Calculator methodology, formulas and limitations
Every result follows the equations below. You can reproduce the projections without creating an account or choosing an investment product.
1. The expense-based FIRE target
Today’s FIRE number = current monthly retirement expenses × 12 ÷ (initial withdrawal rate ÷ 100). A 3.5% assumption means dividing annual expenses by 0.035, or multiplying them by approximately 28.57.
Target at retirement = today’s FIRE number × (1 + annual expense inflation ÷ 100)years to retirement. Expenses are inflated separately from investment returns. The displayed withdrawal rates are adjustable modelling inputs, not independently validated safe rates for India or for a particular retirement duration.
2. Accumulating investments
For FIRE projections, monthly rate r = nominal annual investment return ÷ 1,200. At the end of each month, balance = previous balance × (1 + r) + that month’s contribution. The starting balance is the current investable retirement corpus.
Monthly contribution in investment year k = starting monthly contribution × (1 + annual step-up ÷ 100)k − 1. Year two begins after 12 contributions. A 5% step-up means a ₹25,000 monthly contribution becomes ₹26,250 in year two.
3. Required starting monthly investment
We first project the existing corpus to the target age. We then simulate the same contribution schedule using a starting contribution of ₹1 to find its future-value factor. Required starting contribution = max(0, target corpus − projected existing corpus) ÷ contribution factor.
Example: age 30, target age 40, expenses ₹50,000 per month today, current corpus ₹10 lakh, annual return 10%, annual expense inflation 6%, annual step-up 5%, and withdrawal assumption 3.5%. The target is approximately ₹3,07,00,246 and required starting monthly investment is ₹1,13,053.40, rounded to ₹1,13,053 in the interface.
4. Estimated financial independence age
At each month we compare the portfolio with the expense-based target inflated to that month. FI age is the first month where the portfolio meets or exceeds that target. Contributions and step-ups continue in this estimate until FI, even beyond the selected retirement age. The search stops at age 100.
If the current corpus already meets today’s target, the interface reports that the target is reached today. It does not imply that future spending is guaranteed to be funded.
5. SIP and lumpsum conventions
SIP calculations use nominal annual return divided by 12. You can choose contributions at month start or month end. At month start the contribution earns that month’s projected growth; at month end it does not. At zero return, future value is total contributions. Lumpsum mode grows the initial amount monthly without further contributions.
The optional SIP purchasing-power estimate discounts the final value by (1 + selected annual inflation rate)years. This differs from inflating the expense-based FIRE target.
What is outside the model?
- Retirement drawdown, lifespan and sequence-of-returns risk.
- Taxes, separately deducted fees, exit loads and changing tax rules.
- Pensions, debt payments, rental income, one-off goals and emergency reserves.
- Variable returns, changing inflation, asset allocation and future contribution interruptions.
The model is deterministic. It does not assign a probability of success or recommend a fund, return, withdrawal rate or retirement date.
Sources and further reading
These resources provide broader educational context; they do not endorse this website or validate its example assumptions.
- SEBI Investor: Plan Early for Retirement — retirement planning and preparing for unforeseen costs.
- SEBI Investor: Inflation — prices and purchasing power.
- SEBI Investor: Financial Goal Planner — a broader retirement planning framework.
Implementation checks and revisions
The implementation is checked against closed-form SIP and lumpsum examples, zero-return cases, annual step-ups and the required-contribution equation. These are software checks, not an independent financial review. This revision documents the monthly contribution timing and moves the FIRE planner to the homepage. Display values are rounded while calculation values retain precision.