Two parts of the standard FIRE answer are pure arithmetic. They work in any country and any currency: how your savings rate turns into years of work, and how a withdrawal rate turns into the size of the pot (1 ÷ 4% = 25 times a year’s spending). The other four parts are history and law, and most of them were measured in the United States: the 4% figure itself, the assumed investment return (an assumption that varies by country and period), the tax on what is withdrawn, and the ages when public pensions and healthcare start. This hub keeps the two apart and gives a source for each.
In short
- Travels: savings rate → years, and withdrawal rate → multiple of spending (25× at 4%). Both are ratios, so the currency drops out. Whether 4% is the right rate to put into the multiple is a separate question.
- Doesn’t travel as-is: the 4% figure (US data from 1926), a 5% real return (one blogger’s assumption; real returns differ by country and period), withdrawals before tax, and the US ages for pensions, health cover and retirement accounts.
- Every figure below is either from a linked source or worked out on this page. None of it is a forecast.
The standard answer, piece by piece
| Piece of the usual FIRE answer | Where it comes from | Does it travel? |
|---|---|---|
| Savings rate decides the years | Arithmetic; popularised by Mr. Money Mustache in 2012 | Yes, in any currency |
| Target = 25 × yearly spending | 1 ÷ 0.04 = 25 | The arithmetic, yes; the 4% inside it, not automatically |
| A 4% withdrawal lasts 30 years | Bengen, 1994: US stocks and Treasuries from 1926 | No. In 19 countries’ history the highest safe rate ranged from 0.26% to 3.96% with 50/50 stocks and bills (Pfau, below) |
| About 5% real return a year | Mr. Money Mustache’s stated assumption (same 2012 post) | It varies: world equities 5.2% a year since 1900, and 3.5% since 2000 |
| Withdrawals before tax | The studies leave tax out (Monevator lists “Not incorporating costs and taxes” among the 4% rule’s conditions) | No. Every country taxes withdrawals differently |
| Pension, health cover, access | US rules: Medicare from 65, an extra 10% tax on early retirement-plan withdrawals before 59½ | No. Each country has its own ages |
The two sections that follow are the arithmetic. The four after that are the parts that change at the border.
What travels: savings rate and years
Your savings rate is the share of take-home pay you don’t spend. Once it is set, along with a real return and a withdrawal rate, the number of years from zero to the target follows. Pay, currency and country do not enter the calculation.
The reason is that both sides scale with pay. A household that saves 50 of every 100 it takes home spends 50. Its target is 25 × 50 = 1,250, and it adds 50 a year. Multiply every figure by 1,000, or write them in yen, rupees or euros, and the ratio of target to yearly saving is still 25. So the years are the same too.
At a 5% real return and a 4% withdrawal rate, a 50% savings rate takes about 16.6 years from zero. At a 3.5% real return it takes about 18.3. Both figures are arithmetic, not forecasts: they assume the return arrives smoothly every year, which real markets never do. The 4% rate they assume has a mixed record. In Pfau’s 19-country data (half stocks, half bills, retirements starting 1900–1981), it lasted 30 years in 96.3% of start years for a world portfolio and in 78.0% for the world excluding the US (Pfau). The full table, worked step by step, is in Savings rate and years to financial independence: the arithmetic in any currency.
What travels with a caveat: the 25× multiple
The multiple is 1 ÷ the withdrawal rate:
| Withdrawal rate | Multiple of yearly spending |
|---|---|
| 4% | 1 ÷ 0.04 = 25 |
| 3.5% | 1 ÷ 0.035 ≈ 28.6 |
| 3% | 1 ÷ 0.03 ≈ 33.3 |
That arithmetic is true everywhere. What it can’t tell you is which rate held up in your country’s history. That is the next question.
What doesn’t travel: the 4% figure
William Bengen’s 1994 study used US stock and Treasury returns from 1926. With half in each (stocks and intermediate-term Treasuries) and withdrawals raised with inflation every year, he found that a first-year withdrawal of 4% had never run out in under 33 years (Bengen, Journal of Financial Planning, October 1994, reprinted 2004).
Wade Pfau ran the same kind of test on 17 developed countries with 109 years of data. His conclusion: “From an international perspective, a 4 percent real withdrawal rate is surprisingly risky” (Journal of Financial Planning, December 2010). In an updated table with data to 2010, half stocks and half bills, the highest rate that survived every 30-year start was 3.96% in the US and Canada and 0.26% in Japan. Pfau’s US figure is just under Bengen’s 4% because he used stocks and bills, with start years from 1900 (Pfau, Retirement Researcher).
