Calculating your FIRE number: the arithmetic in four steps

Your FIRE number is the wealth you need to cover your spending without working. In the Netherlands that consists of two parts: a bridge to your state pension date, and a top-up on whatever arrives after it.

This article walks through that calculation step by step. By the end you'll have one amount and one date: precisely the two things you need to work towards it.

Why you don't simply take twenty-five times your spending is covered in the main article on the FIRE movement. In short: that rule assumes your wealth must cover your spending forever, and here it doesn't.

What you need before you start

Four inputs. Two of them you probably don't know offhand, and that's why most people never get past an estimate.

1. Your annual spending. What you actually spent over the past twelve months, not what you think you spend. This is the most sensitive of the four.

2. Your intended stopping age. A guess will do for now; further down you'll see what shifting it does.

3. Your state pension age and amount. The age is currently 67 and rises with life expectancy. Your personal date and amount are with the SVB. It matters considerably whether you live alone or with a partner.

4. Your accrued occupational pension. What will arrive annually from employer schemes, found on mijnpensioenoverzicht.nl. All your schemes sit there together, including from jobs fifteen years ago.

Plus one assumption: your expected real return, meaning after inflation. Most calculations use 3 to 5% for a diversified equity portfolio. Further down you'll see how much that choice matters.

The calculation in four steps

We'll work through an example: someone aged fifty who wants to stop, spends €40,000 a year, receives €18,000 of state pension from 67, has accrued €12,000 of occupational pension, and calculates with 4% real.

Step 1: your bridge years

State pension age − stopping age = bridge years

67 − 50 = 17 years in which you pay for everything yourself.

Step 2: the bridge amount

You don't need 17 × €40,000, because money you haven't spent yet keeps earning. What you need is the present value of that series:

Bridge amount = spending × (1 − (1 + r)^−n) / r

With r = 4% and n = 17: €40,000 × 12.1657 = €486,627.

That 12.1657 is the annuity factor. Seventeen years of spending therefore costs you just over twelve years' worth, not seventeen.

Step 3: the gap after your state pension date

From 67, €18,000 of state pension plus €12,000 of occupational pension arrives, €30,000 together. Your spending is €40,000.

Annual gap = €40,000 − €30,000 = €10,000

That gap must be covered permanently, so the perpetual approach does apply here:

Capital at your state pension date = gap / r = €10,000 / 0.04 = €250,000

But you only need that in seventeen years. What you need today for it is less:

Present value = €250,000 / 1.04¹⁷ = €128,343

Step 4: add them up

Against €1,000,000 by the rule of thumb.

In Excel or Google Sheets

You don't need to compute the annuity factor by hand. For the bridge amount, use PV:

=PV(0.04, 17, -40000)

That gives €486,627. The minus sign on spending produces a positive result.

Phase 2 is one line:

=((40000-18000-12000)/0.04)/(1.04^17)

That gives €128,343. Add them and you have your number.

If you want to experiment, put your four inputs in separate cells and reference them. Then you see immediately what happens when your stopping age or spending changes.

What your stopping age does

The same person, different stop date:

Working five years longer, from 50 to 55, lowers your target by €83,418. And it works twice over: your target falls and you get five extra years to save.

Note what happens between the columns. Phase 1 drops sharply the later you stop; phase 2 rises slightly. The second is logical: the shorter the time to your state pension, the less return you earn on the money earmarked for that period.

The 25× rule is wrong for your total but right at the margin

This is the most striking result of the whole calculation.

Look at what happens when your spending changes, stopping at fifty:

Every thousand euros of extra annual spending costs you exactly twenty-five thousand euros of extra wealth. Precisely the rule of thumb, while your total sits far below it.

That's no accident. The bridge annuity factor plus the discounted perpetuity always sum to exactly 1/r, so to 25 at 4%. At seventeen bridge years that's 12.1657 + 12.8343. At thirty bridge years, 17.2920 + 7.7080. The split shifts, the sum doesn't.

The practical meaning: state and occupational pensions are fixed amounts. They don't scale up when you spend more. They lower your total by a fixed sum, but on every euro you add to your current spending you get no discount at all.

That's why permanently lowering your spending is the strongest lever available. Spending €200 a month less is €2,400 a year, and that lowers your target by €60,000.

