The exit

The boss level is a piece of paper#

You know your gap. You fixed the leaks. The machine runs, and you’re working on your income. What’s missing is the finish line.

This level gives you a number and a plan that fits on one page. Governments need thousands of pages for their pension plans, and you’ve seen how those are going.

Your FI number#

FI stands for financial independence: the point where your investments, together with whatever pension your country ends up paying you, cover your spending. From there on you work because you want to. Or you don’t. Your call.

The quick formula: FI number = annual gap × 25.

Guess first

You want out before the state pension starts, and you spend €2,400 a month. How big does the pot have to be by the 25× rule?

Show me

Want to stop depending on a salary before the state pension starts? Then the gap for those years is your full spending. At €2,400 a month that’s €28,800 a year, and the number becomes €720,000. Early exits are expensive. Once the state pension starts, the gap shrinks again.

When that is depends on where you paid in. For somebody who starts working today, the OECD expects a normal pension age of 65 in Austria and Spain, 67 in Germany, 70 in Italy and 74 in Denmark. Several countries tie the age to life expectancy, so the finish line moves while you’re running.

Where the 25 comes from#

Multiplying by 25 is the same as withdrawing 4% in the first year.

The 4% rule goes back to the US financial planner William Bengen. In 1994 he tested withdrawal rates on US market data from 1926 to 1992. His portfolio held 50% US large-company shares and 50% medium-term US government bonds. He withdrew a fixed share in year one and raised the amount with inflation every year after. An initial rate of 4.0% was the highest that lasted at least 30 years in every period he tested.

Where the rule breaks#

The rule is useful. It’s not a law of nature, whatever the internet tells you.

• One country, one period. The data is from the United States, 1926 to 1992. Other countries and other decades can give different results.
• 30 years. If you stop at 50, you may need 40 or 45 years.
• Costs and tax. You pay fund costs and tax on withdrawals. They come out of your 4%. How much tax depends on the country you live in when you withdraw, which may not be the one you live in now.
• The past. Historical returns are not promises.

So I’d treat 4% as the optimistic end. With a withdrawal rate of 3.5% the multiplier is about 29, with 3% it’s about 33. For the €13,200 gap that means roughly €377,000 or €440,000 instead of €330,000. Annoying? Yes. Still cheaper than outliving your money.

The longer test for European investors is in how much you need to retire.

Withdrawal phase basics#

Saving is the easy half. Spending down is harder, because mistakes are tougher to repair.

The order of returns matters. A crash in the first years of withdrawal hurts more than the same crash later, because you sell units at low prices and they’re gone when the recovery comes.

Three simple defences:

1. A cash buffer. Keep one to three years of withdrawals in the safe part, so you don’t have to sell shares in a crash.
2. Flexibility. Skip the inflation raise or cut withdrawals in bad years. Small cuts early have a large effect.
3. Other income. The state pension, a company pension or part-time work reduce what the portfolio has to deliver.

And here the state pension gets to be useful, in whatever size it survives the next reforms. It pays for life, however long that turns out to be, and no fund can promise you that. As a bonus underneath your own plan, it makes that plan a lot more robust. As the plan itself, you know the bug report.

A pot, a monthly withdrawal, a return after inflation. Play with it.

You can test how long a portfolio lasts at different withdrawal amounts with the withdrawal calculator.

Your plan on one page#

Open a document. Write five headings and fill them in.

1. Target. My FI number in today’s money, and the year I want to reach it.
2. Monthly amount. What I invest each month, and how I raise it after each pay rise.
3. Allocation. My split between equities and the safe part, and the products I use.
4. Crash rules. The four sentences from level 5.
5. Review date. One fixed day a year for rebalancing, updating the numbers and checking the target.

Add today’s date and sign it. Sounds silly. Works anyway, because in a crash you argue with your own signature instead of a headline.

What happens after level 7#

You now have what most people never write down: a gap, a number, a machine and rules. No ministry built it, and no election can cancel it.

From here it’s repetition. The savings plan runs, you review once a year, and you keep working on your income. Most months, nothing happens. That’s the point.

This course is education, not investment, tax or legal advice. For decisions about your own situation, talk to a qualified adviser.

You finished Plan B. The tools stay free, and the start page shows where to go deeper.

Mission

• Work out your FI number with your own annual gap, at 4% and at 3.5%
• Run the FIRE calculator with your current savings and monthly amount and note the year it shows
• Write your one-page plan with the five headings and save it. One page, not a novel
• Put the review date in your calendar as a yearly repeating event

Quiz · 3 questions

Q1 Your annual gap is €12,000. What is your FI number with the 25× rule?

€120,000€300,000€480,000

Q2 Which limit of the 4% rule matters most if you want to stop working at 50?

It only works for dividendsIt assumes zero inflation. Not even the ECB promises thatIt was tested for 30 years, and you may need 40 or more

Q3 Why is a crash at the start of the withdrawal phase more dangerous than one later?

You sell units at low prices, and they are missing when markets recoverTaxes are higher in the first yearsThe state cuts pensions during crashes

Sources#

• Financial Planning Association, Journal of Financial Planning – Revisiting William Bengen’s SAFEMAX (summary of the 1994 study: US data 1926–92, 50/50 portfolio, 30 years, 4.0%)
• OECD – Pensions at a Glance 2025: future normal retirement ages (Table 4.1)

level 7

Done reading?

Tick the mission, answer the quiz, then claim your XP. Or just claim it, I’m not your teacher.

Complete level · +300 XP Back to the map

Education, not advice. I don’t know your situation, and past returns promise nothing. Check my numbers, then make your own call. You’re a grown-up.