FIRE Projection

FIRE stands for Financial Independence, Retire Early. It is a movement and financial strategy focused on aggressive saving and investing so that your portfolio can sustain your living expenses indefinitely, or at least until traditional retirement age. The core idea is to accumulate enough assets that passive income (dividends, capital gains, interest) covers your spending.

FIRE does not necessarily mean stopping work entirely. Many practitioners use it to gain the freedom to choose how they spend their time, whether that means part-time work, passion projects, or full retirement. The key milestone is reaching the point where work becomes optional.

The 4% rule originates from the 1998 Trinity Study, which analysed historical US stock and bond returns to determine a sustainable withdrawal rate. The conclusion: withdrawing 4% of your portfolio in the first year of retirement, then adjusting for inflation each subsequent year, gave a high probability of your money lasting at least 30 years.

To calculate your FIRE number, divide your annual expenses by 0.04. For example, if you need 360 000 kr/year (30 000 kr/month), your target is 9 000 000 kr. The rule assumes a diversified portfolio (typically 50-75% equities) and accounts for sequence-of-returns risk: the danger that poor returns early in retirement can deplete your portfolio faster than average returns would suggest.

Critics note that the Trinity Study was based on US markets, which historically outperformed global averages. A more conservative rate of 3-3.5% may be appropriate for longer retirement periods or international portfolios. For this safe-withdrawal-rate logic to hold, the return you enter in the calculator should be a real (inflation-adjusted) return: subtract expected inflation from your nominal return expectation.

Public pension supplements your FIRE portfolio. Sweden's allmän pension (income pension + premium pension) provides a base income from age 64 (earliest withdrawal age 2026). This means your private savings only need to bridge the gap between early retirement and when the public pension kicks in, potentially reducing your FIRE target significantly.

ISK taxation is favourable for FIRE. The investeringssparkonto (ISK) applies a flat schablon tax instead of capital gains tax: for 2026 the schablonintäkt is 3.55% of the capital base (statslåneränta 2.55% + 1 percentage point), taxed at 30%, an effective drag of about 1.07% per year. From 1 January 2026 the first 300 000 kr is tax-free (shared across all your ISK and kapitalförsäkring accounts), so smaller portfolios pay no ISK tax at all. For long-term growth investing this is typically cheaper than capital gains tax on a traditional account, making ISK the preferred vehicle for FIRE savings in Sweden.

Pension age rules matter. You can start drawing tjänstepension (ITP) from age 55 (though reduced), and allmän pension from 64. The guaranteed pension (garantipension) starts at riktåldern (67). The year after reaching riktåldern the förhöjt grundavdrag kicks in (from age {age}), significantly reducing tax on pension income. Planning your FIRE strategy around these ages lets you optimise withdrawals: deplete taxable accounts first, then transition to pension income as it becomes available.

During accumulation, ISK almost always wins. You pay about 1.07% of your total portfolio value per year regardless of performance. With a traditional depåkonto (aktie- och fondkonto), you pay 30% on every realised gain when you sell or rebalance, plus 30% on dividends. Over decades of compounding, ISK's flat drag is cheaper.

During drawdown, depå can win. ISK's schablon is charged on your entire portfolio value. If you have 10 million kr and withdraw 360 000 kr/year, you still pay 1.07% on the full 10M = ~107 000 kr/year in ISK tax. With depå, you only pay 30% on the gain portion of each withdrawal. If half your withdrawal is gains, that's 30% × 180 000 = 54 000 kr, roughly half. The crossover point depends on your portfolio size, gain fraction, and withdrawal amount.

Optimal strategy for Swedish FIRE: accumulate in ISK (lower drag), then consider moving to depå before retirement for drawdown (lower withdrawal taxes). Note: transferring from ISK to depå is a disposal event for ISK purposes (no tax), but you set a new cost basis in the depå. Use the tax modelling toggle above to compare.

