Find out exactly how much corpus you need to achieve Financial Independence and Retire Early.
Estimate how much you will spend per year once you retire.
The standard rule is 4%, but conservative investors use 3% or 3.5%.
Based on the 4% rule (Corpus = 25x Annual Expenses)
If you accumulate a corpus of ₹3,00,00,000 and invest it such that it beats inflation by 4%, you can theoretically withdraw ₹12,00,000 every year forever without the money running out.
FIRE stands for Financial Independence, Retire Early. It is a movement of people dedicated to extreme savings and investment that allows them to retire far earlier than traditional budgets and retirement plans would permit.
The 4% rule (or Safe Withdrawal Rate) is a rule of thumb used to determine how much you can withdraw from your retirement savings each year without running out of money. It implies you need a corpus of 25 times your annual expenses.
Lean FIRE implies living a frugal lifestyle in retirement, requiring a smaller corpus (often calculated as 0.7x standard FIRE). Fat FIRE implies a luxurious lifestyle in retirement, requiring a larger corpus (often 1.5x standard FIRE).
The 4% rule inherently accounts for inflation, as it assumes you adjust your withdrawal amount for inflation each year while your invested corpus grows at a rate higher than inflation.