Newsletter

Does F.I.R.E really burn bright?

BY Vijay Kuppa
4 Mins Read
February 9, 2025

The Finance Minister has given us a solid tax break in this year’s budget (you can download the Budget Highlights here). While that extra cash might tempt you to splurge, it’s worth asking: Could spending it today hurt your long-term financial freedom—especially if you’re aiming for F.I.R.E?

But before we get started, do you know about F.I.R.E?

If you’re new to this concept, let me briefly tell you about it—and let’s also discuss whether you should play with F.I.R.E!

F.I.R.E: Hot or Not?

Let’s break this into two key components:

Financial Independence (F.I) – This is when your investments are enough to cover your expenses, meaning you no longer need to work for a living.
Retire Early (R.E) – This is the decision to stop working once you’ve achieved F.I, often years before the traditional retirement age.

This isn’t a new concept globally, but its flame is spreading rapidly in India. The pandemic played a big role. People reassessed their priorities, craved more freedom, and sought ways to live life on their terms.

India, with its rising incomes, tech-driven work culture, and growing awareness about personal finance, is becoming a fertile ground for F.I.R.E enthusiasts.

But is F.I.R.E for you?

Are You Ready?

Determining your F.I.R.E number

Your F.I.R.E number is the amount you’ll need to sustain your desired lifestyle post-retirement.

To get started, try online calculators that estimate how much you’ll need and when you can achieve financial independence based on your savings and investments. These tools can help you figure out your target corpus and the monthly investments required today to retire at your desired age.

For reference, here are a few F.I.R.E/ retirement calculators you might find useful:

Being disciplined in saving & investing

Living below your means is often the cornerstone of F.I.R.E. For those aiming to retire early—say between the ages of 40 and 45—this may require saving and investing more than half of your current salary every month. You may need to live below your current lifestyle and that’s easier said than done.

This level of commitment can come with significant adjustments:

Skipping fancy vacations
Cutting back on dining out
Avoiding impulsive purchases

While some can thrive on this minimalist approach, for most, it’s a tough, long-term sacrifice. My sense is that F.I.R.E often works best for high earners who can save 50% or more of their income while still enjoying a comfortable lifestyle.

Beyond saving aggressively, smart investing is critical. Compounding, asset allocation, and market exposure can accelerate wealth creation. However, market risks are real—imagine retiring in 2008 or March 2020, when the markets plummeted. A solid plan should include contingencies for such downturns.

Planning your retirement well

Retiring early sounds exciting, but it’s not all sunshine and rainbows. Without a plan, you might find yourself bored, restless, or even financially strained.

While you may be wealthy on paper, a lack of steady cash flow can leave you feeling cash-poor. And liquidating assets just to cover routine expenses isn’t always an easy or desirable option.

Also, think about what your ideal day would look like. Will you travel, start a business, volunteer, or spend time with family? Planning your retired life is just as important as planning your finances.

I have come across a few instances, where folks after retiring, don’t know how to use their new found freedom well and want to get back to working soon. Sometimes the lack of constant cash flow also pinches.

A more balanced approach

Instead of chasing F.I.R.E to the extreme, a more sustainable approach could be something like:

Opting for Semi-retirement: Working part-time, freelancing, or starting a passion project instead of completely stopping work.
Having Passive income streams: Investing in assets that generate income—dividends, rental income, or side businesses—to reduce reliance on a single corpus, and bring some cashflow in.
Having the right Asset Allocation: Chasing F.I.R.E can lead to inappropriate asset allocation (investing too much in risky assets to chase returns) and can lead to more stress in the future. Hence, It’s important to diversify your portfolio and have an asset allocation thats suitable for your age and risk profile.

The big takeaway

I believe everyone should strive for Financial Independence—it gives you options, security, and the ability to live life on your own terms. But after speaking to so many people on this journey, I’ve realized that Retiring Early isn’t always the dream it’s made out to be.

Yes, it sounds incredible to quit the 9-to-5 grind in your 40s, but at what cost?

Financial independence is always a great goal, but retirement doesn’t have to be the endgame. Instead of obsessing over quitting work as early as possible, why not aim for a life where you have financial well-being without extreme sacrifices?

Because, in the end, wealth isn’t just about having money – it’s about the freedom to lead a satisfied life.

I hope you enjoyed this newsletter and if you did, feel free to share it with your friends and family.

Also, if you have any topics that you would like us to cover or any other feedback, do write to us at connect@incredmoney.com.

Till the next time,

Vijay

CEO – InCred Money

P.S. I share my thoughts on Investing and the Economy regularly. You can follow me here.