Questions
The short answers.
What is a FIRE number?
The capital whose yearly withdrawal pays for a year of life.
FIRE stands for financial independence, retire early. The number is a year's spending divided by a withdrawal rate: at 4% it is 25 times the year. This calculator also prices the year at each place's cost level and adds the tax that place takes on the gain part of each sale.
Where does the 4% figure come from?
From studies of US stock and bond returns, with 30 year retirements as the main case.
William Bengen's 1994 paper in the Journal of Financial Planning and the 1998 Trinity study by Cooley, Hubbard and Walz tested withdrawals against US market history: US portfolios, US dollars, 30 years as the main horizon. Here the rate is a setting, from 3% to 5%. It is not a forecast.
Why is the number different in each place?
The same year costs a different amount there, and the tax on the sales that pay for it differs.
The cost level is the Patrician.ch cost index, an editorial index with Zurich at 100. It runs from 40 in Bali to 142 in The Hamptons. The tax is the rate the board uses for a resident's gains on listed securities, 0% in 39 of the 100 places.
Does the number include wealth tax?
No. 36 of the 100 places levy a wealth tax, and the table marks each one.
The bases differ too much to fold into a single rate: France taxes property only, Uruguay only assets located in Uruguay, and the Spanish and Swiss taxes run on their own scales and thresholds. Each place's wealth tax page sets out the rule.
How does a US citizen read it?
The United States taxes its citizens wherever they live.
The US citizen switch applies, in every place, the higher of the local rate and 23.8%: the US federal 20% on long term gains plus the 3.8% net investment income tax. That is a floor: the IRS does not let a foreign tax credit reduce the 3.8%, so where the local rate is above 20% the US bill can run up to 3.8 points higher.
Which places need the least?
At the default settings, Bali, Buenos Aires, Prague, Athens and Phuket.
A year that costs $150K at New York prices needs $1.68M in Bali and $4.61M in New York, at a 4% withdrawal rate with half of each sale counted as gain.
Can I put this calculator on my own site?
Yes, for free.
Copy 1 line of HTML from the free widgets page, patrician.ch/widgets/. The widget runs all 100 places on the reader's own settings and carries the Patrician.ch credit. A firm can run it under its own brand with Patrician.ch for Firms.
Is this financial advice?
No. It is arithmetic on published rates and on the settings you choose.
Published comparison research, not tax, legal or financial advice. Wealth tax, tax on dividends and interest, health cover and the cost of a residence permit are not in the figure.
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