₹20.75 lakhs invested today becomes ₹2 crores by age 50. That is enough to withdraw ₹1,00,000 every month, perpetually, without ever draining the principal.
Most people save for retirement without a target number. That number has a formula. The formula needs seven inputs, and it takes about two minutes to work out.
The FIRE (Financial Independence, Retire Early) movement rests on that one figure. Save, invest, and hold enough wealth that a paycheck becomes optional. This post gives you the formula, every variable it needs, and one worked example.
🔥 How to Calculate Your FIRE (Financial Independence, Retire Early) Number
Your FIRE number comes out of a single formula. The formula uses your expected withdrawals, your investment returns, inflation, and your retirement timeline. Start with the variables it needs.
Variables Required
Current Age (A) → Your present age
Retirement Age (R) → The age you plan to stop earning actively
Target Monthly Withdrawal (W) → The amount you want to withdraw per month post-retirement
Annual Inflation Rate (I) → Expected inflation rate (e.g., 6%)
Expected Annual Investment Return or XIRR (X) → The rate your investments will grow (e.g., 12%)
Years to Retirement (N) →
R - A(the number of years left to accumulate wealth)Safe Withdrawal Rate (SWR) → Typically 4%, but can be adjusted
Corpus Required (C) → The final amount needed at retirement
Annual Withdrawal at Retirement (AW) →
W × 12(monthly withdrawal converted to yearly)
FIRE Formula
A perpetual withdrawal never touches the principal. Calculate the corpus that supports one, and account for inflation.
C = AW / (X - I)
The formula uses these terms.
C= Corpus needed at retirementAW= Required yearly withdrawals (W × 12)X= Assumed annual return (%)I= Inflation rate (%)
Next, find the amount you need today. Discount the corpus back to the present with this formula.
C_today = C / (1 + X)^N
The second formula uses these terms.
C_today= Amount needed today to reach FIRE targetN= Years left until retirementX= Assumed annual return (%)
Example Scenario
Assume these six inputs.
Age = 30 years
Retirement Age = 50 years
Monthly Withdrawal = ₹1,00,000
Inflation Rate = 6%
Expected XIRR = 12%
Years to Retirement =
50 - 30 = 20
Step 1: Compute Corpus Needed
AW = 1,00,000 × 12 = ₹12,00,000
C = 12,00,000 / (12% - 6%)
C = 12,00,000 / 0.06
C = ₹2,00,00,000 (₹2 Crores)
Step 2: Adjust for Today’s Value
C_today = 2,00,00,000 / (1.12)^20
C_today = 2,00,00,000 / 9.64
C_today = ₹20,75,000
So ₹20.75 Lakhs today grows at 12% per year. By age 50 it reaches ₹2 Crores. That corpus funds perpetual withdrawals of ₹1,00,000 per month.
Plug-and-Play Formula
Plug your own numbers into the corpus formula.
C = (W × 12) / (X - I)
Then discount it to find the amount you need today.
C_today = C / (1 + X)^N
The formula takes any withdrawal amount, any age, any return rate, and any inflation assumption.
Related reading: Goal Proximity: How Distance Shapes Decisions and Investing for Beginners: A Simple Starter Guide.
The formula-first approach is refreshing. Sequence risk still feels like the big blind spot.
Here's the TL;DR version of this:
• FIRE requires a numeric target, not vibes.
• Withdrawal, inflation, and returns define feasibility.
• Discounting future value changes outcomes.
• Age and time horizon matter materially.
• FIRE is solvable with math, not motivation.