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Barista FIRE Calculator for NRI Returning to India: Can $1 million be enough for this NRI returning to India in 5 years for early-retirement?

This article uses the Arthgyaan goal-based investing calculator to understand how much corpus is needed to have a comfortable lifestyle in India.

Barista FIRE Calculator for NRI Returning to India: Can $1 million be enough for this NRI returning to India in 5 years for early-retirement?


Posted on 03 Nov 2024
Author: Sayan Sircar
6 mins read
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This article uses the Arthgyaan goal-based investing calculator to understand how much corpus is needed to have a comfortable lifestyle in India.

Barista FIRE Calculator for NRI Returning to India: Can $1 million be enough for this NRI returning to India in 5 years for early-retirement?

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Can this NRI family FIRE in India with $1 million five years from now at age 45?

This is the question that was posted on Reddit:

Hey learned folks, I am looking to understand what will be the right FIRE number for someone turning 45 in 2029 with the following assumptions:

1) Target city: Kolkata
2) Family of 3 + 1 dependent parent. Child will be around 12 year old in 2029.
3) Debt free own house in Kolkata
4) Currently abroad, have been outside India for last 11 years.
5) Lifestyle includes at least 1 foreign trip and 2 to 3 domestic trips
6) Wish to afford a decent car when back in India (Currently driving BMW X3)
7) Eating out at least once a week in fancy restaurant/hotel

Targeting $1 Million (USD), by 2029. Does that seem reasonable for the above mentioned lifestyle in Kolkata?

Remember, will still keep doing some side gigs.

Here is the original post if you wish to read it: https://old.reddit.com/r/personalfinanceindia/comments/1ge0qkm/fire_number_for_a_45_year_old_im_2029_for_kolkata/

What is the approach we will use to analyse this question?

There is limited information in the post, but we do have some high-level data points that will be helpful:

  • Family composition: self, spouse, child born in 2015, one dependent parent
  • A debt-free house in Kolkata means no future housing expenses
  • willingness to work to create side income instead of being fully dependent on corpus

We will model the following set of goals:

  • early retirement from 2029 for 55 years (assuming longevity up to age 100)
  • separate travel fund for both domestic and international travel
  • luxury vehicle purchase
  • keep the child’s expenses and goals separate from the RE goals
  • additional expenses to support elder parent
  • a “luxury” fund for having access to the good things in life apart from travel

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Assumptions and model setup

We have assumed that the family has assets of $700,000, which translates to around ₹6 crore. The house in their home town is not included here.

We have added the following goals:

  • a luxury car purchase of ₹85 lakhs in 5 years (which is the current price of a BMW X3 in India right now)
  • a foreign travel fund for ₹10 lakhs/year for 20 years starting 5 years from now
  • a foreign travel fund for ₹3 lakhs/year starting 5 years from now
  • monthly expenses of ₹1 lakh in retirement (along with the domestic travel fund, the annual expense comes to ₹15 lakhs)
  • for the child, we have added costs for school admission in Inda, annual expenses until college, UG degree (₹2 crores), cost of down-payment of their first house (₹50 lakhs) and marriage (₹10 lakhs)
  • a designated fund for taking care of the elderly parent for ₹2lakhs/year for 20 years starting 5 years from now

Each goal has a suitable inflation figure assigned to it.

Before going into the details of the goals, if you, dear reader, wish to cover another scenario as a Case Study, click the button below:

Also read
How much returns should you estimate for your goals?

Barista FIRE setup assumptions

Remember, will still keep doing some side gigs.

Since the family plans to work, as per the above comment, we have added a ₹15 lakhs/year income source starting 6 years from now for the next 20 years (via the “income-sources” sheet)

Additional income sources can be added here as well as per this article: How can you add multiple income streams to your portfolio for retirement?.

Barista FIRE is for those who want to quit the 9-to-5 rat race and are willing to cut back their spending while working only part-time - Investopedia

The above setup, where you retire formally and supplement your income with side gigs, low-stress or part-time roles is called Barista FIRE (Barista refers to the workers who serve customers in a coffee shop).

Model output

We use the Arthgyaan Goal-based investing calculator to formulate the investment model with all the above assumptions and goals. There is a link to download a pre-filled copy of the Google sheet via the button below.

Important: You must be logged into your Google Account on a laptop/desktop (and not on a phone) to access the sheet.

Once you get your sheet, you can access video tutorials in the howto tab.

Barista Fire Calculator Output

Plugging in the above assumptions and running the model gives us:

  • a SIP of ₹10.8L ($13,000) per month for the next 5 years which must be stepped up by 10% a year
  • a target corpus of ₹20 crore for retirement by the age of 60 (from ₹6 crore today)
  • corpus to reach $2 million before coming back to India in 5 years

Related:
Does this DISK family need to work longer even after reaching 45x FIRE corpus?

Practical considerations

  • Reaching $2 million in assets in 5 years: we have covered this topic here How easy is it to double your portfolio?
  • Transferring assets to India while minimising tax: depending on where the assets are held (US 401K, UK pension plan etc) there might be taxes on early withdrawal
  • Identifying a career that earns ₹15 lakhs in India for 20 years
  • splitting investments in India vs abroad in the next five years given taxation considerations like PFIC for US-based NRIs

For the time being, based on the assumptions made and the goals, the plan looks unfeasible. Lowering the lifestyle goals (cheaper car, lesser foreign travel etc) would help somewhat.

The children’s educational goals are always a wildcard. There is no way to know in advance where the child will end up studying and how much will that course cost. Here an educational loan can be a good option in case the corpus falls short.

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This post titled Barista FIRE Calculator for NRI Returning to India: Can $1 million be enough for this NRI returning to India in 5 years for early-retirement? first appeared on 03 Nov 2024 at https://arthgyaan.com


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