What does a FIRE calculator actually assume?
Every FIRE calculator makes at least eight assumptions on your behalf — and the three that move the answer most are that returns arrive smoothly, that your spending stays flat for decades, and that a fixed withdrawal rate is safe. None of them is unreasonable. The problem is that most tools do not tell you which ones they made.
A calculator that shows you a single confident date is not more accurate than one that shows a range. It is less honest about the same uncertainty.
The eight assumptions
1. That one number can stand for market returns
Almost every calculator asks for "expected return" and then applies it to every year. Real markets do not deliver 7% annually; they deliver −18%, +28%, +4%, and average out to something like it. For the accumulation phase this simplification is fairly harmless — the average is roughly what you get. For the withdrawal phase it is not, and that is the subject of assumption 2.
2. That the order of returns doesn't matter
It matters enormously once you are withdrawing. Two retirements with identical average returns end very differently depending on whether the bad years come first or last, because selling into a fall permanently removes shares that would have recovered. This is sequence-of-returns risk, and a single-line projection cannot show it — by construction, it has no ordering to get wrong.
This is the single biggest difference between calculator types. A deterministic projection answers "when do I reach the number?". A simulation answers "how often does the money last?" — and those are different questions with different answers. The difference between the two simulation methods is worth understanding before you trust either.
3. That inflation is one number, applied to everything
Your plan is usually stated in today's money, which means every figure is quietly deflated by one assumed rate. In reality the things retirees buy — healthcare in particular — have often risen faster than the general index. A single inflation input cannot express that, and a plan that is comfortable at 2.5% can be tight at 3.5%.
Note also the arithmetic most tools get quietly right and most people get wrong: real return is not nominal minus inflation. They compound.
real return = (1 + nominal) ÷ (1 + inflation) − 1 7% nominal, 3% inflation → (1.07 ÷ 1.03) − 1 ≈ 3.88%, not 4%
4. That your spending is flat, forever
Most calculators take one retirement spending figure and hold it constant in real terms for thirty or forty years. Actual retirement spending tends to be lumpy: higher in early active years, lower in the middle, and potentially much higher at the end if care is needed. A flat line is a reasonable planning midpoint and a poor description of any real life.
5. That the withdrawal rate is a rule
The 4% figure comes from research on historical US portfolio survival — William Bengen's 1994 analysis and the 1998 Trinity Study — and it assumed a retirement of about thirty years, a US stock-and-bond portfolio, and spending adjusted only for inflation. It is a convention, and it is what turns your spending into a target:
FIRE number = annual spending ÷ withdrawal rate $40,000 ÷ 0.04 = $1,000,000 $40,000 ÷ 0.035 ≈ $1,143,000 (a 14% higher target)
If a calculator does not let you change this number, it has made a significant decision for you.
6. That taxes are either simple or somebody else's problem
Many calculators ignore tax entirely; others apply one effective rate. Neither matches a real withdrawal, where what you pay depends on which account the money comes from, in what order, and under which country's rules. A million in a taxable brokerage account does not fund the same lifestyle as a million in a tax-sheltered one.
7. That your income rises smoothly
Career-growth inputs are typically a single percentage applied every year to retirement. Real careers have promotions, plateaus, breaks and changes of direction. This assumption usually flatters the plan, because a smooth line never has a redundancy in it.
8. That you die on schedule
A horizon has to end somewhere, so tools pick a life expectancy — often 90 or 95. Living longer than the assumption is, financially, the risk that all the others compound into. Extending the horizon by ten years can turn a plan that "works" into one that does not.
How to check any calculator in two minutes
- Can you change the withdrawal rate? If not, the target is not yours.
- Does it distinguish real from nominal returns? If it never mentions inflation, the number is in future money and means less than it appears to.
- Does it show a range or a single date? A single date implies a certainty no method can supply.
- Does it say what its market data actually is? "Simulation" covers several very different things.
- Does it document its formulas? If you cannot see the arithmetic, you cannot check the assumptions above at all.
Ember's own answers, for the record
It would be poor form to publish this list without answering it. Ember assumes a constant real return in the deterministic projection; models order-of-returns risk separately through simulation; uses one inflation rate; holds retirement spending flat unless you add life events; lets you set the withdrawal rate; models tax as an optional simplified effective rate rather than a full return; applies a constant real income-growth rate up to a career peak you choose; and ends at a life expectancy you set.
One more, stated plainly because it is the kind of thing tools usually bury: Ember's historical mode replays an illustrative return series, not real market data. It is useful for seeing how ordering changes an outcome; it is not evidence about what US markets did. Every formula and limitation is written out on the methodology page.
See the assumptions, then change them
Ember shows every input rather than hiding defaults, and tells you when a result depends on one.
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