How to Calculate Your FIRE Number:
The Step-By-Step Math

Why Knowing Your FIRE Number Changes Everything

Without knowing your FIRE number, retirement planning is guesswork. You're saving "for later" without knowing what "later" actually costs. This post gives you the formula to calculate exactly how much you need.

The FIRE Formula (Simple Version)

FIRE Corpus = Annual Expenses × (Years Until Death)

But this is too simple and ignores inflation. Real version:

Step 1: Know Your Current Annual Expenses

This is critical. Most people underestimate. Track your actual spend (housing, food, transport, subscriptions, entertainment). Don't guess.

For a single professional in Bengaluru: ₹30,000-60,000/month = ₹3.6-7.2 lakh/year. For a family: ₹80,000-150,000/month = ₹9.6-18 lakh/year.

Step 2: Adjust for Inflation

At 6% inflation, your expenses in 20 years will be roughly 3.2x today's level. If you spend ₹5 lakh today, you'll need ₹16 lakh/year at retirement in 20 years.

Step 3: Calculate Total Corpus Needed

Monthly Savings Gap

Once you know your FIRE number, calculate the monthly SIP needed:

Monthly SIP = (FIRE Corpus - Current Investments) / (Months Until Retirement × Growth Factor)

At 12% annual returns over 10 years, a ₹20,000/month SIP builds ₹35 lakh.

Reality Check: Most People Are Closer Than They Think

If you're saving ₹2-3 lakh/year in tax-optimized investments (NPS + PPF + ELSS), in 15 years with 12% growth, you'll have ₹80-120 lakh. That's enough to sustain ₹6-8 lakh/year spending in retirement with a 4% safe withdrawal rate.