Your portfolio works. You live on what it pays. The principal stays intact, untouched, forever. This calculator finds your exact Dividend Independence Number and how long until you reach it — with tax, growth, dividend cuts and DRIP all modelled.
Most FIRE calculations assume you sell a small percentage of your portfolio each year to live on — this is called drawdown. Dividend Independence is different: you live entirely on the dividends your portfolio pays out, and the portfolio itself stays untouched.
Why choose this approach? Your wealth doesn't decrease over time. Your heirs receive the full portfolio. In a market crash, your dividend income may stay stable even while share prices fall. Psychologically, it removes the anxiety of watching your portfolio shrink.
The trade-off: You need a larger portfolio than standard FIRE. If dividends yield 4% after tax, you need 25× your annual expenses — same as standard FIRE. At a 3% yield, you need 33× expenses. The higher the yield, the less capital required — but higher-yield investments often grow more slowly.
DRIP (Dividend Reinvestment Plan) means automatically reinvesting dividends during the accumulation phase instead of spending them. This accelerates compounding dramatically.