The withdrawal rate you choose at retirement decides whether your money lasts as long as you do. See the same retirement at three different rates.
Each year's withdrawal rises with inflation, same lifestyle in real terms.
| 4% rule | ₹0 / yr |
| 5% rule | ₹0 / yr |
| 6% rule | ₹0 / yr |
| Year | 4% rule balance | 5% rule balance | 6% rule balance |
|---|
Worked answers, using the same formulas as the calculator above.
Withdraw 4% of your corpus in the first year of retirement, then raise that amount with inflation every year. It comes from a 1994 study of US market history over 30-year retirements. Where it came from, and its assumptions.
On ₹5 crore earning 9% a year with 6% inflation, a 4% withdrawal (₹20 lakh in year one) lasts the full 30 years with about ₹11.7 crore left. At 5% the money runs out in year 29, and at 6% in year 22. One or two percentage points decide whether the corpus outlives you.
It depends on how long retirement lasts and the gap between your return and inflation. Over 40 years at 8% return and 6% inflation, 4% runs out in year 34 while 3.5% lasts. For early retirement in India, 3% to 3.5% is the more cautious planning range.
Because withdrawals rise every year while the corpus is shrinking. At 6% inflation, a ₹20 lakh first-year withdrawal becomes about ₹36 lakh in year 11 and ₹64 lakh in year 21. The real test of a withdrawal rate is the return minus inflation, not the return alone.
₹12 lakh a year divided by the withdrawal rate: about ₹3 crore at 4%, or ₹4 crore at 3%. That is in today’s rupees; the FIRE number calculator inflates it to the year you retire.
No. It uses one fixed return every year, so it shows the maths of each rate, not the luck of the sequence. In real markets a crash in the first years of retirement does far more damage than the same crash later, so leave a margin below whatever rate this shows as just surviving.