Zindagi Na Milegi Dobara's Arjun Saluja taught us to chase FIRE, but how to protect it for 50 years

Like Arjun Saluja (Hrithik Roshan's character) in Zindagi Na Milegi Dobara, Deepak had a number in mind. Not for a business deal, but for his financial freedom.

An investment banker by profession, he spent years meticulously tracking every expense, increasing his investments with each salary hike, and building a portfolio he believed would allow him to retire at 40.

Then, during a conversation with his parents about their retirement finances, he began comparing their monthly expenses with what they had been just a few years earlier. Healthcare, medicines and caregiving costs had climbed far faster than he had anticipated. It made him wonder whether reaching his FIRE number was only half the battle and whether he had a strategy to protect his retirement corpus for five decades.

First things first! If someone is planning to retire at 40, they should be cognisant that they need to plan for the next 50 years, as life expectancy is increasing, says Abhishek Kumar, SEBI-registered Investment Adviser (RIA) and Founder of SahajMoney

This extended timeline requires:

• consideration of the compounding effect of inflation over the next five decades
• higher healthcare-related spending in the later part of their lives,
• and the risk of the sequence of returns in the initial years of retirement

“Hence, an early retiree must build a larger retirement corpus by targeting a lower withdrawal rate in retirement and by maintaining a margin of safety in the corpus to account for swings during multi-decadal economic cycles.”

Three strategies to protect your retirement corpus after retiring early

Lifestyle inflation is a silent tax

The biggest threat to your retirement corpus is lifestyle inflation, which quietly erodes its purchasing power with every passing year.

Many retirees flush with liquidity end up spending a lot on lifestyle, such as upgrading housing, frequent travel, or expanding family needs, and end up permanently raising the baseline expenses that the portfolio must now support.

If their spending increases faster than their previously planned withdrawals, their portfolio would be depleted more quickly, making disciplined budget tracking and flexible spending rules essential for preserving capital over their lifetime.

The 4% rule doesn't fit early retirees

The standard 25x expenses guideline and the 4% withdrawal rule, which were designed for a 30-year retirement window, are not applicable for a 50-year retirement horizon.

For over five decades, a fixed 4% withdrawal rate carries a significantly higher risk of failure due to a longer period of exposure to inflation and market downturns.

Thus, we suggest that someone planning to retire at 40 keep a more conservative target of 30x to 35x annual expenses, as this would help them maintain a safer initial withdrawal rate of roughly 3% to 3.5%.

Stick to disciplined rebalancing

For a retirement horizon of 50 years, one should revisit their portfolio semiannually to rebalance targeted asset allocation and adjust withdrawal amounts based on market performance.

More frequent monitoring is often counterproductive and increases the risk of market timing decisions during volatile periods.