Want to retire early? Here's how F.I.R.E strategy can help — We calculate corpus you will need

FIRE aims to help people retire early through high savings, disciplined spending, and long-term investing. Strategies should be tailored to personal goals and account for inflation, healthcare costs, taxes, and unexpected expenses.

Retiring early is an ever-growing dream for a number of young professionals in India and around the world, as the ‘Financial Independence, Retire Early’ or FIRE method has evolved from a niche movement to more mainstream mass appeal.

The recent Bharosa Talks: India Retirement Index Study 6.0 (IRIS 6.0) report noted that as many as 7 in 10 urban Indians said they would exit the workforce early if money were no concern. However, only 11% of those surveyed were confident their retirement savings would actually last them a lifetime.

What is the FIRE strategy? We explain…

A movement among millennial, Gen Z, and younger workforce, FIRE is a financial movement that calls for reducing expenditure in order to enable extreme savings (up to 75% of income) and investments with the goal of building enough corpus to retire at a younger age.

The most basic FIRE calculation is where you multiply the current annual expense by 25 and assume that number as the goal needed to retire comfortably. Once retired, most withdraw 3-4% of their savings annually to cover expenses.

However, there are other iterations of the FIRE philosophy that have been developed as people look to tailor their savings to fit their goals. Here's a look at the other paths apart from the traditional FIRE strategy:

• Fat FIRE: Aimed at those seeking continued standard of living after retirement, this calls for saving up to 70% of income and investing aggressively to gain high returns. Further, it also calls for annual pay increase to draw a high salary.
• Lean FIRE: Aimed at the minimalist, this looks at the minimum required to life a modest and restricted lifestyle.