Coast FIRE is the point where your existing savings, with zero additional contributions, will grow to your FIRE number by your target retirement age. Once you've reached Coast FIRE, you can "coast", earn just enough to cover current expenses without needing to save anything further.

For example: if your FIRE number is 9M kr and you want to retire at 55 with a 7% return, the Coast FIRE number at age 30 is 9M ÷ 1.07^25 ≈ 1.66M kr. Once your portfolio hits 1.66M, compound growth does the rest. This unlocks career flexibility years before full FIRE: you could take a lower-paying job you love, go part-time, or start a business without risking your long-term plan.

The order you draw from different accounts matters enormously for tax efficiency. The optimal sequence for Swedish FIRE:

1. ISK up to the tax-free threshold (300 000 kr/person from 2026, shared across ISK + KF). Withdrawals themselves aren't taxed, and the schablon on amounts under the threshold is zero.

2. Depå for small withdrawals. When the gain fraction is modest, depå taxes are low. Ideal for the early drawdown years when you want to keep the ISK growing tax-efficiently.

3. ISK/Kapitalförsäkring above threshold. Once the tax-free limit is exhausted, the schablon kicks in. Still often cheaper than income tax.

4. The year after riktåldern (from {age}): switch to pension accounts. The grundavdrag (basic deduction) increases significantly once you have reached riktåldern at the start of the tax year, making income tax on tjänstepension and privat pension withdrawals much cheaper. Before that, pension withdrawals face full income tax – 30–50% depending on the amount.

5. Allmän pension as baseline. Starts from 63-66. Delaying to riktåldern means higher monthly payments and lower tax. Every month you delay past your earliest start age increases the payment permanently.

Sequence risk is the danger that poor returns early in retirement can permanently damage your portfolio, even if long-term average returns are fine. Two retirees with identical average returns over 30 years can have wildly different outcomes depending on when the bad years hit.

Example: Retiree A gets -20% in year 1, then +10%/year for 29 years. Retiree B gets +10%/year for 29 years, then -20% in year 30. Same average. But Retiree A's portfolio never recovers because withdrawals ate into a depleted base. Retiree B barely notices because the loss hit a much larger portfolio.

Mitigation strategies: a conservative withdrawal rate (3-3.5%), a cash buffer covering 2-3 years of expenses (to avoid selling during crashes), flexible spending rules (reduce withdrawals after bad years), and the Swedish pension bridge (pension income reduces how much you need to withdraw during vulnerable early years).

FIRE is not one-size-fits-all. Five common paths exist, each with different trade-offs between timeline, lifestyle, and risk:

Lean FIRE: retire on a reduced budget (50-80% of current spending). The fastest path but requires sustained frugal discipline and leaves less buffer for surprises.

Coast FIRE: save enough that compound growth alone reaches your target by retirement age. You stop aggressive saving and just cover current expenses. Unlocks career flexibility years before full FIRE.

Regular FIRE: the classic path. Save aggressively until your portfolio covers current spending via the 4% rule. The most studied and validated approach.

Barista FIRE: semi-retire with part-time income covering living expenses while your portfolio grows untouched. Named after the idea of working a low-stress café job. Requires a smaller portfolio since part-time income reduces needed withdrawals.

Fat FIRE: retire with an elevated lifestyle (125-200% of current spending). Requires the largest portfolio but provides comfort, travel budget, and buffer for unexpected costs.

Sweden's social safety net makes part-time work unusually valuable compared to the US or UK version of Barista FIRE:

SGI (sjukpenninggrundande inkomst): your sick pay and parental leave benefits are based on your recent income. Working part-time, even 50%, maintains your SGI and protects you if you get ill or have children.

A-kassa: unemployment insurance requires at least 80 hours/month for 6 months. Part-time work that meets this threshold keeps your A-kassa eligibility intact, a safety net that pure retirees lose.

Tjänstepension (ITP): employer pension contributions continue as long as you're employed. Even at reduced hours, you keep building occupational pension. Above the 7.5×IBB threshold, the employer contributes 30%, significant even on a part-time salary.

