How much do you need to retire in 2021

Ah September, the month parents get some peace and quiet as the kids go back to school. Road are getting busy again. It’s also the month we celebrate our blogiversary (the 5th!). But it’s also the month that the government presents the new tax plans, so we can calculate our newly required FIRE number once again. So here it is, but then for you: how much do you need to retire in 2021 (in the Netherlands that is).

Early retirement in the Netherlands

Previous posts in this series on “How Much Do You Need To Become Financially Independent in the Netherlands” can be found here:

Similar to last years we will be looking purely at the “base case” of having €25.000 to spend each year (so after taxes!). Yes, we have not applied inflation for the past 5 years. Might need to update that next year, as the purchasing power of €25.000 surely is not what it used to be. Actually, you need ~€26.690 now to be able to buy the same things as 5 years ago.

As in previous years, we assume you are a couple for tax purposes. Having a (few) kid(s) does not change much on the tax side (except maybe some benefits, credits and deductions). It does affect your expenses obviously, but let’s assume you are creative enough to stick to €25.000 (corrected for benefits/credits if you will). We also assume you strive to organise your (working) life to have the lowest taxes possible.

How much do you need to retire in 2021

We will look at these 4 taxation scenarios to see how much money you would need to FIRE or become HOT in the Netherlands:

  1. All your income falls under Box 1:
    “HOT option” => Part-time work only to cover “the minimum you need”
    “FIRE option” => You have short-term rentals/Airbnb for your income and do some “work”
  2. All your income falls under Box 2:
    HOT/FIRE option => subject to your required amount of work (for example, if you just receive company dividends virtually without performing work, I would classify it as a “FIRE option”)
  3. All your income falls under Box 3:
    Full FIRE option => Investments/passive income only!
  4. Your net income has a 40 – 60 percentage split between income in Box 1 and Box 3 (HOT option)

Note, I also updated the original Box 3 post with the new 2021 tax numbers.

Thus, how much do you need to retire in 2021? Let’s look at the various scenarios!

Scenario Assumptions

We have assumed the following for each scenario:

Scenario 1 (minimal work hours option):

  • Taxation is based on 2021 rates, inclusive of ” algemene heffingskorting” (tax credits) and social premium deductions.
  • It assumes your income is from “work”, but this could also include income from short term Airbnb rentals for example.
  • It is assumed that the income is equally split between the two of you (to max out tax benefits).
  • No income from other benefits or government/private pension.
  • You both are younger than 67 years (otherwise different taxation rates apply!).
  • No special tax arrangements or benefits (e.g. no company car, you rent a house, no special life insurance or other policies, etc.), just to keep it simple.

Scenario 2 (company owner option):

  • Taxation is based on 2021 rates (26.90% “dividend tax”).
  • There is only income in Box 2 from special interests in a company (paid in dividends).
  • Inclusion of 2021 “algemene heffingskorting” for two adults (i.e. €2.837 per person in general tax reductions).

Scenario 3 (“traditional” FIRE option):

  • Taxation is based on 2021 rates.
  • Inclusion of 2021 “algemene heffingskorting” for two adults (i.e. €2.837 per person in general tax reductions).
  • Assumed net ROI of 3%, 4%, 7% and 10% (to show taxation effects).

Scenario 4 (“bit of both” option):

  • Taxation is based on 2021 rates (Box 1 & Box 3).
  • Total yearly net income of €10.000 from “work” (or other Box 1 income forms) and €15.000 from investments.
  • Inclusion of 2021 “algemene heffingskorting” for two adults (i.e. €2.837 per person in general tax reductions).
  • No income from benefits or pension.
  • You are younger than 67 years.
  • No special tax arrangements or benefits (e.g. no company car, you rent a house, no special life insurance or other policies, etc.). Again just to keep it simple.
  • Assumed net average ROI’s of 4% and 7% (to show taxation effects).
How much do you need to retire in 2021
How much do you need to retire in 2021 – The Results!

The Results

For more details on the taxation amounts, please see Box 1Box 2 and Box 3 (AND check the website of the “Belastingdienst” for the latest and greatest!).

Based on our assessments, you get the following taxation amounts and effective tax rates based on the above noted assumptions. The required amount of assets are based on the noted ROI’s (not to be confused with safe withdrawal rates!). Unless I screwed up somewhere…

How much do you need to retire in 2021 – Scenario Overview

Observations & Notes


Before diving into the observations and conclusion, one major comment. The noted net ROI’s are what your portfolio is actually making you (irrespective of what it consists of!). However, this does not leave room for inflation correction. If you want to take that into account, you will either need a larger portfolio, with corresponding higher tax burden and/or you need a higher ROI to compensate for inflation. For Dutch wealth tax purposes, a higher ROI is the best way to go (go figure!).

Another note here is not including the tax benefits one has with real estate. Property valuations are currently generally lower than market value and you can correct for “value in rented state“. Plus you can (still) deduct mortgages and loans to determine you actual wealth for tax purposes.

Final note, the asset amount is the amount of invested wealth you need. Your home is not included in this assessment (as it can be either be taxed in Box 1 or Box 3, but I have ignored this for now), nor are any valuable possessions (art, cars, etc.). So for these calculation purposes I assume you are renting!

