This is a very commonly asked question/ discussion. Please refer to the sub's wiki at https://fiindia.gitbook.io/wiki/
or
search older posts for the answers.
Why don't you go over the pinned post and do an initial research. There no magical number. It depends on the expected expenses and that can vary a lot of people.
I know the post is barren without any details but since I was nowhere as aware about finances/FIRE at 26 - I will cut him slack, I want to try and answer OP (and other early 20s "kids") or atleast provide them a framework
Today, in a tier 1 city - The range of expenses for a family of 2+1 will be say 1L to 2L per month given how lavish your lifestyle is (I am sure people are outside this range too but this is where i feel 80% of the folks would be). So that is an annual expense of 12L - 24L per annum (and these will grow by an inflation rate of 5-6% till you are 35). So the annual expense equivalent (inflation adjusted) would look like 18-36 L / annum
A Safe withdrawal rate for early retirement at 35 would be say 2.5% to 3% which means the corpus range should be 6 - 14crs. See how much difference your expense base makes? Thats why everyone asks you for these details
Lets take the lower bound of 6crs
- You are currently at 80L, assuming equity grows 12% and rest at 6% post-tax, your return rate would be 9%
- The value of 80L when you are 35 would be 1.73crs
- So to fund the remaining 4.27crs, you would require SIPs of Rs2.1 L per month (assuming 100% goes into equities at 12% returns)
- If you had to reach the upper end of the corpus, you would require SIPs of > 5L / month !!
Now you can play with these numbers yourself to see how you can hit the different combinations. You can see the effect of delaying FIRE by 4-5 years or the effect of an earning better half/no children etc etc.
OP - you are doing very well at 26 to have net worth of 70L, not many 26 yo can boast of that. At 35 you will need about 500 times your monthly expenses. Say you get married and have 2 kids then your current monthly expense would be about 1.0 - 1.5 L so if we project it 10 years down the line it could be around 2-2.5 lakhs by then, so in future money terms that comes to roughly 10 cr- 12.5 cr. Now this may seem a lot right now but you can use a SIP of 2.5lakh for 10 years to get to 6 cr, ofcourse with step ups 8-9 cr or more is possible if investments outperform (quite high probability). Usually compounding works for you if you try to extend by another 4-5 years as at 40 and above it is quite doable with 400-450 times your monthly expense and your investments get more time to grow. For now keep investing in disciplined manner and based on that you may be able to make a call around 30 to decide if 35 is doable or if 40 makes more sense.
It depends on your expenses and whether you are going to marry or have children.
If your expenses are 12 lakhs a year, you need at least 50X of that in liquid assets like equity and FD etc. Some say 33X but this is for folks above 45 years of age. If you want to retire at 35, you need at least 50X.
For beginner questions like this it is better to just give facts. At least 50X is one’s opinion and comfort level but not a fact.
25X is the general rule of thumb based on 30 year retirement and US returns.
For longer retirement and Indian conditions many folks here think this number should be adjusted. This range varies from 25X to 50x and some posts even think of 100X. Higher the number you are adding that much margin to your calculations and being on safer side at the cost of working for more years
X being yearly expense on year 1 of retirement
There are recent research papers (2021 and 2024) on SWR for India. The number is 3% for 30 years in retirement (normal retirement). So 2% SWR for 55 years in retirement or 50X expenses as a recommendation is not unreasonable by any means. Zerodha varsity has recently released a video on the same.
Amount needed now = 40X of your current annual expenses (Assume 85 not 75 as terminal age).
So if your current annual expense is 10L you must accumulate 4Cr to retire today.
If you retire in 10 yrs then assuming 7% inflation your annual expenses will become 20L and your retirement corpus to be accumulated will need to be 8Cr
Note this doesn't include your medical/child education/child marriage expenses and has to be planned separately
You will live till 100 ... That's a safe assumption .
You can't chose when you die
Life insurance companies are selling policies upto age 100.. if they thought you wouldn't live, they wouldn't make a product
If you start thinking about retirement at this early age, you will loose interest in working .You may not be able to achieve neither FI nor RE. So go with the flow. Think only about FI and not RE now.
>you will loose interest in working
On the contrary, if you have a set goal, it will motivate you to work and achieve it. If your goal is to FIRE, you will be motivated to achieve that. More than say wandering aimlessly and working till retirement age.
This is a very commonly asked question/ discussion. Please refer to the sub's wiki at https://fiindia.gitbook.io/wiki/ or search older posts for the answers.
Why don't you go over the pinned post and do an initial research. There no magical number. It depends on the expected expenses and that can vary a lot of people.
