Retirement and Financial Independence (FIRE): The Complete Guide
Learn to calculate your FIRE number, understand the 4% rule, and master the Retirement tools in Patrimonio360.
Introduction
The concept of retirement has transformed. Traditionally, retirement meant waiting for a statutory state age to rely on a public pension. Today, the FIRE movement (Financial Independence, Retire Early) proves that retirement is not a biological age, but a financial number. In this guide, you will learn the mathematical foundations of financial freedom and how to plan it in Patrimonio360.
Key Concepts
1. What is Financial Independence (FIRE)?
Financial Independence occurs when passive returns from your investments and wealth equal or exceed your living expenses. Work transforms from a survival necessity into an autonomous choice.
2. The 4% Rule & Safe Withdrawal Rate (SWR)
Stemming from the Trinity Study, the 4% Rule states that withdrawing 4% of your investment portfolio in year one, adjusted for inflation thereafter, carries a >95% probability of lasting over 30 years.
- FIRE Capital Formula: Multiply your target annual spending by 25 (e.g. Monthly budget of $3,000 × 12 × 25 = $900,000).
- Conservative horizons (40+ years): Many use a 3.5% SWR (28.5x multiplier).
3. The Pension Gap Concept
In most countries, public or state pensions replace only 40-60% of pre-retirement income. The difference between what you need and what the state pays is your Pension Gap.
35-year-old aiming to retire at 58 with a $4,000/month lifestyle:
$4,000/mo
$1,500/mo
$2,500/mo
$750,000
$700/mo
Combining private wealth with state pension makes early retirement targets attainable.
5 Steps to Plan Retirement in Patrimonio360
1. Define Lifestyle
Enter your desired monthly retirement living budget.
Step 12. Estimate Pension
Input your expected social security or pension payout.
Step 23. Identify Gap
Patrimonio360 computes the exact private capital required.
Step 34. Configure Portfolio
Set expected returns and test sensitivity scenarios.
Step 45. Audit Sustainability
Verify in decumulation simulator that funds never run dry.
Step 5- Retirement is not an age; it is a financial number.
- The 4% rule (25x annual spending) is your foundational compass.
- Calculating your pension gap prevents relying solely on public promises.
Calculate your personalized scenario
Financial Independence & Retirement Calculator
Determine your FIRE number and the exact nest egg needed to live off your assets
Monthly amount to sustain your lifestyle in retirement.
Guaranteed monthly income from public or private pension.
Liquid net worth or investments accumulated to date.
Total expenses minus guaranteed pension income.
Fund needed to withdraw 4% annually perpetually.
Suggested monthly contribution to reach goal in 20 years.
Want a full actuarial and retirement analysis?
Explore the Retirement module to simulate pension gaps, life expectancy, and decumulation.
Frequently Asked Questions
Recommended next step
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