₹20.75 lakhs (₹2,075,000) invested today becomes ₹2 crores (₹20,000,000) by age 50. That is enough to withdraw ₹1,00,000 every month, forever, without ever draining the principal.
Most people save for retirement with no target number. That number comes from one formula. The formula runs on five inputs, and it takes about two minutes to work through by hand.
The FIRE (Financial Independence, Retire Early) movement rests on that one figure. Save enough, invest it well, and a paycheck stops being required.
Five Inputs the Formula Needs
Current age (A) and retirement age (R) set N, the years you have left to build the corpus, the invested sum you retire on. N equals R minus A.
Target monthly withdrawal (W) is the amount you plan to pull out every month once you stop earning actively.
Annual inflation rate (I) is the rate prices rise each year. Use 6% for India unless you have a specific reason to pick another number.
Expected annual return (X) is the rate you expect your investments to grow. Fund statements often label this XIRR.
Most retirement guides anchor to a different figure instead: the Safe Withdrawal Rate, usually 4%. Bill Bengen published that number in the Journal of Financial Planning in October 1994. He tested it against U.S. stock and bond returns going back to 1926. Three professors at Trinity University popularized the same idea in 1998, in what is now called the Trinity Study.
Bengen's 4% rule assumes a fixed pool that drains over a set number of years, usually 30. The formula below assumes a pool that never drains at all. It skips the 4% figure and solves for the gap between your return and inflation instead.
The FIRE Formula
A pool that never drains funds its withdrawals from returns alone. Solve for the corpus that supports one, then adjust it for inflation.
C = AW / (X - I)Cis the corpus you need at retirement.AWis your required yearly withdrawal, W times 12.Xis your assumed annual return, as a percentage.Iis your inflation rate, as a percentage.
Next, find what that corpus costs you today. Discount it using your return rate and the years remaining.
C_today = C / (1 + X)^NC_todayis the amount you need today to hit your FIRE target.Nis the years left until retirement.Xis your assumed annual return again.
A Worked Example
Assume these five inputs.
Current age: 30
Retirement age: 50
Target monthly withdrawal: ₹1,00,000
Inflation rate: 6%
Expected XIRR: 12%
That sets N at 50 minus 30, or 20 years.
Step 1: find the corpus you need
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: discount it to today's rupees
C_today = 2,00,00,000 / (1.12)^20
C_today = 2,00,00,000 / 9.64
C_today = ₹20,75,000₹20.75 lakhs today, growing at 12% a year, reaches ₹2 crores by age 50. That corpus funds a monthly withdrawal of ₹1,00,000 forever. The principal never shrinks.
Run Your Own Numbers Through It
C = (W × 12) / (X - I)
C_today = C / (1 + X)^NSwap in your own age, withdrawal target, return rate, and inflation assumption. The formula holds for any set of five.
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.