How sensitive is this to your assumptions?

Two inputs deserve a warning.

Your real return

Between 3% and 5% sits €190,095 of difference. That's nearly a third of your target, and it depends entirely on a figure you fill in yourself.

Using 5% makes your target smaller on paper and your risk larger in practice: if returns disappoint, you fall short in precisely the years you're no longer working. For the bridge phase, where you withdraw rather than accumulate, calculating cautiously beats calculating optimistically.

Your pension accrual

Over €280,000 between no pension and a good one. This is why "roughly estimating your FIRE number" doesn't work: without your actual pension figure you're hundreds of thousands out.

At €24,000 of pension something notable happens. Together with €18,000 of state pension, €42,000 arrives against €40,000 of spending, so the gap is zero and phase 2 costs nothing. You only need to cross the bridge.

How long do you have left?

The number is half the answer. The other half is when you get there.

Someone with €200,000 setting aside €20,000 a year, at 4% real:

Here you see why your intended stopping age isn't a free choice but an outcome. Someone aged 40 wanting to stop at 50 has 10 years and needs 15.4. That leaves three levers: save more, spend less, or stop later.

The formula to do this yourself:

=NPER(0.04, -20000, -200000, 614970)

Left to right: return, annual contribution, current wealth, target amount.

The three mistakes that cost most

Estimating your spending instead of measuring it. Almost everyone understates. The holiday, the dentist, the broken washing machine, the present: these aren't in your monthly budget and are in your annual spending. Be 20% out on €40,000 and you're €200,000 out on your target.

Calculating nominally against a target in today's euros. Use 7% while your target sits in current euros and you'll think you're done years before you are. Use real returns, after inflation.

Ignoring your pension because you don't know it. It's on mijnpensioenoverzicht.nl and takes ten minutes. For most people it's the single largest item in this entire calculation.

From number to target

You now have two outputs: an amount and a date. That's where it starts.

A target sitting in a spreadsheet you open twice a year does little. What works is a target your progress is measured against without you having to do anything.

The bridge calculator on the site works out both values and sets them up as your wealth target. Your total wealth, bank, broker, crypto, precious metals, your property with the mortgage underneath, updates daily and is set against that target. The projection runs on your own measured growth rather than an assumed percentage, so you see whether you're on schedule based on what's actually happening.

What can't go in: your accrued employer pension. In this calculation it doesn't belong as wealth anyway but as a future income stream: it lowers your target; it isn't an asset you can draw on today. An annuity or pension investment account at a broker connects normally.

What this calculation doesn't do

It assumes fixed spending. Your spending at fifty, sixty and eighty differ. Commuting disappears, healthcare costs arrive, and for most people spending falls after seventy. This calculation holds it flat, which errs on the cautious side.

It uses an average return. In reality returns arrive in good and bad years, and the order matters once you withdraw. A hit in the first years of your bridge is considerably more damaging than the same hit ten years later. This model can't see that difference.

It contains no tax. Wealth above an exemption is taxed annually. That belongs inside your real-return assumption, not on top of it.

It doesn't know your life. Job loss, illness, an inheritance, a divorce, a child. Any projection across fifteen years is a direction, not a forecast.

What the calculation is good for: it gives you a number considerably closer to reality than the rule of thumb, and it makes visible which levers you can pull.

Frequently asked questions

How much do I need to stop working? At €40,000 of spending, stopping at fifty, €18,000 state pension and €12,000 occupational pension: roughly €615,000. Change any one of those four and the outcome shifts substantially: run your own situation.

Should I calculate with 3, 4 or 5%? For the accumulation phase, 4 to 5% real is defensible. For the bridge phase, where you withdraw, calculating more cautiously is wiser. Run both and see how much it differs.

Do my savings count? Yes, as wealth. But savings usually deliver a negative real return, so a large savings share drags your average down and lengthens your timeline.

What if I still have a mortgage? Two things. Your outstanding balance reduces your wealth, and your monthly payments sit in your spending. If your mortgage is repaid by the time you stop, calculate with your spending without that payment, that lowers your target considerably.

How often should I recalculate? Once a year is enough, or whenever something structural changes in your income, spending or pension accrual.