The review

Based on the 2021 tax calculations the conclusions are pretty similar as with the 2020 assessment:

  • Scenario 1: If you are able to split income almost perfectly, your effective tax rate can be quite low. I mean 5.4%, hello! A HOT life might involve only working 1-2 days per week, sounds pretty good to me. But you will never FIRE in this scenario, albeit that might not matter to you.
  • Scenario 2: This option has not changed much over the years, tax burden is quite high in relative terms (26.9%). And this is on top of the corporate profit tax that is already paid within the company at 15% for 2021 (up to €245.000 profit).
  • Scenario 3: If you can consistently have your portfolio produce 10%, you can retire without paying taxes. Got to seriously love risks and/or leverage though!
  • Scenario 3A: Let’s assume you have some real estate and are able to generate 7% net cash-flow (that corrects for inflation), you only need to have a leveraged net wealth of about €360.000 to get around, that’s pretty good! Also, assuming the coming years provide a similar overall return, the stock market would work well too (i.e. the S&P500 return is about 7% after inflation over the last 30 years).
  • Scenario 3B: If you assume a net ROI of 4%, you could pay relatively little taxes and still enjoy freedom. You would still need to get around €660.000 in invested wealth though.
  • Scenario 3C: Yes, you can retire on a bond/green investment portfolio/very defensive portfolio, but man, do you need to build up a lot of wealth first.
  • Scenario 4A: Kind of a sweet spot for those who want to be HOT! Lowest taxes of all scenarios with a labour component at only about 4%! You need relatively little wealth with the opportunity for a good work/life balance! But, you do need your investments to consistently provide you with around 7% returns.
  • Scenario 4B: Not the greatest combo from a tax perspective. Might need to work on getting the wealth and return up so you can FIRE completely or get closer to a 4A scenario (and are able to spend some more).

Due to a drop in income taxes (box 1) and an increase in wealth taxes (Box 3), there are minor shifts in effective taxation and wealth required to retire in the Netherlands in 2021. But there are no major changes to the overall conclusion as previously shown in the 2019 and 2020 update posts.

Cheesy Numbers?

I have also recalculated our own new target number for FIRE, which dropped this year due to the lower taxation in Box 3. However, we won’t make this number public. That being said, we are also aiming for about €28.000-32.000 per year. We will likely have a tax combo between Box 1 and Box 3 (Barista FIRE here we come). However, we are still aiming for a full FI under Box 3 (with any Box 1 income as a buffer/safety margin).

That being said, the horror plans for 2022 seem to have disappeared for now. But that is likely more of a delay, than a cancellation. The government is still working on assessments on tax overhauls in the point of wealth taxation. Time will tell.

So how much do YOU need to retire in 2021? Have you calculated your new FIRE number yet?

P.s. I’ve updated the ETF REIT post with some fund options that trade in Euros. In case you are interested.


  1. Hi Team CF
    Very interesting post!
    I like that kind of stuff, calculations, tracking of numbers.
    FI is a moving number and as for my wife and me, we want to achieve it by the end of 2024. we currently spend around Swiss francs CHF 50ˋ000 (Family of four) annually, there are taxes etc. included. We hit our goal once we have at least CHF 1.25. Currently we have 600‘000 in cash and somewhat over 400ˋ000 in stocks. What we want is acquiring rental properties to generate additional passive income streams. Plus we want to boost stock exposure to have more dividend income so a bear market would be very welcome

    1. Nice, it’s looking pretty good for you in terms of how much you have and how much you still need. Agree that it’s a moving target. Same for us, depends heavily on if we find another home for us (or not, in that case we are already FIRE). Also taxes are a big unknown, as in inflation. Also now sure how expensive our kid is going to be, it has not been too bad so far. Lots to consider!
      Take care and good luck with the rental property search!

  2. Interesting article but more in the general sense since it’s tax related and these things vary from country to country. It gives a nice view on how changes in taxes can have a big or small impact on your FIRE target.

    1. Oh definitely, our FIRE number keeps changing due to yearly tax updates. It can also really screw you over during a major overhaul, which we originally were promised in 2022. Fortunately, that’s cancelled (for now).

  3. Nice number crunching, cheesy.
    Actually, my FI number hasn’t changed. Small changes like this don’t affect my number that much. The horror scenario 2022 that you mentioned would have, of course.
    I’m more concerned about the EU wanting to directly tax it’s citizens. This will complicate matters, without knowing what that looks like. More tax dials to turn is almost never a good idea…
    Are you sure about your house being put in box 2? I think you mean box 3.

    1. Typo fixed, thanks for bringing that to my attention!
      Yeah, minor changes for us too with the total FIRE number, not looking forward taxation regime either.

  4. It makes me sad that you say the scrapped proposal for 2022 is only delayed 🙁 :).

    I’m afraid you’re right.

    Due to WOZ value inefficiencies, value-in-rented state ‘discount’, some interest-only mortgage debt on a primary residence and the general tax credit, it’s possible to have a million EUR in actual wealth and pay little to no wealth tax.

    1. It’s unknown what will happen with the 2022 Box 3 tax proposal, although in it’s current form it has died indeed. As far as I understand, the government is working on a far larger tax overall and will incorporate changes for Box 3. In the mean time, let’s just enjoy the favourable Box 3 taxation 🙂

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