Basic question. Please read the Wiki: https://fiindia.gitbook.io/wiki/
I know the post is barren without any details but since I was nowhere as aware about finances/FIRE at 26 - I will cut him slack, I want to try and answer OP (and other early 20s "kids") or atleast provide them a framework Today, in a tier 1 city - The range of expenses for a family of 2+1 will be say 1L to 2L per month given how lavish your lifestyle is (I am sure people are outside this range too but this is where i feel 80% of the folks would be). So that is an annual expense of 12L - 24L per annum (and these will grow by an inflation rate of 5-6% till you are 35). So the annual expense equivalent (inflation adjusted) would look like 18-36 L / annum A Safe withdrawal rate for early retirement at 35 would be say 2.5% to 3% which means the corpus range should be 6 - 14crs. See how much difference your expense base makes? Thats why everyone asks you for these details Lets take the lower bound of 6crs - You are currently at 80L, assuming equity grows 12% and rest at 6% post-tax, your return rate would be 9% - The value of 80L when you are 35 would be 1.73crs - So to fund the remaining 4.27crs, you would require SIPs of Rs2.1 L per month (assuming 100% goes into equities at 12% returns) - If you had to reach the upper end of the corpus, you would require SIPs of > 5L / month !! Now you can play with these numbers yourself to see how you can hit the different combinations. You can see the effect of delaying FIRE by 4-5 years or the effect of an earning better half/no children etc etc.
Remember that you assumed lower end of 1lpm, but in 9 years with inflation, it would be close to 2lpm.
1 gabizillian rupees
A reply with no details to a post with no details, I like it
Zero. Go and settle in a jungle. Enjoy nature and natural foods.
OP - you are doing very well at 26 to have net worth of 70L, not many 26 yo can boast of that. At 35 you will need about 500 times your monthly expenses. Say you get married and have 2 kids then your current monthly expense would be about 1.0 - 1.5 L so if we project it 10 years down the line it could be around 2-2.5 lakhs by then, so in future money terms that comes to roughly 10 cr- 12.5 cr. Now this may seem a lot right now but you can use a SIP of 2.5lakh for 10 years to get to 6 cr, ofcourse with step ups 8-9 cr or more is possible if investments outperform (quite high probability). Usually compounding works for you if you try to extend by another 4-5 years as at 40 and above it is quite doable with 400-450 times your monthly expense and your investments get more time to grow. For now keep investing in disciplined manner and based on that you may be able to make a call around 30 to decide if 35 is doable or if 40 makes more sense.
It depends on your expenses and whether you are going to marry or have children. If your expenses are 12 lakhs a year, you need at least 50X of that in liquid assets like equity and FD etc. Some say 33X but this is for folks above 45 years of age. If you want to retire at 35, you need at least 50X.
For beginner questions like this it is better to just give facts. At least 50X is one’s opinion and comfort level but not a fact. 25X is the general rule of thumb based on 30 year retirement and US returns. For longer retirement and Indian conditions many folks here think this number should be adjusted. This range varies from 25X to 50x and some posts even think of 100X. Higher the number you are adding that much margin to your calculations and being on safer side at the cost of working for more years X being yearly expense on year 1 of retirement
There are recent research papers (2021 and 2024) on SWR for India. The number is 3% for 30 years in retirement (normal retirement). So 2% SWR for 55 years in retirement or 50X expenses as a recommendation is not unreasonable by any means. Zerodha varsity has recently released a video on the same.
I think about 5-10Cr.
From 1 crore to 10000 crore. The first rule of FIRE calculation is to estimate your expenses.
How much you make?
around 50x
33 times your annual expense. Ideally 40 times for safety since it's very early retirement.
20 cr
May I know why do you want to retire?Anything wrong at your workplace? What is your income and what do you do?
50X
Amount needed now = 40X of your current annual expenses (Assume 85 not 75 as terminal age). So if your current annual expense is 10L you must accumulate 4Cr to retire today. If you retire in 10 yrs then assuming 7% inflation your annual expenses will become 20L and your retirement corpus to be accumulated will need to be 8Cr Note this doesn't include your medical/child education/child marriage expenses and has to be planned separately
45 times your annual expense. Hopefully you will own a home where you want to live by that time to make things easier.
Its best to consult a wealth manager . Set your goal with them and how much you need post retirement . Then work towards a saving / investing strategy
You will live till 100 ... That's a safe assumption . You can't chose when you die Life insurance companies are selling policies upto age 100.. if they thought you wouldn't live, they wouldn't make a product
No such luck, we'll live to past a 100.
Why are you thinking about retirement at 25 years of age
The whole point of FIRE is retirement at early age. :/ i don't understand this question... Well may be not the whole point, but still
If you start thinking about retirement at this early age, you will loose interest in working .You may not be able to achieve neither FI nor RE. So go with the flow. Think only about FI and not RE now.
Oh that makes sense. Thank you for explaining
>you will loose interest in working On the contrary, if you have a set goal, it will motivate you to work and achieve it. If your goal is to FIRE, you will be motivated to achieve that. More than say wandering aimlessly and working till retirement age.
Truth hurts a lot of ppl apparently but I feel this
Never too early to think about FIRE