FIRE in India: Why early retirement may be unrealistic—but financial freedom isn't
Given family obligations and the costs of children's education, chasing FIRE may not always be as successful as in the West. What's a better way to approach it then?
“I’ve exhausted my savings in funding my daughter’s MBBS education. Her post-graduation is still left. At the age of 55, I will start saving for retirement from scratch. I will retire with no corpus, or perhaps never retire," said an attendee at the Mint Money Festival in Bengaluru on Saturday. His story, shared during a session on FIRE, or Financial Independence Retire Early, underscored how unrealistic the idea can feel in India, weighed down by education costs and family obligations.
FIRE is a global movement that has captivated young professionals with its radical promise: work and save aggressively in your 20s and 30s, so that by your 40s or 50s, you no longer need to earn a living. The concept, popularized in the US by bloggers such as Mr. Money Mustache, is built on three pillars—frugality, high savings rates and early investing.
But Vidya Bala, co-founder of PrimeInvestor, who spoke at a session on FIRE and retirement planning, explained why this American model rarely works in the Indian context. “Indians rarely think only of themselves in retirement planning. Here, you provide for your children’s education and often support ageing parents. That changes the math completely," she said. Moreover, the American FIRE formula assumes a benign inflation of 2-3%, while India lives with 5-6%, with healthcare inflation rising even faster.
Think financial freedom, not early retirement
That doesn’t mean financial independence is out of reach. Bala stressed that the key lies in starting early. Even modest sums invested over long horizons can snowball into substantial wealth. “If you invest ₹10,000 a month for 15 years at 12%, you end up with ₹51 lakh. Delay by just five years, even with a higher contribution of ₹15,000 per month, you are left with far less at ₹39 lakh," she said.
Yet, she cautioned against chasing arbitrary targets like ₹3 crore or ₹4 crore for retirement. “Costs vary with lifestyle, medical needs and family responsibilities. The number is not fixed; instead, retirement is a moving target that needs to be reviewed and adjusted every few years."
If early retirement feels unrealistic, delaying the goal slightly can make it achievable. Postponing retirement from 50 to 55, Bala noted, can cut the required monthly savings by nearly half. Many professionals also supplement their income post-retirement with consulting or freelance work, stretching their corpus while staying productively engaged, she added.
Separate retirement from other goals
She also urged parents to draw firmer boundaries when it comes to funding higher education for their children to safeguard their retirement savings. “It is taken for granted that parents will bankroll expensive postgraduate degrees, even if it comes at the cost of their own retirement. Your child deserves the best, but let him or her earn it," she said, pointing out that education loans and scholarships are widely available. If you drain your savings entirely for your children’s studies, you risk leaving yourself with nothing for retirement.
The lesson from the session was that FIRE in its American form may not fit Indian realities. But financial independence, which is defined as the freedom to choose how you work and live, is possible with early investing, realistic expectations and disciplined planning.
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