Why 1 Million Euro Is Not Enough to Reach FIRE (Financial Independence, Retire Early) — At Least Not Always

drfabiogiacometti
Jul 2
2 min read

Many participants in my course believe that €1,000,000 is a magic number for achieving FIRE. It’s not, and they got shocked!!!!

Here is why:

1. FIRE ≠ “I’m Rich, I Can Stop Thinking”

FIRE doesn’t mean you stop managing your money. It means your investments generate enough passive income to cover your living expenses forever, without working.

So the real question isn’t “Do I have €1M?” It's: “Can €1M reliably generate enough annual income to support my lifestyle, adjusted for inflation, for the next 30–50 years?”

2. Withdrawal Rates: The 4% Rule Isn’t Bulletproof

Classic 4% Rule says you can safely withdraw 4% of your portfolio annually. That’s €40,000/year.

But:

That rule is based on US data, not European markets.
It assumes a 30-year retirement, not 50+.
With today's low returns and high inflation, many experts now suggest 3% or even 2.5% as safer.

At 3%, you get €30,000/year. At 2.5%, only €25,000/year.

Can you live on €2,000/month or less — for decades — with rising healthcare costs, taxes, and emergencies?

3. Inflation Eats You Alive

Even if you could live on €30,000/year today, that’s not going to cut it in 20 or 30 years.

With just 2.5% annual inflation, here’s what happens:

In 20 years: your €30,000 has the buying power of ~€18,600 today
In 30 years: ~€14,400
In 40 years: ~€11,200

You’re not getting richer while in FIRE. You’re getting squeezed slowly.

4. Sequence of Returns Risk

If you retire at the wrong time — say, just before a market crash — your portfolio may never recover.

Let’s say you retire in 2025, invest 70% in stocks, and the market drops 30% in year 1. You still withdraw €30,000. Now you’ve eaten both market losses and your own capital. Compound damage.

5. Taxes, Healthcare, Surprises

You’ll owe taxes on capital gains and dividends.
Healthcare isn’t free, especially if you opt for private care.
Property taxes, rent hikes, insurance, and family support, among other expenses, all add up over time.
You may want to travel, help your kids, move — life changes.

When Could €1 Million Be Enough?

If you live in a low-cost country (e.g., rural Portugal, Thailand)
If you own your home outright and have minimal expenses
If you’re extremely frugal, minimalist, and flexible
If you’re pursuing Barista FIRE (working part-time)
If you’re retiring later (age 60+, with pension or healthcare coverage)

The Takeaway

€1,000,000 is a great start — but it's not a guarantee. Without proper planning, inflation protection, and realistic expectations, you risk running out of money long before you run out of life.

During our course, you’ll learn how to build yourself a custom FIRE projection based on:

Your age and expected retirement age
Your current expenses
Inflation assumptions
Investment return scenarios
Tax impact
Healthcare costs and contingency buffers

Disclaimer

The content of this article is intended for educational purposes only and does not constitute personalised financial advice. The strategies discussed are most effective when understood within the broader context of the investment principles covered in my advisory course. If you haven’t attended the course, I strongly recommend doing so before applying any of the ideas presented here. Click here to know more: www.bankingadvisory.hu