How much money do you need to never work again? The exact calculation according to your lifestyle

In our example, this gives 750,000 euros of capital to aim for to have 2 500 euros monthly with the 4% rule. But this rule was designed for the American market, with its own taxation and returns. So what should you do when you live in France and no longer want to work to live off your investments? What figure should you aim for? According to French experts in financial independence, the figure of 4% deserves to be revised… downwards.

Aim for a more prudent withdrawal rate in France

Maxime Roussigné, financial investment advisor and moderator of the r/vosfinances forum on Reddit, prefers a much more conservative hypothesis. “The basic rule is the 4% rule, but taking into account French taxation and the generally higher risk aversion of the French, I prefer to base myself on a more conservative hypothesiswith withdrawals of around 2% of net assets »he explains.

A coherent reasoning for someone who aims financial independence at age 35 or 40with a withdrawal phase which can ultimately exceed 50 years depending on its lifespan. Over all these years, things can happen: “The 2% rate survives the crises of 1929, the world wars and the internet bubble”specifies the expert. And since we never know its exact lifespan, it is better not to draw too much on capital, nor invest it in products that are too risky. By living directly from this capital, we cannot afford to see it melt during a market decline. And less risk also means lower returns.

This rate of 2%, however, remains very cautious: it should be noted that simulators and other specialized communities tend to agree on a withdrawal rate of 3 to 3.5%, to take into account the single flat-rate deduction of 31.4% on capital gains and a withdrawal phase which remains, in the majority of cases, less than 50 years. Finally, as our expert summarizes, no choice is “the best”, it depends above all on our age at the time of departure: “The longer the withdrawal phase, the more the withdrawal rate should be conservative in order to limit the risk of exhausting your capital before the end of your life”.

So, to aim a capital income of 2,500 euros net per monthor 30,000 euros per year, the necessary savings vary greatly depending on the withdrawal rate used:

• If we take a withdrawal rate of 4% (American rule), it is 750,000 euros
• If we take a rate of 3.5%, that increases to 857,143 euros
• For 3%, you have to aim for one million euros
• And at 2%, it will be 1.5 million euros.

The PUMA tax, a trap for rentiers

Finally, Maxime Roussigné raises another point to justify the 2%: French taxation can be heavy for those who live solely on their capital. “Taxation which is sometimes very punitive in France, with potentially the Puma tax on top”. This tax applies at 6.5% to capital income that exceeds half of the annual Social Security ceiling, i.e. 24,030 euros in 2026. However, it does not apply if the annuitant has retained earned income exceeding 20% ​​of the same ceiling, or approximately 9,612 euros per year.