🔥 FIRE Calculator

Assumptions & Methodology

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Core FIRE Principles

FIRE (Financial Independence, Retire Early) is achieved when your investment corpus can sustain your lifestyle indefinitely through passive income, typically using the 4% rule or similar withdrawal strategies.

📊 Key Calculations & Formulas

1

FIRE Number Calculation

  • Retirement Expenses: Current monthly expenses × Lifestyle multiplier (post-retirement)
  • Annual Retirement Expenses: Monthly retirement expenses × 12
  • Inflation-Adjusted Expenses: Annual retirement expenses × (1 + Inflation Rate)^Years to FIRE
  • Future Goals Value: Sum of all goal values × (1 + Goal Inflation)^Goal Years
  • Healthcare Buffer: Healthcare value × (1 + Healthcare Inflation)^Years to Healthcare Age
  • FIRE Number: (Inflation-adjusted expenses ÷ Withdrawal Rate) + Future Goals + Healthcare Buffer
Example: ₹30K monthly × 1.0 lifestyle × 12 = ₹3.6L annual. With 6% inflation over 15 years: ₹3.6L × (1.06)^15 = ₹8.6L. FIRE Number = ₹8.6L ÷ 4% = ₹2.15Cr
2

Portfolio Growth Modeling

  • Monthly Simulation: Portfolio is recalculated month by month until retirement
  • Monthly Contributions: Added at the beginning of each month
  • Annual Step-up: Contributions increase by step-up percentage each year
  • Monthly Returns: Each asset class grows at (Annual Return ÷ 12) per month
  • STP Transfers: Fixed amount transferred from debt to equity at specified frequency
  • Formula: Asset Value = (Previous Value + Monthly Contribution) × (1 + Monthly Return)
3

Expense Modeling

  • Current Expenses: Sum of all monthly expenses (permanent + temporary)
  • Lifestyle Adjustment: Current expenses × Lifestyle multiplier (post-retirement)
  • Inflation Adjustment: Expenses grow at the specified inflation rate
  • Temporary Expenses: Only included if they extend beyond retirement age
  • Goals: One-time expenses with their own inflation rates
  • Healthcare Buffer: Additional corpus for healthcare expenses at specified age
4

Systematic Transfer Plan (STP)

  • Purpose: Gradually transfer from debt to equity to reduce risk
  • Frequency: Daily (22 transfers/month), Weekly (4 transfers/month), or Monthly (1 transfer/month)
  • Amount: Fixed amount per transfer (limited by available debt balance)
  • Impact: Reduces debt allocation, increases equity allocation over time

📈 Chart Explanations

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Portfolio Growth & Asset Allocation

  • Shows portfolio value growth over time until retirement
  • Displays asset allocation changes year by year
  • Includes contributions, returns, and STP effects
  • Helps visualize wealth accumulation journey
🥧

Final Asset Allocation

  • Shows asset allocation at the moment of retirement
  • Based on final portfolio composition after all growth
  • Helps assess risk exposure at retirement
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STP - Debt to Equity Transfer

  • Visualizes the systematic transfer process
  • Shows how debt allocation decreases over time
  • Demonstrates equity allocation increase
  • Only appears if STP is enabled
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Burn Down Charts

  • Future Value: Corpus in future rupees (not inflation-adjusted)
  • Today's Value: Corpus discounted by inflation each year
  • Shows how long your corpus will last
  • Helps identify if you need to adjust withdrawal rate

⚠️ Important Assumptions & Limitations

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Investment Assumptions

  • Constant Returns: Returns remain constant throughout the period
  • No Rebalancing: Asset allocation is not rebalanced automatically
  • No Market Volatility: Returns are assumed to be smooth and consistent
  • No Transaction Costs: Buying/selling costs are not included
  • No Fund Management Fees: Expense ratios are not deducted
  • Monthly Compounding: Returns are compounded monthly, not daily
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Tax Assumptions

  • No Tax Modeling: Tax rates are collected but not used in calculations
  • No Tax Loss Harvesting: Tax optimization strategies are not modeled
  • No Tax-Deferred Accounts: Special tax treatment (like EPF, NPS) is simplified
  • No Estate Tax: Inheritance tax implications are not considered
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Expense Assumptions

  • Constant Inflation: Inflation rate remains constant
  • No Lifestyle Changes: Major life events are not modeled
  • No Healthcare Inflation: Medical costs may inflate faster than general inflation
  • No One-time Expenses: Large purchases (cars, home repairs) are not included
  • Fixed Lifestyle Multiplier: Lifestyle multiplier remains constant post-retirement
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Post-Retirement Assumptions

  • No Post-Retirement Modeling: Calculator stops at retirement age
  • No Withdrawal Strategy: How you withdraw money is not modeled
  • No Asset Allocation Changes: Portfolio composition remains static
  • No Social Security: Government benefits are not included

🔧 Methodology Details

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Calculation Process

  1. Expense Calculation: Total monthly and annual expenses are computed
  2. FIRE Number: Target corpus is calculated with inflation adjustment
  3. Portfolio Projection: Each asset class is projected month by month to retirement age
  4. Corpus Comparison: Projected corpus is compared with target corpus
  5. Shortfall Analysis: Additional investment needed is calculated
⚠️

Risk Considerations

  • Sequence of Returns Risk: Not explicitly modeled but affects real outcomes
  • Longevity Risk: Living longer than expected
  • Inflation Risk: Higher than expected inflation
  • Market Risk: Poor market performance
  • Liquidity Risk: Need for cash during market downturns
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Recommendations

  • Conservative Estimates: Use conservative return and inflation assumptions
  • Regular Reviews: Recalculate annually or when circumstances change
  • Multiple Scenarios: Test different market conditions
  • Professional Advice: Consult financial advisors for complex situations
  • Emergency Planning: Maintain adequate emergency funds

📚 Additional Resources

For more detailed information about FIRE planning, consider exploring:

Bengen's 4% Rule research
Trinity Study on safe withdrawal rates
Asset allocation strategies
Tax-efficient withdrawal strategies
Sequence of returns risk management
ℹ️

Note: This calculator provides estimates for educational purposes. Actual results may vary significantly due to market conditions, tax law changes, and personal circumstances. Always consult with qualified financial professionals for personalized advice.

Your Details

Core Assumptions

Life Expectancy

Plan for how long you expect to live and need your retirement corpus to last.

Tax Considerations

Specify the tax rates that apply to your investments now and after retirement. These affect your net returns.

Current Tax Rates

Equity
Debt

Post-Retirement Tax Rates

Equity
Debt

Lifestyle & Risk Preferences

Define your lifestyle and risk tolerance now and after retirement.

Additional buffer for unexpected expenses or market volatility

Import Previous Data

Load your previously exported FIRE calculator data to continue where you left off.

Select a previously exported .json file to load your data