Data Sources
Our international FIRE number calculations use a single authoritative data source to ensure consistent methodology across all countries:
World Bank Price Level Ratio (2024)
We use the World Bank's Price Level Ratio indicator (PA.NUS.PPPC.RF), which provides a consistent methodology across 181 countries worldwide. This ensures all countries are measured using the same basket and approach.
- Source: World Bank Price Level Ratio
- Data year: 2024 (extrapolated from ICP 2021)
- Coverage: 181 countries
- Update frequency: Annual extrapolation
About Data Extrapolation
The World Bank conducts comprehensive price surveys (ICP) every 6 years. Between surveys, they extrapolate price levels using GDP deflators and consumer price indices. The 2024 values are extrapolated from the 2021 ICP benchmark. This provides more current estimates while maintaining methodological consistency across all countries.
Price Level Index (PLI) Explained
The PLI compares the cost of a standardized basket of goods and services between countries. We normalize the data so that the United States = 100:
- PLI = 50: Country is 50% as expensive as the US
- PLI = 100: Same cost as the US (baseline)
- PLI = 150: Country is 50% more expensive than the US
Important: PLI Is Not "Expat Cost of Living"
The Price Level Index measures prices for a standardized basket of goods consumed by the general population - not specifically by expatriates or retirees. Actual costs for foreigners often differ because:
- Expats may pay premium prices for housing in desirable neighborhoods
- The basket excludes costs like international health insurance, visa fees, and flights home
- Preferences for imported goods, western-style amenities, or English-speaking services add costs
- Very low PLI countries (under 0.25) may have infrastructure or safety limitations
- High-income countries (Switzerland, Norway, etc.) may appear closer to US costs than expat experience suggests - local consumption patterns and strong currencies can narrow the PLI gap while actual expat costs remain high
For destination research, consider cross-referencing with expat-focused sources like Numbeo or Expatistan.
US Baseline Expenses
We use a baseline annual expense of $60,000 for a US resident at the national average cost of living (PLI = 100). This figure represents comfortable single-adult spending including housing, food, transportation, healthcare, and discretionary expenses.
Note: The BLS Consumer Expenditure Survey reports median single-person household spending of approximately $42,000-$47,000. We use $60,000 to reflect the FIRE community's typical target of "comfortable" rather than "minimum" living - roughly the 65th-70th percentile of single-person spending.
Calculation Method
Each country's FIRE number is calculated in two steps:
Step 1: Adjust Annual Expenses
Annual Expenses = US Baseline × (PLI / 100)
Example: Portugal has a PLI of 65.9
Annual Expenses = $60,000 × (65.9 / 100) = $39,540
Step 2: Apply Withdrawal Rate
FIRE Number = Annual Expenses × (100 / Withdrawal Rate)
Using 4% withdrawal rate (multiply by 25):
FIRE Number = $39,540 × 25 = $988,500
Why US = 100?
We display all PLI values relative to the US baseline because most of our readers are American. This makes it easy to compare: "Thailand costs X% of what I'd spend in the US." The World Bank data is already indexed to US = 1.0, which we display as a percentage.
FIRE Types Explained
We calculate three variations of FIRE numbers to match different lifestyle goals:
Lean FIRE
For those comfortable with a frugal lifestyle. In low-cost countries, lean FIRE can mean living on under $1,000/month - achievable with a surprisingly small portfolio.
Lean FIRE = (Baseline × PLI/100 × 0.8) × 25 Regular FIRE
The standard FIRE target. Maintains a comfortable middle-class lifestyle equivalent to what $60,000/year buys in the US. The primary figure shown throughout the index.
Regular FIRE = (Baseline × PLI/100) × 25 Fat FIRE
For those wanting a more luxurious retirement. In many countries, fat FIRE enables a lifestyle that would be considered wealthy by local standards.
Fat FIRE = (Baseline × PLI/100 × 1.5) × 33 Assumptions
These calculations make several assumptions that may not apply to everyone:
- 4% Safe Withdrawal Rate: Based on the Trinity Study using US market data. Some argue this may be too aggressive for portfolios invested in other markets or for very long retirements.
- US Investment Returns: The 4% rule assumes investments are primarily in US markets. If a portfolio is in a different country's market, historical returns may differ.
- Single Adult Household: The baseline assumes one person. Couples may spend less per person due to shared housing costs.
- Similar Lifestyle: This assumes a similar lifestyle would be maintained relative to local standards. The basket of goods measured by PLI may not match actual spending patterns.
- No Major Healthcare Expenses: Healthcare costs and quality vary dramatically between countries. Some destinations have excellent affordable care, others may require expensive private insurance.
- USD-Based Portfolio: Numbers are in USD. Currency fluctuations can significantly affect purchasing power if living in a country with a different currency.
Limitations
Keep these limitations in mind when using our FIRE numbers:
Country-Level Averages
Large countries have significant variation. Living in Tokyo costs far more than rural Japan, even though both share the same PLI.
No Tax Adjustments
PLI data doesn't account for income taxes, VAT, or tax treaties. Some countries have territorial taxation favorable to retirees; others tax worldwide income.
Expat vs. Local Prices
Foreigners often pay more than locals for housing, services, and certain goods. The PLI reflects average prices, not necessarily what an expat would pay.
Quality Differences
A "similar" basket of goods may represent different quality levels. Healthcare, housing standards, and service quality vary even at similar price points.
Data Lag
ICP data is released with a multi-year lag. Current prices may differ, especially in countries with high inflation or rapid development.
Currency Risk
These are point-in-time USD calculations. If the local currency strengthens against USD, effective costs increase.
International FIRE Considerations
Retiring abroad involves factors beyond cost of living. These don't affect our calculations but are essential for planning:
Visa & Residency
Each country has different requirements for long-term stays. Options include retirement visas, digital nomad visas, investor visas, or residency by investment programs. Requirements range from proving $1,000/month income to investing $500,000+.
Healthcare Access
Some countries offer high-quality public healthcare to residents. Others require private insurance. Pre-existing conditions may affect options. Research specific destinations carefully.
Tax Obligations
US citizens owe US taxes regardless of residence (with foreign earned income exclusions). Other nationalities may owe taxes only in their country of residence. Tax treaties affect how investment income is treated.
Banking & Finance
Opening local bank accounts, transferring money internationally, and accessing investments may be more complex abroad. Some brokerages don't serve non-US residents.
Update Schedule
We update our FIRE number calculations when the World Bank releases new price level data. The underlying ICP survey is conducted every 6 years, with annual extrapolations published in between.