Hey folks,

This is how our lives typically look like.

You’re born and you just get a couple of years to chill. Once you’re put into pre-nursery, there’s no looking back. The script begins to play out — go to school, get good grades, decide your career path when you’re 15, join college and graduate. Then you get a job, get married, buy a house and have a kid. You pay for the house and the kid for the next 20 years, try and save up some money, and finally, at the age of 60, you get to hang up your boots.

But by then, your body isn’t as fit as it used to be. You don’t have the energy to do the stuff you’ve always dreamed about. And you wonder, “Was this life?”

Yeah, it’s a pretty depressing start to the final edition of Money Milestones, but it gets better from here.


We just wanted to ask — are you tired of this rat race yet?

Well, lots of folks are. And it’s no wonder that everyone wants to FIRE — Financial Independence, Retire Early!

But FIRE is not a one-size-fits-all concept.

On one hand, you might get people who’ll save every penny they can and invest it aggressively. They’re okay with missing those night-outs, holidays, new gadgets, anything that will interfere with their grand plan to buzz off from a 9–5 job. The sooner they can get out of the rat race, the better.

Or there might be others who simply want to strike a balance between living in the present and saving for the future. They’re fine pushing.

The only thing that’s usually common between both these segments?

Retirement does not mean they want to simply lie in bed all day just bingeing on potato chips and Netflix. They just want to retire from a life that’s controlled by others. They want to have enough money to live life on their own terms — take up projects that fulfil them and maybe spend enough time with the family. Be present.

So, the only question that remains is — how much do you need to lead that sort of retirement right now?

Well, if you like thumb rules, there’s something called the Rule of 25. All you have to do is take your annual expenses and multiply that by 25. It’s that simple.

Assume you spend ₹1 lakh a month on regular living expenses, that’s ₹12 lakhs a year. And if you multiply that by 25, you get ₹3 crores.

Yup, that’s really all you need.

How’s that, you wonder?

Okay. So think about it this way. If you have ₹3 crores and you put that money in a fixed deposit, you’ll get a payout of ₹21 lakhs in the first year. But you don’t need that much money. You only need ₹12 lakhs.

So at the end of the year, you actually have ₹3.09 crores. That’s more money than you started off with!

In the next year, you’ll need slightly more than ₹12 lakhs to spend. Because of inflation, of course.

But your FD that’s worth ₹3.09 throws out more money now. And even after the higher expenses you’re left with even more money in your account at the end of the second year.

But hold on…this trend won’t continue forever. Inflation will finally catch up and drive the expenses higher. And that will begin to eat into the money you saved up.

So yeah, that’s how this whole thing works.

There are a couple of things to keep in mind here.

Firstly, we’ve not assumed taxes. But of course, the real world isn’t that kind. So a better thumb rule might actually be the Rule of 30 instead of the Rule of 25. Better to be safe than sorry, right?

Secondly, don’t forget that the calculation only talks about a retirement fund. You’ll still need to save up if you want to take an international holiday every couple of years, buy a house, fund your child’s education, create an old-age medical emergency fund, etc.

When you add all that up, the numbers do seem a little scary.

But here’s a little ready reckoner that you can use if you want.

And if that isn’t enough and you want to plug in your own numbers, we’ve got you covered. Here’s a spreadsheet where you can calculate your FIRE number and even figure out how much money you need to invest monthly to help you achieve that.

Just know that there is one non-negotiable assumption baked into this. For instance, a life expectancy of 90. It might seem like it’s way too long but with the average life expectancy in India at 70 years, it’s good to stretch that little extra.

Keep in mind

While most stories around FIRE paint it in a glamorous light, we need to talk about the downsides too, no?

Nick Maguilli, a wealth manager in the US, wrote an article titled If You Play With FIRE, Don’t Get Burned. And here’s an excerpt from that:

I was reminded of this after recently reading this post about a retired FIRE blogger (“LivingAFI”) who was forced out of early retirement after five years due to unforeseen circumstances. The long story short is that LivingAFI and his wife enjoyed their first few years of early retirement, but then things went downhill. As both of them watched their friends get richer and go on fancier vacations, the wife started to feel like she was missing out. One thing led to another and she ended up having an affair which led to their divorce.

Unfortunately, LivingAFI also discovered that he had a serious medical condition that would require significant outlays into the future. As a result of his divorce and his new, ongoing medical expenses, LivingAFI came out of early retirement and rejoined the workforce.

Now Living AFI's situation might be an exception. But things like that can still happen to anyone, no?

Maybe it’s not just about tiffs with your partner. Maybe it's not a dreaded medical issue. But it could have to do with friendships too. I mean, many of your friends today might be centred around your work or profession. And what happens when you leave that? You might find that some of the common interests disappear and the friendship might get frayed too.

Just think about the tradeoffs that come with FIRE, alright?

Bonus Tip

When you open a FIRE calculator, it’ll ask you how much you currently spend every month. It’ll then adjust this amount for future inflation.

But here’s the thing, it ignores lifestyle creep — you know when we upgrade our lifestyles as our incomes rise. We eat out more often, we take swankier holidays, we buy a bigger car, etc. So your expenses rise as well.

So yeah, if you want to FIRE, remember that inflation’s okay but lifestyle creep can derail all your plans.

And with that, Money Milestones is a wrap!

Yes, we know that the end has come too soon. But we’d still love to know what you thought about the 4 editions over the past month. Just hit reply to this email or if you’re reading this on the app or web, drop us a message at money@finshots.in.

In the meantime, spread the love and tell your friends and family about the Money Milestones too? Send it their way through WhatsApp, LinkedIn, or X!

Until next time….

Finshots’ content is only for informational purposes. Please don’t take it as the gospel truth for financial advice. Always consult a financial expert.