F.I.R.E Calculator

What is FIRE and Why it Matters?

FIRE stands for Financial Independence, Retire Early - a global movement now gaining traction in India.

Whether you're dreaming of early retirement in India or just want the freedom to work on your terms, knowing your FIRE number in India helps you get there with clarity.

What is a FIRE Calculator?

A FIRE (Financial Independence, Retire Early) calculator is a simple tool that helps you figure out how much money you need to save to retire early and live comfortably without worrying about money. FIRE is all about achieving financial independence so you can retire early if you want to, pursue your passions, or simply have more freedom in life.

Parameters Required for FIRE Calculator

• Monthly Household Expenses: This is how much money you spend each month combined on things like rent, groceries, bills, entertainment, and other essentials.
• Current Age:Your current age helps the calculator understand how much time you have before you want to retire.
• Retirement Age: This is the age at which you want to stop working and enjoy your retirement.
• Life Expectancy: This is how long you expect to live. While it's hard to predict, using an average life expectancy can give you a good starting point.
• Inflation Rate: Inflation affects how much you’ll spend in the future. In retirement planning in India, accounting for an average inflation rate of 6–7% helps you stay realistic. That ₹50,000/month today could be ₹1.5 lakh/month in 20 years.

How the FIRE Calculator Works

Once you enter your details, the calculator will show your FIRE Number - the total amount you need to save to achieve financial independence by your chosen retirement age.

Once the calculator shows your FIRE Number, we have this part to will help you customize your FIRE journey based on where you are today. Here’s how it works:

• Corpus Created Till Now: This is the amount you've already saved or invested for retirement.
• Yearly Saving for Retirement: Here you enter how much you’re currently investing every year for your retirement.
• Yearly Increase in Investment Amount: If you plan to increase your investment each year (say by 5–10% as your income grows), you can input that here.
• Expected Rate of Return: Here, you can set the expected average return on your investments.

FIRE Example: Meet Rohan

Rohan, 30, wants to retire at 50. He’s wondering: “How much do I need to retire by 50 in India?” The calculator shows a realistic FIRE plan with all his inputs.

Step 1: Finding His FIRE Number

He enters the following in the first step of the FIRE Calculator:

• Monthly Household Expenses: ₹50,000
• Current Age: 30
• Retirement Age: 50
• Life Expectancy: 85
• Inflation Rate: 7%

The calculator shows that Rohan needs around ₹6.96 crore as his FIRE Number to retire at 50 and comfortably cover his future expenses till 85.

Step 2: Planning the Journey to FIRE

Now, Rohan moves to the second section to see how he can actually reach that number. He enters:

• Corpus Created Till Now: ₹10 lakhs
• Yearly Saving for Retirement: ₹3 lakhs
• Yearly Increase in Investment: 10%
• Expected Rate of Return: 12%

The calculator now shows:

Your target FIRE number - the amount you’ll need after 20 years to retire stress-free - is ₹6.96 crore, adjusted for inflation.

At your current pace (annual savings growing by 10% and returns of 12%), your investments are projected to grow to ₹4.65 crore.

That’s a shortfall of ₹2.31 crore.

To bridge this gap, you would need to earn an average return of 15.44% - or increase your savings further - to stay on track for your FIRE goal.

Why Knowing Your FIRE Number is Important?

Your FIRE number is the amount you need to generate enough passive income to cover your future expenses - and knowing this number helps you:

• Helps avoid over-saving or under-saving
• Reduces stress by giving a clear target
• Allows you to make smarter investment choices

Benefits of Using a FIRE Calculator

• Goal Clarity: It helps you set clear financial goals and gives you something concrete to work towards.
• Financial Planning: It allows you to create a solid financial plan that considers your lifestyle, expenses, and future needs.
• Risk Management: It helps you mitigate risks by ensuring you have enough savings to cover unexpected expenses or emergencies.
• Peace of Mind: Knowing you have a plan in place can reduce financial stress and give you peace of mind about your future.

Tips for Effective FIRE Planning

1. Start Early: The earlier you start saving and investing, the easier it is to reach your financial goals. Compound interest works wonders over time!
2. Adjust as Needed: Life can be unpredictable, so it's important to review and adjust your FIRE plan regularly based on changes in your income, expenses, and goals.
3. Emergency Fund: Don't forget to build an emergency fund separate from your retirement savings. This fund can cover unexpected expenses without derailing your FIRE plans.
4. Diversify Investments: Spread your investments across different asset classes like stocks, bonds, real estate, and mutual funds to reduce risk and maximize returns.
5. Seek Professional Guidance: Consider consulting with a financial advisor or planner who can provide personalized guidance based on your specific situation and life goals.