FIRE Calculator Methodology & Longevity Assumptions

1. Safe Withdrawal Rate (SWR) Mechanics

The baseline FIRE target number represents the capital required to sustain annual living costs in perpetuity without drawing down principal to zero over your target lifespan:

While US studies typically use 4.0% (25x expenses), our Indian tools support and recommend 3.0% to 3.5% (28x to 33x expenses) to insulate against higher emerging-market inflation and lack of state-sponsored social safety nets.

2. Real Return Accumulation Modeling

During the accumulation phase, annual portfolio growth is modeled using real returns (expected nominal investment return minus assumed inflation rate):

Capital compounds annually by adding annual investment savings and multiplying by (1 + Real Return).

3. Model Exclusions & Practical Cautions

Our models simulate constant asset growth rates for planning simplicity. In real life, market returns fluctuate (sequence-of-returns risk). We urge readers to maintain 2 to 3 years of living expenses in liquid debt funds upon retirement so they are never forced to sell equities during a bear market.