You can work out when you could retire early from four numbers: the corpus you need (a year's spending times a multiple), what you have invested today, what you add each month, and the return you assume above inflation. Grow the middle two at that real return, year by year, and the first year they reach the target is your financial independence (FI) year.
What four numbers decide your FI year?
Sujata is 33 and on a ₹38 lakh CTC with no variable pay, about ₹2,19,600 a month in hand (FY 2026-27, new regime, PF on full wages, as in CTC vs in hand salary).
| Number | Sujata's figure |
|---|---|
| Target corpus: 33 times a year's spending (₹70,000 a month, ₹8,40,000 a year) | ₹2,77,20,000 at today's prices |
| Invested today | ₹40,00,000 |
| Added each month, raised each year with prices | ₹80,000 |
| Real return: 12% assumed, adjusted for 6% inflation | about 5.66% a year |
The multiple sets the withdrawal rate. Her money may need to last close to 40 years, to 85, so she uses 33 times, a 3% first-year withdrawal. The 4% rule's 25 times comes from 1994 research on 30-year US retirements; the 25x or 33x post explains why.
The return must be real because the target and the ₹80,000 are at today's prices; 1.12 ÷ 1.06 is 1.0566. The 12% and 6% are October 2026 assumptions, not forecasts.
Her salary is not one of the four; it counts only through her savings rate, about 36% of take-home invested. The ₹69,600 or so she neither spends nor invests stays out of the sum.
How do you work out your FI year by hand?
Grow each part at 5.66% a year and add them, counting each year's ₹9,60,000 as invested at its end (power of compounding shows how growth builds).
After 13 years, in 2039, when she is 46: ₹40 lakh × 2.046 (13 lots of 1.0566 multiplied together) is ₹81.8 lakh, and ₹9.6 lakh × 18.48 (2.046 less 1, divided by 0.0566) is ₹1.77 crore. Together, ₹2.59 crore: short.
After 14 years, in 2040, when she is 47: ₹40 lakh × 2.162 is ₹86.5 lakh, and ₹9.6 lakh × 20.53 is ₹1.97 crore. Together, ₹2.83 crore: her FI year is 2040, at 47.
To compare, enter age 33, FI by 47, ₹70,000 of monthly expenses, ₹40,00,000 of current investments and ₹80,000 of monthly investment in the FI calculator, leaving its defaults: a 5% yearly step-up, the nearest to rising with prices, 12% return, 6% inflation and plan till 85. In October 2026 it shows 2037 (Age 44), three years before the hand sum's 2040, and puts her need at 47 at ₹4.95 crore in that year's rupees.
Most of the gap is the target. The calculator uses no fixed multiple: it plans spending to 85, rising 6% a year until she stops and 5% after, with her money earning 7% once she stops. At 47 that is about 26 times her first-year spending, and at 26 times the hand sum lands in 2038. The rest is timing: the calculator invests monthly, the hand sum yearly. So 2037 is the soonest her plan works on its terms; 2040 leaves room for a life past 85 or a poor first decade.
Which number moves the early retirement age most?
Each row changes one thing. What she invests moves the year most, three to four years each way; the return moves it one to two, the multiple one to three.
| Change from Sujata's plan | Target at today's prices | FI year (age) |
|---|---|---|
| None | ₹2.77 crore | 2040 (47) |
| 30 times spending | ₹2.52 crore | 2039 (46) |
| 25 times spending | ₹2.10 crore | 2037 (44) |
| Real return 4% | ₹2.77 crore | 2042 (49) |
| Real return 7% | ₹2.77 crore | 2039 (46) |
| Invests ₹1,20,000 a month | ₹2.77 crore | 2037 (44) |
| Invests ₹50,000 a month | ₹2.77 crore | 2044 (51) |
| Spends ₹85,000, invests ₹65,000 | ₹3.37 crore | 2044 (51) |
Watch the last row: shifting ₹15,000 a month from investing to spending cuts her savings rate from about 36% to 30% of take-home and adds four years, since it raises the target and slows the build-up at once (lifestyle creep shows how). In the calculator, a 10% step-up instead of 5% moves her FI age from 44 to 43; step-up SIP compares the rates.
Put your own four numbers into the FI calculator to see the year you could be financially independent.
What does the hand sum leave out?
Tax: the 12% is pre-tax. Gains on equity held over a year are taxed at 12.5% above ₹1.25 lakh a year (since 23 July 2024), and on debt funds bought from April 2023 at her slab rate, so withdrawals must cover a little more than spending.
EPF: left out, it is a cushion. Health cover: a group policy usually ends with the job, and premiums climb with age, so healthcare costs in retirement sizes a separate pot for them beside the corpus.
The order of returns: a market fall in her first years without pay hurts more than one later, as she would sell to pay bills; sequence of returns risk works a 25% fall in year one against year ten, and the retirement planning guide gives the mix by age.
Dhi maps your investments to goals, financial independence included, and answers questions from your own numbers, such as how far they are from the target. Dhi looks at your cash flow, net worth, protection and goals together and nudges when something needs attention.
Frequently asked questions
This is general information for salaried individuals in India, not personalised financial advice.
