« The stock market has reached an all-time high. Should you buy or sell? What is the best way to invest for your child's college education? »

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

Posted on 04 Dec 2022
Author: Sayan Sircar

Tags: FIRE

23 mins read
📢Join 4,200+ readers on WhatsApp and get new post notifications!

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

📚 Table of Contents

Why would you want to work longer before retiring early?
Numbers in terms of corpus accumulated
Numbers in terms of extra time worked
Is your current corpus enough to FIRE?

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?.

👉 Join our free WhatsApp community for the latest updates.

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.

Did you know that we have a private Facebook group which you can join for free and ask your own questions? Please click the button below to join.

Start Building Wealth with Expertly Curated Mutual Fund Packages

🔹 Retirement Packages — Start with just ₹52,377/month
🔹 FIRE Packages — Achieve Financial Freedom from ₹86,277/month
🔹 College Fund Packages — Secure Education from just ₹10,554/month

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.

If you are planning your FIRE journey, then Arthgyaan packages can help you create and manage your FIRE portfolio effortlessly. Choose the year closest to your desired FIRE year to get started:

<a href=”/packages/financial-independence-retire-early-investment-plan-2030” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2030">2030</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2031” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2031">2031</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2032” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2032">2032</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2033” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2033">2033</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2034” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2034">2034</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2035” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2035">2035</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2036” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2036">2036</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2037” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2037">2037</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2038” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2038">2038</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2039” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2039">2039</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2040” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2040">2040</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2041” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2041">2041</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2042” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2042">2042</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2043” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2043">2043</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2044” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2044">2044</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2045” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2045">2045</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2046” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2046">2046</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2047” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2047">2047</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2048” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2048">2048</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2049” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2049">2049</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2050” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2050">2050</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2051” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2051">2051</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2052” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2052">2052</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2053” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2053">2053</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2054” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2054">2054</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2055” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2055">2055</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2056” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2056">2056</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2057” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2057">2057</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2058” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2058">2058</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2059” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2059">2059</a> </span>

<a href=”/packages/financial-independence-retire-early-investment-plan-2060” class=”custom-button-for-tags” title=”Packages

  Financial 

  Independence 

  Retire 

  Early 

  Investment 

  Plan 

  2060">2060</a> </span>

Is your current corpus enough to FIRE?

To know if you are ready to FIRE, you can run simulations for your current corpus and desired lifestyle using this calculator.

FIRE Corpus:

₹

12 Cr

Annual Expenses:

₹

30 Lakh

FIRE Number:

40x

SWR (%):

2.5%

Time Period (Years):

40 years

Equity Allocation (%):

60%

Debt Allocation (%):

40%

Simulations to run:

1000 simulations

Success (%):

Output:

Get your sample FIRE plan by email

Additional parameters:
Choose a method for return generation

Equity Market Return (%):

14%

Equity Market Return Variation (%):

15%

Debt Market Return (%):

Debt Market Return Variation (%):

Inflation (%):

Inflation Variation (%):

Equity Long Term Tax (%):

15%

Debt Long Term Tax (%):

20%

Short-term cash holding period (Years):

5 years

Equity Floor (%):

30%

Equity Allocation Change (%):

5%

If you found this useful, check out the Arthgyaan step-up SIP calculator.
If you are looking to understand how to best manage your mutual fund portfolio, you can get a free Mutual fund portfolio review.
You can share the calculations on this page by clicking the WhatsApp icon on the left.

Key Input Parameters:

FIRE Corpus: The total amount of money you have saved for retirement.
Annual Expenses: Your estimated annual living expenses in retirement.
FIRE Number: A multiple of your annual expenses, often used as a target corpus.
SWR (Safe Withdrawal Rate): The percentage of your corpus you plan to withdraw annually.
Time Period (Years): The duration of your retirement.
Equity Allocation (%): The percentage of your portfolio invested in equities.
Debt Allocation (%): The percentage of your portfolio invested in debt.
Simulations to run: The number of Monte Carlo simulations to perform.

