FIRE calculator for retiring early in Asia

How the withdrawal rate works

Your money stays invested while you live off it. Each year, you take some money out of your investments to pay for your life, while the rest stays invested and can grow.

The withdrawal rate tells you how much you take out. For example, if you have USD 500,000 and use a 4% withdrawal rate, you would take out USD 20,000 in the first year.

• It is based on what you have on the day you stop working. After the first year you do not take 4% of whatever your investments are worth. You take the same amount again, raised to keep up with inflation, whether the stock market went up or down.
• It is not a prediction of your returns. The 4% does not mean your investments earn 4% a year. The money you take out can come from dividends, interest or selling some investments.
• It is a rule of thumb, not a guarantee. It tells you how much you can take out while giving your money a good chance of lasting.

The rule comes from studying what would have happened to portfolios during past market conditions. Financial planner William Bengen first worked it out in 1994, and the famous 1998 Trinity Study tested different mixes of shares and bonds. For portfolios with at least half in shares, a 4% starting withdrawal lasted 30 years in at least 95% of the periods they tested. The withdrawal rose with inflation each year. With mostly bonds, it failed far more often. The FIRE movement later borrowed the rule for much longer retirements.

If you retire young, your money has to last longer. Someone who retires at 45 could need their money for 45 years or more. That is why many people who retire early use a more cautious withdrawal rate of 3% to 3.5%. The lower your withdrawal rate, the more money you leave invested, and the less likely you are to run out.

What if the market crashes right after you retire?

This is the biggest risk in early retirement. If the market drops sharply in your first few years and you keep taking money out, you are selling investments while their price is low. That money is gone before the market recovers. Two people with the same average returns over 30 years can end up in very different places, just because of when the bad years came. This problem is called sequence-of-returns risk. It is the main reason a lower withdrawal rate is safer.

Being flexible helps a lot. If you are willing to spend less in bad years, or to earn a little extra until the market recovers, your money is much more likely to last. The calculator assumes you spend the same amount every year, which is the cautious case.

What is your FIRE number?

Your FIRE number is not the amount you plan to spend until your money runs out. It is the amount you need invested so that you can keep taking money out each year while still having a good chance of your portfolio lasting for the rest of your life.

The calculator does not try to predict what the stock market will do each year. Instead, it uses the withdrawal rate you choose.

If a visa requires you to keep money in a local bank account, that money is not included in the amount you can withdraw. You still own it, but you cannot use it to pay for your normal living expenses.

Your FIRE number is an estimate, not a fixed target. Check it again when your spending, your investments, your family, your country, or the tax and visa rules change.

You don't have to stop working

The FI in FIRE, financial independence, matters more than the RE. Financial independence means work becomes optional. Once you reach your number you might stop working completely, work part-time, start a business, take a year off, or stay in a job because you enjoy it. All of that counts.

Where FIRE comes from

The idea goes back to the 1992 book Your Money or Your Life, which treats money as the hours of your life you traded for it. Blogs like Early Retirement Extreme (2010) and Mr. Money Mustache (2011) made it popular. The original idea was not about being cheap. It was about spending on what makes your life better, cutting what doesn't, and investing the difference to buy back your time.

What changes your FIRE number from one country to another?

Moving to a cheaper country after earning your money somewhere more expensive is called geo-arbitrage. It is the idea behind this calculator: lower yearly costs mean you need less invested. But moving to a cheaper country does not automatically mean you need less money to retire. Three main things affect your FIRE number:

1. How much it costs to live there
2. How much tax you pay on your investments
3. How much money you have to put aside for your visa

1. What does it cost to live there?

We estimate living costs using prices collected from real shops, gyms, landlords and other local sources. We have three different lifestyles:

• Lean: local food, a simple apartment and a scooter.
• Comfortable: a nicer apartment, eating at cafes and a gym membership.
• Fat: a larger home, a car and eating out regularly.

Each country page shows the full breakdown. For example, you can see the complete cost-of-living breakdown for Thailand.

2. How much tax do you pay on your investments?

Your investments can cost you very different amounts in tax depending on where you live. Some countries do not tax foreign investment income at all, while others tax dividends, interest and investment gains.

• The Philippines does not tax a foreigner's income from abroad, and Malaysia exempts most foreign income its tax residents bring in until the end of 2036.
• Thailand can tax foreign income that you bring into Thailand, including dividends, interest and investment gains. How it is taxed depends on when you earned the income and when you bring it into Thailand.
• Indonesia can tax residents on foreign investment income, including dividends, interest and investment gains, with rates that can reach 35%.

Because taxes can have a big effect on how much money you need, the calculator includes them when working out your FIRE number.

3. How much money does your visa require?

Some retirement visas require you to keep a certain amount of money in a local bank account. For example:

• Malaysia MM2H: USD 150,000 for the Silver tier
• Indonesia Second Home Visa: IDR 2 billion
• Philippines SRRV: USD 15,000 to USD 50,000, depending on your age and whether you have a pension

That money is still yours. You are not spending it. But because you have to keep it locked up for the visa, you cannot use it to pay your everyday expenses. So the calculator adds that amount to your FIRE number.

Your age can also affect which visas you can use. For example, the Philippine retirement visa starts at age 40, while Thailand's retirement visa starts at age 50. Each living guide covers the visa options in full.

How the calculator works

1. Set aside visa money. It puts aside any money that your visa requires you to keep in the country.
2. Add up your yearly costs. It works out how much the adults need to live each year, including rent, health insurance and travel.
3. Add tax and visa costs. It adds local tax on your investments and the yearly visa costs.
4. Subtract your income. It takes off any pension or other regular income you have.
5. Work out your FIRE number. It divides what is left by your withdrawal rate, then adds the visa money back.
6. Add your children's costs. It adds up what each child costs until they turn 18, school fees included, and sets that amount aside on top.

For example, if you need USD 40,000 per year and use a 4% withdrawal rate, you would need about USD 1 million invested.

The calculator also estimates how much of your yearly withdrawal comes from dividends and interest, and how much comes from selling investments. Your settings decide how much tax you pay on those amounts. We round the result to the nearest USD 1,000.

Where to learn more about FIRE

Reddit has some of the biggest FIRE communities online. They show how people plan, invest and live after they stop working:

• r/financialindependence: the main FIRE community, with detailed posts about planning.
• r/Fire: a more casual community for general questions.
• r/ExpatFIRE: people retiring early abroad, with many discussions about Southeast Asia.
• r/leanfire: FIRE on a small budget.
• r/ChubbyFIRE: FIRE on a middle-sized budget.
• r/fatFIRE: FIRE on a big budget.
• r/coastFIRE: for people who have saved enough to stop adding money and let their investments grow.

FIRE abroad: common questions