The FIRECalculus Engine
A transparent look at the mathematics driving your financial independence projections.
The WealthLeak Variable
Most calculators show you a nominal return (e.g., 8%). The WealthLeak Variable reveals your Real Return by strictly accounting for the silent erosion of your purchasing power.
The Formula
Real Return = Gross Return - (Inflation Rate + Management Fees)
We default to a 3.2% inflation rate based on long-term CPI averages, though recent volatility suggests testing higher scenarios. We also deduct an estimated 0.15% expense ratio for low-cost index funds. If your portfolio fees are higher (e.g., 1%), your Date of Freedom could be delayed by years.
Safe Withdrawal Rate (SWR)
The "Freedom Number" is derived from the foundational Trinity Study (1998).
The study analyzed historical market performance to determine a withdrawal rate that would not deplete a portfolio over a 30-year retirement. The consensus 4% Rule suggests you can withdraw 4% of your invested assets in year one, adjusted for inflation thereafter, with a high probability of success.
FIRECalculus uses this 4% rule to calculate your target:
Target Nest Egg = Annual Expenses × 25
Note: For longer retirement horizons (40+ years), many practitioners suggest a more conservative 3.25% - 3.5% SWR.