FIRE calculator 2026 — how to calculate your retirement portfolio target?

FIRE (Financial Independence, Retire Early) means reaching a state where your investment portfolio's returns cover your living expenses without employment income. The movement originated in the US in the 1990s, but its principles apply in Finland too — with some important adjustments, since Finland's capital gains tax significantly affects the required portfolio size.

This guide covers how to calculate your FIRE number, the Finnish tax specifics, and how the acquisition cost assumption and capital gains tax should be factored into your planning.

What is the FIRE number?

The FIRE number is based on the 4% rule (SWR, safe withdrawal rate). The rule states that you can withdraw 4% of your portfolio per year without depleting it — historically the portfolio survives at least 30 years. The formula is:

Example: if your annual expenses are €30,000, you need a €750,000 portfolio. In Finland the situation is more complex because withdrawals are subject to capital gains tax. You therefore need a larger gross portfolio than the basic expenses figure suggests.

Estimates account for capital gains tax (30/34%) but not the acquisition cost assumption. The exact figure also depends on withdrawal timing and portfolio structure.

Acquisition cost assumption (hankintameno-olettama)

When calculating capital gains in Finland, you can use the acquisition cost assumption instead of the actual purchase price. The rates are:

• 20% of the selling price — if you have held the investment for less than 10 years
• 40% of the selling price — if the holding period exceeds 10 years

In practice: if you sell ETF units for €10,000 and have held them for over 10 years, you can deduct €4,000 (40%) as the acquisition cost regardless of what you originally paid. The taxable gain is €6,000.

The acquisition cost assumption is especially useful when the actual purchase price is low or difficult to document. For a FIRE investor with long-term positions, the 40% assumption can significantly reduce the tax burden.

Capital gains tax and FIRE

Finland taxes capital income at two rates:

• 30% — on capital income up to €30,000
• 34% — on the amount above €30,000

Example: you withdraw €40,000 from your portfolio, of which the taxable gain (after the acquisition cost assumption) is €24,000. Breakdown:

Keeping annual withdrawals below the €30,000 taxable gain threshold avoids the 34% bracket. This is a key optimisation point in Finnish FIRE planning — a staggered withdrawal schedule can save thousands of euros per year.

Note also that capital income is not combined with earned income — it is always taxed as a separate income category. Having both salary and capital gains does not push either rate higher.

When does FIRE make sense?

FIRE is entirely achievable in Finland, but a few specific points deserve attention:

• Kela and social security — when retired early without earned income, unemployment or sickness allowances may be low or zero. Healthcare and basic security continue, but YEL pension accrual stops.
• State pension accrual— Finland's statutory pension accrues from earned income. Early retirement reduces the final pension, but a sufficient investment portfolio compensates for this.
• Inflation — the 4% rule is calibrated on US historical data. A European investor may prefer a more conservative 3.5% rate, which increases the required portfolio by around 14%.
• Sequence of returns risk— a bad market year immediately after retiring can dramatically shorten the portfolio's life. A cash buffer or a flexible withdrawal strategy helps.

Ultimately FIRE is a personal decision. The key is to calculate your own FIRE number with realistic assumptions and to account for Finnish taxation already during the accumulation phase.