Why does the savings rate matter more than the return?

Because it works on both sides. Saving more grows the portfolio and shrinks the expenses it must cover, so it moves the target and the progress towards it at the same time.

Is four percent safe?

It came from US data on thirty-year retirements and is a rule of thumb rather than a guarantee. For a retirement of forty years or more, or outside that market, a lower rate is the cautious choice.

Investmentretirement

FIRE Calculator

The portfolio that supports your expenses indefinitely, and how long it takes to build. The savings rate matters far more than the return, which is the finding that makes the whole idea work.

Also called: financial independence calculator, 25x rule, retire early.

Years to financial independence

13.6

13.6 years to a ₹2,25,00,000 portfolio at a 4% withdrawal rate. Your savings rate of 50% is what drives that, far more than the return.

Portfolio needed

₹2,25,00,000

Savings rate

50%

At 75% of expenses

₹1,68,75,000

At 150% of expenses

₹3,37,50,000

Progress towards the number

8.89%

Portfolio when you get there

₹2,25,00,000

How this is calculated

An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.

Method and background

This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for India change on a published schedule; the effective date is shown on every rule-based tool.

How this is calculated

The target is annual expenses divided by the withdrawal rate, so a four percent rate means twenty-five times expenses. Everything then depends on the savings rate rather than the return, because saving more does two things at once: it adds to the portfolio and it lowers the expenses the portfolio has to cover. That double effect is why someone saving half their income reaches independence in under two decades at any plausible return.

the target is expenses divided by the withdrawal rate; the years follow from compounding the portfolio and savings up to it

E: Annual expenses (currency)
w: Withdrawal rate (decimal)
S: Annual savings (currency)
r: Real return (decimal)

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

the twenty-five times rule

Annual expenses: ₹9,00,000
Safe withdrawal rate: 4%
Portfolio today: ₹20,00,000
Saved each year: ₹9,00,000
Real return, after inflation: 6%

Years to financial independence13.6

9,00,000 / 0.04 is exactly 25 times expenses

Open this example

already past the number takes no time

Annual expenses: ₹9,00,000
Safe withdrawal rate: 4%
Portfolio today: ₹3,00,00,000
Saved each year: ₹9,00,000
Real return, after inflation: 6%

Years to financial independence0

boundary

Open this example

Method and limits

What it assumes

Returns are entered net of inflation, so the answer is in today’s money.
Expenses in retirement match expenses now.

What it deliberately does not model

The four percent rule comes from US market history over thirty-year retirements. A longer retirement or a different market is a different question.
It ignores tax, healthcare and the possibility of earning anything after stopping.
Sequence of returns risk is not modelled and is the main way this fails in practice.

Formula version 1.0.0 · definition 1.0.0 · India · Report a problem with this calculator

Frequently asked questions

Why does the savings rate matter more than the return?: Because it works on both sides. Saving more grows the portfolio and shrinks the expenses it must cover, so it moves the target and the progress towards it at the same time.
Is four percent safe?: It came from US data on thirty-year retirements and is a rule of thumb rather than a guarantee. For a retirement of forty years or more, or outside that market, a lower rate is the cautious choice.