Concepts

Inflation: why tomorrow costs more

Inflation is the rise in prices over time. If prices rise 6% a year, something that costs ₹1 lakh today costs ₹1.06 lakh next year, and the increase builds on itself.

A quick rule: divide 72 by the inflation rate to see how long prices take to double. At 6%, that's about 12 years. So a retirement 15 or 20 years away needs to pay for expenses that are more than double today's.

This is also why returns matter only after inflation. A 12% return with 6% inflation makes your money about 5.7% more useful each year, not 12%. FI-RE uses 6% by default, and you can change it on every page.

See it in action: the Lump Sum calculator shows any amount in today's money.

Education and medical inflation: the costs that run faster

Not everything gets dearer at the same pace. School and college fees and healthcare in India have often risen faster than everyday prices, frequently 10–12% a year. Using the general rate for them makes big future costs look smaller than they will be.

That ₹20 lakh gap is why the Lab grows education and medical events with their own, higher rate: 10% by default, adjustable from 8% to 16%. Everything else uses general inflation.

Try it: add a Child education or Medical emergency event in the planner's Lab.

Why 30× your yearly expenses

Your FIRE number is the amount you need saved to stop working for money. FI-RE works it out in two steps:

1. Grow today's yearly expenses by inflation to the year you retire.
2. Multiply that by 30.

You may have heard of the "25× rule". It comes from US studies of 30-year retirements with US inflation. Two things make India different: inflation has usually run higher, and someone retiring early may need their money to last 40 or 50 years, not 30. Saving 30× gives you more room for both.

30× is a starting point, not a law. The planner lets you pick anything from 20× to 50×, and also checks whether your savings actually last to the age you choose.

Find yours: open the FIRE planner.

The 3.5% safe withdrawal rate

Once you retire, you live off your savings. The withdrawal rate is how much of them you take out in the first year. After that you take the same amount plus inflation each year, while the rest stays invested and keeps growing.

Take out too much and the money runs out. Take out a small enough share and returns can refill most of what you spend. 3.5% a year is a cautious level for Indian inflation and long retirements. The well-known 4% rule is again based on US data.

The two ideas fit together: saving 30× your expenses means you would draw about 3.3% a year, just under the 3.5% safe rate. The planner shows both, and how long your money lasts at your own return and inflation.

Plan your income: the Monthly Income calculator shows how long savings last at any withdrawal.