FIRE (Financial Independance Retire Early) Corpus Calculator

What is FIRE (Financial Independence, Retire Early)?

FIRE means reaching a point where you can live comfortably without relying on a regular job. It’s about saving aggressively, investing smartly, and creating sources of passive income so you can retire earlier than the traditional retirement age.

To put it simply, with FIRE, you're working towards a time when your investments pay you enough to cover your daily living expenses – so you can choose to stop working.

Example:

Let’s say you’re 30 years old, and you’d love to retire by 45. That means you have 15 years to save and invest. Your goal is to have enough money saved up that you can live comfortably without needing to rely on a job.

How the Retire Early Calculator Can Help

Our Retire Early Calculator is a simple tool that helps you understand how much retirement corpus you need, how much monthly savings you need, or how much lumpsum amount you need to reach your retirement goal. By entering a few details, like your current age, monthly expenses, and how much return you expect from your investments until your retirement, and after your retirement, the calculator will show you how much you need to save regularly.

Example:

Let’s say you’re 30, want to retire by 45, and your monthly expenses are $3,000. You also expect a return of 8% per year on your investments, inflation at 3%. The Retire Early Calculator will help you figure out how much you need to save each month to reach your goal.

In this case, the calculator shows you that you need to save around $3,100 per month. This means that over the next 15 years, you’ll need to set aside that amount to retire comfortably at 45, with a retirement corpus of around 1M dollars. Alternatively, you can keep aside $345K today, invest it until you retire at age 45, and this investment would potentially grow to achieve your retirement corpus.

By using this tool, you’ll know exactly how much you need to save, and it will help you stay on track.

Choosing the Right Retirement Plan

There are different types of retirement plans that can help you reach your FIRE goal, and the best one for you depends on your country and financial situation. Let’s take a look at a few popular retirement options:

1. 401(k) Plan (USA)

In the United States, the 401(k) is a popular retirement plan. It’s offered by employers and lets you contribute a portion of your salary into a retirement account. Many employers even match your contributions, which is essentially free money.

For example, if your employer matches up to 5% of your salary and you earn $50,000 a year, you’ll want to contribute at least 5% ($2,500) to take full advantage of the match.

Different 401(k) plans include options like Fidelity 401k, Principal 401k, and Vanguard 401k. They all have slightly different investment options and fees, so it’s important to choose the right one for you.

2. Roth IRA (USA)

Another option in the U.S. is the Roth IRA. With a Roth IRA, you invest after-tax money, but the best part is that the money grows tax-free, and when you withdraw it, you don’t pay taxes. This can be a great way to save for retirement if you expect to be in a higher tax bracket later in life.

3. National Pension Scheme (India)

In India, the National Pension Scheme (NPS) is a government-backed option that helps you save for retirement. You contribute to the NPS during your working years, and when you retire, you receive regular payments. It’s a good option if you live in India and want to make sure you have a secure retirement income.

4. Pension Schemes (Other Countries)

Many countries offer various pension schemes to help their citizens save for retirement. These plans usually come with tax benefits and allow you to accumulate funds for your future. Research the retirement plans available in your country to see which one works best for you.

Building Passive Income for Early Retirement

One of the keys to FIRE is creating passive income. This is income that comes in regularly, even when you’re not working. A few ways to build passive income include:

• Rental Income: If you own property, renting it out can provide a steady stream of passive income.
• Dividend Stocks: When you invest in stocks that pay dividends, you can earn money regularly without having to sell the stock.
• Online Business: You can earn money through online businesses, like blogging, affiliate marketing, or selling digital products.
• Peer-to-Peer Lending: Investing in platforms that lend money to others allows you to earn interest on your investment.

Example:

Let’s say you’ve built a portfolio of rental properties. Every month, you earn $2,000 in rental income. Combined with your mutual fund investments, you now have enough passive income to cover most or all of your living expenses. This means you can stop working and enjoy retirement!

FAQs about Retiring Early and FIRE