Simulate portfolio longevity using the safe withdrawal rate methodology (The 4% Rule).
Withdrawals increase with inflation
Financial Independence (FI) means your annual expenses are fully covered by the returns from your investments.
When you reach this stage, you no longer depend on a monthly salary to survive. "Retirement" in this context doesn't necessarily mean being old; it means having the freedom to work because you want to, not because you have to.
The 4% rule is the gold standard for the FIRE (Financial Independence, Retire Early) movement. It stems from historical market data suggesting that if you withdraw 4% of your portfolio in the first year of retirement and adjust for inflation thereafter, your money should last for at least 30 years.
Annual Expenses × 25 = Target Corpus
Example: If you spend $60,000 (or ₹60,00,000) per year, your target is $1.5 Million (or ₹1.5 Crores). Once you hit this number, the 4% rule suggests you are financially independent.
Most people associate "retirement planning" with old age. Reframe this: it is about clarity over chaos. Having a specific "Freedom Number" reduces anxiety. It turns a vague worry ("Will I have enough?") into a concrete goal ("I need $X by year Y"). Planning is always superior to guessing.
While powerful, the 4% rule is a guideline, not a guarantee. It assumes historical market returns, which may not repeat. Factors like Sequence of Returns Risk (market crashing right when you retire) and prolonged high inflation can impact success. It is wise to have a buffer or a flexible withdrawal strategy.
| Feature | Traditional Retirement | Financial Independence (FIRE) |
|---|---|---|
| Age | 60-65+ | Any age (30s, 40s, 50s) |
| Income Source | Pension / Social Security | Assets & Investments |
| Lifestyle | Often fixed/limited | Flexible & Design-your-own |
Typically, you need 25 times your annual expenses. Use the calculator above to find your exact number based on your spending.
Yes. Once your invested assets reach your target number, the returns theoretically cover your expenses, making your 9-5 salary optional.
India has higher inflation than the US (where the rule originated). However, Indian markets also typically offer higher nominal returns. Many Indian experts suggest a more conservative withdrawal rate (e.g., 3% or 3.5%) to be safe against high inflation periods.
No! Many people reach FI and switch to lower-stress jobs, passion projects, or part-time work (Barista FIRE), which actually makes the plan safer.