Additional Parameters:

Method for generating returns: Random numbers using a normal distribution or the Block-bootstrap method.
Inflation Mean & Variation: Expected inflation rate and its volatility.
Equity Market Return & Variation: The expected return from equity investments and how much that return might vary. This is relevant only if you choose the Random numbers method
Debt Market Return & Variation: The expected return from debt investments and how much that return might vary. This is relevant only if you choose the Random numbers method.
Equity Long Term Tax (%): The tax rate on long-term capital gains from equity investments.
Debt Long Term Tax (%): The tax rate on long-term capital gains from debt investments.
Short-term cash holding period (Years): The number of years of expenses held in a low-risk, short-term account (the 'debt bucket').
Equity Floor (%): The minimum equity allocation allowed during the simulation.
Equity Allocation Change (%): The percentage by which equity allocation reduces every year

How it Works:

Monte Carlo Simulation: The core of the calculator is a Monte Carlo simulation. This is a method that uses random sampling to determine the probability of different outcomes. In this case, it runs the retirement scenario many times (defined by "Simulations to run"). Each simulation uses slightly different, random/block-bootstrap generated investment returns (for both equity and debt) and inflation rates, based on the means and standard deviations. This helps to model the uncertainty of the real world.
Asset Allocation and Rebalancing: You specify how your investments are divided between equity and debt. The simulation tracks how these investments grow (or shrink) each year, based on the random returns generated.
Withdrawals: The calculator deducts your annual expenses from your portfolio each year. Importantly, the annual withdrawal amount is adjusted for inflation in each simulation, reflecting the increasing cost of living.
Taxes: The calculator accounts for taxes on long-term capital gains from both equity and debt investments, making the simulation more realistic.
Debt Bucket: A portion of your initial corpus is considered a "debt bucket". This represents money held in safer (vs. equity), liquid investments to cover short-term expenses. The simulation first withdraws from this bucket before touching the main corpus.
Equity Glide Path: The calculator allows for a decreasing equity allocation over time, simulating a common strategy to reduce risk as you age.
Success Rate: The calculator counts how many of the simulations result in your portfolio lasting the entire duration of your retirement (as specified in "Time Period (Years)"). The "Success (%)" is the percentage of simulations where you didn't run out of money.

Key Features and Considerations:

Monte Carlo Advantage: Unlike simple fixed-rate calculators, this one acknowledges market volatility, giving you a more robust estimate.
Customization: You can tailor many parameters to match your specific situation and investment strategy.
Inflation and Returns: The calculator explicitly models inflation and the random nature of investment returns.
Tax Impact: It includes the effect of taxes, which can significantly impact long-term returns.
Debt Bucket: The inclusion of a debt bucket models a conservative approach to managing near-term expenses.
Equity Glide Path: The decreasing equity allocation accounts for the reduced risk appetite as one ages.
Success Rate Interpretation: A higher success rate indicates a more robust FIRE plan. However, there's no single "safe" number, and you should consider your own risk tolerance.
Block-bootstrap returns: For the block-bootstrap method, we have used monthly Large Cap Equity and Gilt returns since Feb 2013 for Direct Mutual Funds by default. You can choose other categories as well using the drop-downs.
Not Investment Advice: This calculator is for educational purposes only and should not be considered financial advice. Consult with a qualified advisor before making any investment decisions.

Ready-made goal-linked mutual fund packages related to this article

If you are planning your FIRE journey, then Arthgyaan packages can help you create and manage your FIRE portfolio effortlessly. Choose the year closest to your desired FIRE year to get started:
2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 2051 2052 2053 2054 2055 2056 2057 2058 2059 2060

What's next? You can join the Arthgyaan WhatsApp community

You can stay updated on our latest content and learn about our webinars. Our community is fully private so that no one, other than the admin, can see your name or number. Also, we will not spam you.

For resident Indians 🇮🇳:

For NRIs 🇺🇸🇬🇧🇪🇺🇦🇺🇦🇪🇸🇬:

Use this button to add arthgyaan.com as a preferred source of personal finance on Google