Introduction: What Is Your FIRE Number?
How much money do you need to stop working forever? is one of the most searched questions in personal finance. Your FIRE number—or financial independence corpus—is the amount of savings and investments required to retire with confidence, sustainably funding your life without drawing from earned income. In this guide, we’ll walk through proven formulas, real-life case studies in both ₹ and USD, and actionable steps to get your number.
1. Understanding the Core Rules: 25× or 30× Your Annual Expenses
- The 4% Rule: Based on the Trinity Study, this rule suggests you can withdraw 4% of your retirement portfolio in the first year and adjust for inflation thereafter. This gives a 95–98% chance that your money will last for at least 30 years.
- 25× Formula: Your corpus = Annual Expenses × 25. Ideal for retirement within traditional age ranges.
- Conservative Approach: For early retirees planning 40–60 years horizon, use 3.25–3.5% withdrawal rates, leading to 25–30× multipliers.
Example (USD):
- $60k/year → Corpus:
- At 4% = $1.5M (× 25)
- At 3.5% = $1.71M (× 28)
- At 3.25% = $1.85M (× 30)
Example (India, INR):
- ₹12 lakh/year → Corpus:
- ×25 = ₹3 crore
- ×30 = ₹3.6 crore
2. Deep Dive: Key Variables That Shape Your FIRE Number
Inflation & Real-Returns
- India: inflation ~6–7% per year
- US/global: ~2–3% per year
Make sure your FIRE corpus accounts for inflation and rising living costs over a 30–40-year retirement horizon.
Investment Returns
- Pre-retirement: equity-heavy portfolios may earn 10–12%
- Post-retirement: shift to conservative allocation (debt, bonds) yield ~8–10%
Life Expectancy
Factor in longevity—if retiring at 55 and expecting to live until 90, plan for at least 35 years of withdrawals.
Special Expenses
Include one‑offs like children’s education, health emergencies, weddings, travel or family support. Add these into your “bucket hole” gap planning.
3. FIRE Types: Lean, Fat, Coast & Barista Variants
- Lean FIRE: Minimalist lifestyle, low annual spend, smaller corpus (e.g. ₹ 2 crore).
- Fat FIRE: Higher lifestyle spending, possibly ₹ 3–4 crore (or higher, in USD terms).
- Coast FIRE: You save until your invested assets alone will grow to your retirement corpus someday; then work optional.
- Barista FIRE: Early retirement but with income from side gigs or part-time work to reduce withdrawals.
4. Step‑by‑Step Calculation Framework
- Estimate current or projected annual expenses (₹ or $).
- Choose a safe withdrawal rate—standard (4%) or conservative (3.25–3.5%).
- Multiply: Annual Spend × Multiplier = FIRE Corpus.
- Run projections adjusting for inflation and market returns.
- Add buffer for emergency funds (6–12 months).
- Schedule periodic review: market shifts, lifestyle changes, health, inflation.
- Add possible passive income sources (pensions, rentals, dividends) to offset the corpus needed.
5. FAQ Section (Target “featured snippet” queries)
- Q: What is the 4% rule in retirement planning?
- A: The 4% rule says you can safely withdraw 4% of your initial retirement portfolio in year one (adjusted for inflation annually) and expect your savings to last ~30 years.
- Q: Is 25× annual expenses enough?
- A: For traditional retirement horizons (~30 years), 25× is considered safe. For early retirement or longer durations, consider 28–30× to buffer inflation and longevity.
- Q: How much money do I need to retire in India?
- A: Multiply your planned annual spend by 25–30. E.g. ₹6 lakh/year ×25 = ₹1.5 crore, ×30 = ₹1.8 crore.
- Q: Can passive income reduce my corpus?
- A: Yes—income from pensions, rental property, dividends or part-time work lowers the withdrawals you need from invested capital, reducing your FIRE number.
