Financial Freedom - FIRE Calculator
What is FIRE Number ?
The FIRE Number (Financial Independence, Retire Early) represents the target investment corpus required to sustain your lifestyle through retirement without needing active income.
Unlike static static-rule estimates (such as the traditional 25x multiplier), this advanced calculator models the exact dynamic flow of your money year by year. It factors in annual cost-of-living adjustments due to inflation, along with ongoing investment compounding on your remaining portfolio throughout your retirement horizon.
How is the FIRE Number Calculated?
The required target corpus is computed using an annuity model that accounts for annual withdrawal timing, inflation, and portfolio growth rates.
Calculation Assumptions:
- Beginning-of-Year Withdrawal: At the start of each retirement year, your annual inflation-adjusted expenses are withdrawn immediately from the corpus.
- Growth on Remaining Balance: The remaining balance after expense deduction stays invested and grows at the post-retirement expected return rate for the rest of the year.
- Target Zero: The exact FIRE target is the initial corpus needed so that after N years of annual inflation increases and growth, the ending balance reaches exactly ₹0 at the end of the retirement period.
Example:
If your current annual expense is $6,00,000, with 7% inflation, 7% post-retirement return, and a 30-year duration:
- Year 1 Start : $1,80,00,000
- Year 1 Withdrawal: $6,00,000
- Post-Withdrawal Balance : $1,80,00,000 - $6,00,000 = $1,74,00,000
- 7% Return Earned : $1,74,00,000 × 7% = $12,18,000
- Year 1 End : $1,74,00,000 + $12,18,000 = $1,86,18,000
This process repeats until Year 30, where the corpus fully satisfies all annual withdrawals and finishes at zero.
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