Practical result: a Swede doing Barista FIRE with 20,000 kr/month part-time income preserves sick pay, builds pension, maintains unemployment insurance, and needs a much smaller portfolio than someone who stops working entirely.

Start with your annual spending. If you need 30 000 kr per month (360 000 kr per year), the classic 4% rule sets your FIRE number at 9 000 000 kr. That target assumes your portfolio must last 30+ years entirely on its own.

In Sweden, the pension bridge changes the calculation. Your private savings only need to cover the years between early retirement and when pension income starts. Tjänstepension can begin from age 55 and allmän pension from 64. Once both are active, they cover a large portion of your expenses, reducing how much you withdraw from your portfolio each year.

For a 35-year-old saving 10 000 kr per month at 7% return with 500 000 kr starting capital, the projection reaches 9 Mkr around age 58. With the pension bridge factored in, the effective target is lower because the portfolio only bridges a limited period. Enter your numbers above to see your personal timeline, including the pension bridge phases.

The pension bridge is the period between early retirement and when Swedish pension income starts. During this phase, you live entirely off your private savings. Once pension income begins, your withdrawal from private savings drops dramatically.

There are two bridge phases. Phase 1 runs from your early retirement age until tjänstepension starts (as early as 55). During this period, your portfolio is the only income source. Phase 2 begins when tjänstepension activates, supplementing your withdrawals. When allmän pension starts (from 64), both pensions together may cover most or all of your living expenses.

The practical effect: instead of needing a portfolio that sustains 30+ years of full withdrawals, you need one that bridges roughly 10 to 15 years at full withdrawal, then gradually reduces as pension income phases in. The calculator above models these phases automatically. The pension calculator shows your expected pension amounts, and the withdrawal strategy tool helps optimise the account order during each phase.

Yes. Allmän pension is based on your lifetime earnings. Every year you work and earn above the threshold, you build pension rights. Stopping work early means fewer years of contributions, which reduces your monthly pension payment.

The impact depends on how early you stop. Someone who works from 25 to 50 (25 years) will have significantly lower allmän pension than someone who works to 65 (40 years). However, the pension you have already earned continues to grow through indexing even after you stop contributing.

Delaying when you start drawing allmän pension also increases the monthly amount. Each month you wait past the earliest start age raises the payment permanently. For FIRE planners, this creates a useful trade-off: use private savings during the bridge period, then start allmän pension later at a higher amount.

The pension calculator shows your projected pension based on your current salary and years of service. Use it alongside the FIRE projection above to model the combined effect.

During the drawdown phase the tax base is what matters. An investeringssparkonto (ISK) charges its schablon (standardised tax) of about 1.07% per year on your whole account value, whether you sell anything or not. A regular securities account (depå) instead taxes 30% only on the realised capital gain when you actually sell. So the account that was cheapest while saving is not automatically the cheapest while withdrawing.

The bigger and more mature the pot, the more the schablon on the full balance adds up, while a depå only taxes the profit slice of each sale. For large portfolios with high embedded gains a depå can end up cheaper on withdrawals, and for smaller pots the ISK free amount of 300 000 kr often leaves the schablon at zero. Model your own numbers in this FIRE (Financial Independence, Retire Early) calculator, and see ISK vs pension for a side-by-side of the account types.

If you reach Financial Independence, Retire Early (FIRE, ekonomiskt oberoende) before the state pension age, there are gap years to cover: the stretch between the day you stop working and the day allmän pension (state pension) and tjänstepension (occupational pension) begin paying out. This stretch is the pension bridge.

During those years your investment portfolio does the heavy lifting. You withdraw from your own savings to cover living costs, and once the pensions switch on they take over most of that load, so your portfolio only has to last through the bridge rather than a full 30-plus year retirement. The withdrawal strategy tool helps you plan which accounts to draw from during each phase of the bridge.