Money Basics · Retirement (yes, already)

FIRE

FIRE (Financial Independence, Retire Early) is a movement built on one idea: accumulate enough wealth that your investments generate enough income to cover your living expenses, so work becomes optional.

The core math: the 4% rule

Research by William Bengen (and later the Trinity Study) found that a retiree can withdraw 4% of their portfolio annually, with the portfolio adjusted for inflation, and the money will last 30+ years across historical market conditions.

Your FIRE number = Annual expenses × 25

If you spend ₹5 lakh/year, your FIRE number = ₹1.25 crore.

If you spend ₹12 lakh/year, FIRE number = ₹3 crore.

> Once you hit your FIRE number, the portfolio generates your expenses. Work is optional, not retired, but free to choose.

Types of FIRE

• LeanFIRE: minimalist lifestyle, smaller corpus needed
• FatFIRE: high lifestyle maintained in retirement, larger corpus
• BaristaFIRE: partially retire, do part-time work to cover some expenses
• CoastFIRE: invest enough young that you can coast. Stop contributing and let compounding do the rest

The FIRE savings rate

10% savings rateretire in ~51 years

25% savings rateretire in ~32 years

50% savings rateretire in ~17 years

75% savings rateretire in ~7 years

The savings rate, not the income, determines your FIRE timeline.

Indian context

FIRE is harder in India due to: joint family obligations, healthcare costs not covered by any portfolio, children's education expenses. Most Indian FIRE practitioners aim for FatFIRE numbers that account for these. One more thing worth stating plainly: the savings-rate table above works in REAL (inflation-adjusted) terms at 5% a year, while the earlier chapters in this module work in nominal terms at 12%. 5% real is roughly 10% nominal against 5% inflation. The two are not disagreeing with each other.

Start tracking your savings rate today. At 25% you are looking at roughly three decades. Push it to 50% and you roughly halve that.

Takeaway. FIRE number = annual expenses × 25. At a 50% savings rate, financial independence is achievable in 15–17 years. Savings rate, not income, is the deciding variable.