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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
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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.

FIRE journey in India: what happens if you work just a bit longer

📚 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?.

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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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Worked out case studies for goal-based investing

Case study: how can this middle aged investor with two children plan for retirement and children's goals?

This article shows how a single-income middle aged couple with two small children reach their retirement and children’s goals.
Case study: can this double income single kid family reach FIRE at 50?

This article shows how a double-income couple with a 2-year old reach their FIRE dream at the age of 50.
Case study: how a family in their mid-30s with a newborn kid can FIRE and invest in real estate?

This article shows how a double-income couple with a newborn child can invest for their future goals of FIRE and real-estate investment.
Case study: how this double income recently married family can perform DIY goal-based investment planning

This article shows how a young just-married couple can invest for future goals using the Arthgyaan goal-based investing tool.
Case Study: How should couples in their 40s with a new baby plan their financial future?

Did you welcome a bundle of joy in your 40s? This article will discuss ways of planning the child’s (and your’s financial future)
Case study: how this double income single kid family can perform DIY goal-based investment planning

This article shows how a very typical salaried couple with one child can invest for future goals using the Arthgyaan goal-based investing tool.

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Topics you will like:

Asset Allocation (20) Basics (8) Behaviour (10) Budgeting (11) Calculator (17) Case Study (6) Children (14) Choosing Investments (40) FAQ (7) FIRE (13) Gold (14) Health Insurance (4) House Purchase (21) Insurance (15) International Investing (10) Life Stages (2) Loans (13) Market Movements (17) Mutual Funds (34) NPS (6) NRI (15) News (10) Pension (8) Portfolio Construction (47) Portfolio Review (27) Reader Questions (6) Real Estate (6) Retirement (38) Review (13) Risk (6) Safe Withdrawal Rate (5) Set Goals (27) Step by step (15) Tax (43)

Next steps:

1. Email me with any questions.

2. Use our goal-based investing template to prepare a financial plan for yourself
OR
use this quick and fast online calculator to find out the SIP amount and asset allocation for your goals.

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