The country-by-country results, the strongest objections to them and what each rate means for the pot are in Does the 4% rule work outside the US?
What doesn’t travel: the return assumption
The 5% real return in the best-known savings-rate table is Mr. Money Mustache’s assumption, not a measured figure. It sits close to world equities since 1900 (5.2%), below the US (6.6%), above world equities since 2000 (3.5%), and well above portfolios with bonds (1.7%) or bills (0.5%). The point is that returns vary by country and period:
- US equities, 1900–2024: 9.7% a year nominal, with inflation at 2.9% a year (UBS Global Investment Returns Yearbook 2025, summary edition, p. 6). After inflation that is 1.097 ÷ 1.029 − 1 ≈ 6.6% a year.
- World equities, 1900–2024: 5.2% a year after inflation. World bonds earned 1.7% and bills 0.5% (Cambridge Judge Business School on the 2025 Yearbook).
- World equities since 2000: 3.5% a year after inflation (same Yearbook summary, p. 13).
The same Yearbook found that over the last 50 years, investing globally rather than at home gave better risk-adjusted returns in most of its countries. The US was one of the few exceptions, where staying home did better (p. 9). Japan shows how long a single market can lag. The Nikkei 225 took until 22 February 2024, more than 34 years, to close above its December 1989 record (nippon.com). That is a price index without dividends. It is history, not a forecast for any market.
What doesn’t travel: tax
The withdrawal studies above are before tax. If part of every withdrawal goes to tax, less of it is left to spend. With an example effective rate of 20% on the whole withdrawal, a 4% withdrawal leaves 4% × (1 − 0.20) = 3.2% of the pot to spend. Going the other way, spending 4% of the pot takes a withdrawal of 4% ÷ 0.8 = 5%.
The rate itself is national, and often personal: it depends on the account, how much of a withdrawal counts as gain, and the bracket. That’s why this blog gives no country’s tax rates. A planned article covers how to find your own effective rate from last year’s statement.
What doesn’t travel: pensions, health cover and access ages
Part of the US early-retirement canon is about bridging US ages. In the US, Medicare is health insurance “for people 65 or older” (medicare.gov), and retirement-plan withdrawals before age 59½ can carry an additional 10% tax (IRS Topic 558). Mad Fientist’s guide to accessing retirement funds early is one example of that genre.
Other countries have different ages and their own official forecasts. A few examples:
- United Kingdom: Check your State Pension forecast (gov.uk) gives the expected amount and the age it can start.
- Canada: an estimate of the CPP retirement pension is in My Service Canada Account (canada.ca).
- Japan: Nenkin Net (Japan Pension Service).
The arithmetic of a public pension is the same everywhere. Once it starts, the pot only has to cover the gap. With example figures of 30,000 a year of spending and a 12,000 pension, the later years need (30,000 − 12,000) × 25 = 450,000, not 30,000 × 25 = 750,000. The years before it starts are a separate pot. A planned article works through both phases.
Two ways to read this hub
- Just the answer: the table at the top.
- Show me the working:
- Does the 4% rule work outside the US? What a century of data from 19 countries found
- Savings rate and years to financial independence: the arithmetic in any currency
- Planned: your effective tax rate, and the bridge to a state pension.
What this hub does not do
It gives no country’s tax rates, recommends no product, fund, account or allocation, and forecasts nothing. The studies it cites describe what happened in the past under their own assumptions. What the figures on these pages are, and what they leave out, is listed on the limitations page.
How we worked out the numbers on this page
- Sourced figures: Bengen (1994), Pfau (2010, and his updated table on Retirement Researcher), Monevator (2025), the UBS Global Investment Returns Yearbook 2025 summary edition and Cambridge Judge Business School’s write-up of it, nippon.com, medicare.gov, irs.gov. Each one is linked where it is used.
- Our arithmetic: the multiples (1 ÷ rate), the US real return (1.097 ÷ 1.029 − 1), the after-tax withdrawal (4% × 0.8; 4% ÷ 0.8), the pension example ((30,000 − 12,000) × 25) and the success rates (100% minus Pfau’s failure shares of 3.7% and 22.0%). The years-to-freedom figures come from the method in the savings-rate article.
- Example inputs: 20% tax, 30,000 spending and a 12,000 pension are round illustrations in no particular currency, not anyone’s numbers.