What is FIRE?
FIRE stands for Financial Independence, Retire Early. It's the idea that once your investment corpus can sustainably cover your annual expenses, you no longer need active income. Work becomes optional. Retire-early is the dramatic framing — the real value is optionality.
The FIRE number is the corpus where that holds true.
How this calculator works
- Project your expenses forward to retirement year using the inflation rate you set. Money you spend at 30 costs more at 55.
- Divide by a safe withdrawal rate (SWR). We use 3.5% for the Indian context, more conservative than the US 4% rule. Indian inflation is higher (6–7% long-run vs. 2–3% in the US) and equity volatility is higher, so 4% can exhaust a corpus in a bad sequence.
- Subtract the future value of your current corpus growing at your expected return over the same horizon.
- Compute the monthly SIP needed to close the remaining gap over your accumulation horizon.
The formula
Annual expenses at retirement = Current monthly expenses × 12 × (1 + inflation) ^ years_to_retire
FIRE number = Annual expenses at retirement / (SWR / 100)
Future value of corpus = Current corpus × (1 + return) ^ years_to_retire
Gap = FIRE number − Future value of corpus
Required monthly SIP = Gap / [((1 + r)^n − 1) / r × (1 + r)]
Where r is the effective monthly rate derived from the annual return and n is the number of months to retirement.
Why 3.5% SWR for India
The US "4% rule" comes from the Trinity Study, based on US market history 1926–1995. Key differences in India:
- Higher inflation. India averages ~6% long-run CPI vs. the US ~2.5%. A retiree's real-purchasing-power drawdown is harsher.
- Fatter equity tails. Nifty drawdowns of 30–50% in 2008, 2020, 2025 aren't rare. Sequence-of-returns risk in year 1–5 of retirement can destroy a corpus.
- Longer remaining life at retirement. Indian life expectancy continues to rise; corpus needs to last 30+ years.
Academic back-tests on Indian markets generally suggest a 3.0–3.5% SWR is safer. Use 3% if you're very conservative or retiring very young.
Honest caveats
- Returns are assumed constant. Real markets are lumpy. A bad first 5 years of retirement matters more than the average return over 30 years.
- No healthcare curve. Medical costs inflate at ~10%, not 6%. If you're retiring without employer health cover, budget separately.
- No part-time income. If you plan to consult, teach, or do semi-retirement income, your required corpus drops meaningfully.
- Tax drag isn't modelled. LTCG on equity is 12.5%. Debt/SWP gains are slab-rate. Effective post-tax return is 10–20% lower than nominal.
The calculator gives you the order of magnitude. A SEBI-registered adviser can tune it to your actual cash flow.
How to use the result
- FIRE number: the target. Once your total investment corpus (in retirement year rupees) crosses this, you're financially independent.
- Required monthly SIP: what you need to automate, starting today, to get there by your target age.
- If the SIP is too high for your current income: either extend the retirement age by 3–5 years, reduce target monthly expenses, or increase expected return (with matching risk tolerance).
Small input changes have big effects. Try increasing expected return from 10% to 12% — the required SIP drops dramatically. That's the power of compounding over long horizons.
Frequently asked questions
Is FIRE realistic for middle-class Indians? Yes, but it takes discipline. Saving 40%+ of take-home from age 25–30 can make FIRE possible by age 50. Below 25% savings rate, FIRE by 50 is very hard without major windfalls.
What about Lean FIRE / Fat FIRE / Coast FIRE? We deliberately simplified. Lean = smaller corpus, tighter expenses. Fat = generous. Coast = save hard early, then stop adding and let compounding finish. All boil down to different expense assumptions. Adjust the "monthly expenses" input to model each.
Should I include my home in the corpus? No — your primary residence isn't a liquid investment. A second home for rental income can be included at its market value minus outstanding mortgage.
What return rate should I use? For Indian equity-heavy portfolios over 20+ years, 10–12% nominal has been historical. For balanced funds, 8–9%. For debt-only, 6–7%. Be conservative — underestimating return is cheaper than overestimating.
Run the numbers above. Then join the NYVO waitlist to get the full family-FIRE planner in our app.
