FIRE journey in India: what happens if you work just a bit longer
This article shows the effect of postponing early retirement by just a little since it allows you to spend more in retirement.
FIRE journey in India: what happens if you work just a bit longer
Posted on 04 Dec 2022
Author: Sayan Sircar
Tags: 
FIRE
4 mins read
FIRE
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This article shows the effect of postponing early retirement by just a little since it allows you to spend more in retirement.
📚 Topics covered:
- Why would you want to work longer before retiring early?
- Numbers in terms of corpus accumulated
- Numbers in terms of extra time worked
Why would you want to work longer before retiring early?
There could be multiple reasons why a Financial Independence, Retiring Early (FIRE) candidate might wish to delay their FIRE plans. The reasons for this could be as simple as not being able to accumulate extra corpus due to a market fall. Or it could be simply that you are not yet ready.
This article shows a quick thumb rule to estimate how much extra money you can spend when you retire early based on the calculation in this post: How much money do you need for retirement?.
This article also requires you to be aware of the concept of the Safe Withdrawal Rate (SWR) that is covered here: Does the 4% SWR rule work in India?.
Related:
Which stage of your career is most important for wealth creation?
Numbers in terms of corpus accumulated
The formula is:
Extra income = Corpus * SWR / 12
| Corpus | 2.4% SWR | 3.6% SWR |
|---|---|---|
| 1 L | 200 | 300 |
| 5 L | 1,000 | 1,500 |
| 10 L | 2,000 | 3,000 |
| 20 L | 4,000 | 6,000 |
| 50 L | 10,000 | 15,000 |
| 1 cr | 20,000 | 30,000 |
At 2.4% SWR and zero real returns, each additional lakh of FIRE corpus gives you ₹200/month more. At 3.6% SWR and zero real returns, each additional crore of FIRE corpus gives you an extra ₹30,000/month more. And so on.
Numbers in terms of extra time worked
The formula is:
Extra income = Monthly Investment * Months delayed * SWR / 12
At 2.4% SWR, we get:
| Investment | 3 mon | 6 mon | 1 yr | 2 yrs |
|---|---|---|---|---|
| 50,000 | 300 | 600 | 1,200 | 2,400 |
| 1,00,000 | 600 | 1,200 | 2,400 | 4,800 |
| 2,00,000 | 1,200 | 2,400 | 4,800 | 9,600 |
| 3,00,000 | 1,800 | 3,600 | 7,200 | 14,400 |
| 4,00,000 | 2,400 | 4,800 | 9,600 | 19,200 |
| 5,00,000 | 3,000 | 6,000 | 12,000 | 24,000 |
If your monthly investment is 1 lakh, delaying retirement by 6 months gives you an additional ₹1,200/month during FIRE. If your monthly investment is 2 lakhs, delaying retirement by 2 years gives you an additional ₹9,600/month during FIRE. And so on.
At 3.6% SWR, we get:
| Investment | 3 mon | 6 mon | 1 yr | 2 yrs |
|---|---|---|---|---|
| 50,000 | 450 | 900 | 1,800 | 3,600 |
| 1,00,000 | 900 | 1,800 | 3,600 | 7,200 |
| 2,00,000 | 1,800 | 3,600 | 7,200 | 14,400 |
| 3,00,000 | 2,700 | 5,400 | 10,800 | 21,600 |
| 4,00,000 | 3,600 | 7,200 | 14,400 | 28,800 |
| 5,00,000 | 4,500 | 9,000 | 18,000 | 36,000 |
If your monthly investment is 1 lakh, delaying retirement by 6 months gives you an additional ₹1,800/month during FIRE. If your monthly investment is 2 lakhs, delaying retirement by 2 years gives you an additional ₹14,400/month during FIRE. And so on.
These calculations are approximate. If you are using a goal-based investing calculator, then you can vary your inputs to calculate the exact impact of changing your FIRE dates.
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