Living off your returns means funding your life from what your wealth earns, without touching the wealth itself.
That's stricter than what the FIRE movement proposes, where your capital may run down over thirty years. And stricter means more expensive: at €40,000 of annual spending the difference is over three hundred thousand.
But a second difference works the other way. In the Netherlands you don't have to fund your full spending from returns, because state and occupational pensions cover part of it. That brings the figure below any standard calculation.
What it means exactly
Under this approach your wealth stays intact. You withdraw only what it earns above inflation, and the amount you live on stays constant in purchasing power.
In principle that means it can continue indefinitely, and you end your life with roughly what you began with.
The formula is simple:
Wealth required = annual spending / real return
At €40,000 of spending and a 4% real return: €1,000,000.
Note the word real. That's your return after inflation. Calculate with nominal returns and you're quietly eroding your purchasing power, and it won't last.
The difference from FIRE
The FIRE movement uses the 4% rule, which is more relaxed than it appears. It's based on a thirty-year horizon in which your capital may run down.
At €40,000 of annual spending and a 4% real return:
| Approach | Withdrawal rate | Wealth required |
|---|---|---|
| Deplete over 30 years | 5.78% | €691,681 |
| Deplete over 40 years | 5.05% | €791,711 |
| Capital preserved | 4.00% | €1,000,000 |
Preserving your capital therefore costs €308,319 more than the same income across thirty years.
That's the price of certainty and of leaving something behind. You're buying two things: the risk of living longer than planned disappears, and something remains.
More on where those percentages come from is in the article on the 4% rule.
How much do you need?
The outcome depends entirely on the real return you assume:
| Annual spending | At 2% real | At 3% real | At 4% real | At 5% real |
|---|---|---|---|---|
| €20,000 | €1,000,000 | €666,667 | €500,000 | €400,000 |
| €30,000 | €1,500,000 | €1,000,000 | €750,000 | €600,000 |
| €40,000 | €2,000,000 | €1,333,333 | €1,000,000 | €800,000 |
| €50,000 | €2,500,000 | €1,666,667 | €1,250,000 | €1,000,000 |
| €60,000 | €3,000,000 | €2,000,000 | €1,500,000 | €1,200,000 |
Between 2% and 5% sits a factor of 2.5. That's the largest uncertainty in the whole calculation, and it's a figure you fill in yourself.
For a diversified equity portfolio, most long-term calculations use 4 to 5% real. For living off returns, where you withdraw rather than accumulate, calculating more cautiously is wiser.
Why it's far less in the Netherlands
Now the point the table above doesn't show, and it lowers the figure substantially.
The table assumes your wealth must carry your full spending, forever. In the Netherlands it doesn't. From state pension age, both pensions arrive and lower what must come from your wealth.
At €40,000 of spending, €18,000 state pension and €12,000 occupational pension:
| Stopping at | Wealth required | Without pensions | Difference |
|---|---|---|---|
| 55 | €531,552 | €1,000,000 | €468,448 |
| 60 | €430,062 | €1,000,000 | €569,938 |
| 65 | €306,583 | €1,000,000 | €693,417 |
Anyone wanting to live off returns from sixty-five at €40,000 of spending needs just over three hundred thousand rather than a million.
Note the right-hand column: what the pensions save you depends on your stopping age, not your spending. That's because they're fixed amounts that don't move with your lifestyle. That mechanism is worked through in the article on Lean and Fat FIRE.
Can it work with half a million?
The question asked most often, and the answer surprises.
As pure perpetual capital, €500,000 at a 4% withdrawal rate produces €20,000 a year, or €1,667 a month. That's tight.
But with state and occupational pensions it looks different:
| Stopping at | Spending €500,000 supports |
|---|---|
| 55 | €38,738 a year (€3,228 a month) |
| 60 | €42,798 a year (€3,566 a month) |
| 62 | €44,658 a year (€3,721 a month) |
| 65 | €47,737 a year (€3,978 a month) |
With half a million and stopping at sixty-five you can spend nearly €48,000 a year, more than double what the perpetual calculation suggests.
That difference comes entirely from having only a limited number of years to carry fully yourself.
Why a savings account won't do it
Living off interest sounds as though a savings account suffices. It doesn't, and the figures show exactly why.
What counts is your return after inflation:
| Savings rate | Inflation | Real return | Consequence |
|---|---|---|---|
| 1.5% | 3% | −1.46% | Your capital shrinks |
| 2.0% | 3% | −0.97% | Your capital shrinks |
| 2.5% | 2% | +0.49% | €8.16 million needed for €40,000 |
At a negative real return you can't live off returns by definition, because there's no yield to live on. You're depleting your capital without noticing.
And even at a positive real return of half a percent you'd need over eight million to withdraw €40,000 a year. This approach therefore requires investing, and investing requires accepting fluctuation.
The idea suggests more certainty than it delivers
It sounds like a state of rest: your capital sits there, you live off the yield, done. In practice it's less fixed than it sounds.
Returns don't arrive evenly. An average of 4% real over thirty years can consist of years at plus twenty and minus fifteen percent. In a bad year there isn't enough yield to live on, and then you touch your capital anyway.
The order matters. A sharp fall just after you start withdrawing does considerably more damage than the same fall twenty years later. That's set out in the article on the 4% rule.
Your spending isn't fixed. Healthcare, a move, a child studying. The model uses a constant amount; your life doesn't.
Practically that means: keep part liquid in the early years so you needn't sell anything in a bad year. And keep room to spend less temporarily. The second is the cheapest insurance available.
How Gylder fits in
This approach turns on two figures that both keep moving: what your wealth is, and what you spend.
Gylder totals your wealth daily across all your accounts: bank, broker, crypto, precious metals and your property with the mortgage underneath. Your spending is categorised automatically, with a model running entirely on its own servers, so your annual figure rests on measurement rather than estimation.
Once you start withdrawing, your money-weighted return becomes the only figure that still says anything. A time-weighted return ignores your withdrawals, which is precisely what you don't want to overlook when living off your wealth. Why that difference matters is in the article on calculating returns.
The bridge calculator works out the amount that applies to your situation, with your state pension date and occupational pension included, and saves it as a wealth target.
What this doesn't tell you
The real return is an assumption. Between 2% and 5% sits a factor of 2.5 in the amount required. Run both extremes.
Wealth above an exemption is taxed annually. That reduces your net return and belongs inside your real percentage.
The model uses flat spending. In reality it falls for most people after seventy while healthcare costs rise.
This isn't advice. This approach makes your income entirely dependent on your wealth. Have a plan of that size properly calculated.
Frequently asked questions
What does living off your returns mean? Funding your life from what your wealth earns without touching the wealth itself. Your capital stays constant in purchasing power.
How much money do you need? Your annual spending divided by your real return. At €40,000 and 4% real that's a million, but in the Netherlands it's lower because pensions cover part. Stopping at sixty-five, it's roughly €307,000.
What's the difference from FIRE? Here your capital stays intact. The FIRE rule of thumb assumes a thirty-year horizon in which capital may deplete, which requires less.
Can I do it from a savings account? No. With a savings rate below inflation your real return is negative and your capital shrinks. Even at half a percent real you'd need over eight million for €40,000 a year.
Can I do it with €500,000? As perpetual capital that produces €20,000 a year. With pensions included, the same amount supports nearly €48,000 of spending if you stop at sixty-five.