Is the 25X rule enough to retire early in India or do we need a bigger corpus?

The blueprint for FIRE in the US does not seamlessly translate to India. In the US the standard FIRE rule of thumb is accumulating 25 times your annual expenses. In India financial experts agree that 35X is the absolute minimum baseline.

But you actually need to take this a step further and aim for 35X plus OMG. First you must calculate your true annual expense by annualizing everything. Multiply monthly school fees by 12 and add annual insurance premiums.

Divide bi-annual international vacations by 2 and divide car upgrades every 5yr by 5. Even with 35X your underlying assumptions regarding tax rates and a standard 60:40 equity debt asset allocation can fail. To protect against this you must add OMG to your corpus.

• O stands for One-Time Expenses like a child's higher education which require dedicated separate corpuses.
• M stands for Margin for Error because humans consistently underestimate their future expenses.
• G stands for Gap in Assumptions which covers deviations between your assumed tax rates and your actual portfolio implementation.

Retiring early in India means planning for 40-50yr of living without an active income due to rising life expectancy.

Disclaimer: All information shared above are strictly for educational and informational purposes only. It should not be construed as financial or investment advice.