🔥FIRE Calculator

Leveraging RRSPs and TFSAs for FIRE

In Canada, the path to FIRE is built on tax-advantaged accounts. A Registered Retirement Savings Plan (RRSP) provides immediate tax deductions, which can be reinvested to accelerate your timeline. Meanwhile, the Tax-Free Savings Account (TFSA) allows for tax-free withdrawals in retirement—crucial for managing your 'taxable income' during the early retirement phase. The CRA sets annual contribution limits that every FIRE aspirant must maximize to hit their goal faster.

Canada Revenue Agency (CRA)

Factoring in CPP and OAS Milestones

Even for those retiring early, government benefits like the Canada Pension Plan (CPP) and Old Age Security (OAS) play a role. While you can't access OAS until 65, you can start CPP at 60 (with a reduction). Statistics Canada reports that these benefits provide a vital safety net. Our calculator helps you determine how much of your FIRE bridge fund you need to cover the gap before these government 'pensions' kick in.

Employment and Social Development Canada

Healthcare Costs in Canadian Early Retirement

While Canada has public healthcare, 'early retirees' no longer have employer-sponsored extended health benefits for items like dental, vision, and prescriptions. According to the Canadian Institute for Health Information (CIHI), these out-of-pocket costs can be significant. When calculating your FIRE number, it's vital to include a budget for private health insurance to protect your portfolio from medical emergencies.

Canadian Institute for Health Information

What is the '4% Rule' in Canada?

The 4% rule suggests you can safely withdraw 4% of your initial portfolio value (adjusted for inflation) annually. In Canada, many FIRE advocates (like those in the 'Lean FIRE' community) suggest a more conservative 3% to 3.5% withdrawal rate due to Canada's unique tax treatment of dividends and capital gains, and the potential for higher long-term inflation compared to historical US data.

How does the 'Coast FIRE' strategy work in Canada?

Coast FIRE is when you have enough in your RRSP and TFSA that, without any further contributions, the portfolio will grow to support you at traditional retirement age (e.g., 65). This allows you to work a lower-stress 'Barista FIRE' job in Canada just to cover your current living expenses. This is a popular path for Canadians in high-burnout fields like tech or medicine.

Are capital gains taxed differently for early retirees?

Yes. If your only income in early retirement is from selling assets in a non-registered account, only 50% of the capital gain is taxable. In Canada, if your total income is low, your effective tax rate could be near zero. This tool helps you simulate different withdrawal sequences (TFSA vs. RRSP vs. Non-Registered) to minimize your payments to the CRA.

What is FIRE?

FIRE (Financial Independence, Retire Early) is a movement focused on extreme savings and investment to retire much earlier than the traditional age of 65. The goal is to accumulate enough that investment returns cover your expenses indefinitely.

The 4% Rule (25x Rule)

Based on the Trinity Study, the 4% rule suggests you can withdraw 4% of your portfolio annually with low risk of running out of money over 30+ years. This means you need 25x your annual expenses (1 ÷ 0.04 = 25).

Lean FIRE

Retirement on a tight budget, typically with expenses below the national average. Allows earlier retirement but with less room for luxuries or emergencies. Typically 50-70% of current expenses.

Fat FIRE

Retirement with a generous budget that maintains or exceeds your current lifestyle. Takes longer to accumulate but provides significant security and flexibility. Typically 150-200% of current expenses.

Coast FIRE

You have enough invested that compound growth alone will fund your traditional retirement at 65. You can "coast" - work just to cover current expenses without needing to save more.

Barista FIRE

Similar to Coast FIRE, but you continue working part-time (like as a barista) to cover expenses and potentially health benefits, while your investments grow.

Does the 4% rule still work?

The original study was based on historical US data. Many experts now recommend 3-3.5% for longer retirements (50+ years) or to be more conservative. The rule remains a good starting point.

What about healthcare and insurance?

This is one of the biggest challenges for early retirement. Consider: private health insurance, Barista FIRE for employer benefits, or moving to a country with public healthcare. Include healthcare costs in your retirement expenses.

What do I do after reaching FIRE?

Many people continue working on passion projects, volunteering, traveling, or spend more time with family. Financial independence is about having the choice - not necessarily about stopping work.