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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


04 Dec 2022 - Contact Sayan Sircar
4 mins read

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?

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.


Goal-based-investing plan

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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Topics you will like:

Asset Allocation (17) Basics (8) Behaviour (10) Budgeting (10) Calculator (13) Case Study (3) Children (10) Choosing Investments (29) FAQ (4) FIRE (10) Gold (6) Health Insurance (4) House Purchase (13) Insurance (14) International Investing (8) Life Stages (2) Loans (10) Market Movements (9) Mutual Funds (17) NPS (5) NRI (5) News (6) Pension (6) Portfolio Construction (38) Portfolio Review (23) Retirement (30) Review (11) Risk (6) Safe Withdrawal Rate (5) Set Goals (26) Step by step (9) Tax (19)

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