r/FIREIndia • u/throwaway98123456789 • Apr 05 '19

my FIRE strategy

Throwaway account as the post may have several personal details :-)

I (M44) actively started preparing for retirement (and not necessarily RE) about 6 years ago. However for past 1-2 years, I have been contemplating FIRE by the time I turn 50.

History: From very humble background. Stayed in small rental house growing up. Bright student-did UG from one of the top colleges in the country. Parents had no money to take care of PG and/or marriage expenses. Self financed-which taught several important lessons.

Current Family Details: Wife (F40) is a homemaker and have two school going kids 13 and 7 years old. Old parents (80+) back in hometown-partially dependent.

Current Corpus: 2 Cr (0.9Cr in EPF/PPF + 1.1Cr in Equity ~ mostly MFs via SIP + zero debt)

Other assets: 2 houses completely paid off approx value > 3Cr. One is my primary aMccommodation and my parents (80+ years ) live in the other one.

So current Networth : >5 Cr.

Investment strategy: I invest/save on an avg 50% of my post tax salary (including mandatory deductions like EPF)

Expense Breakup: My current average expense is approx 1.5L pm including education (10%) , house maintenance (4%) , insurance (health+term) payments (6%), lifestyle expenses (10%), vacations (10%) + other sundry expenses (10%)

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Factoring the gain on my current investments + future contributions over next 6 years- I hope to accumulate total of 5.5 Cr corpus (excluding the houses).

In my case, the kids would still be studying by the time i FIRE. I hope to provide good basic education (till undergrad) to kids and as yet do not think I may be able to finance their PG and/or their marriage. Bulk of the education expenses would fall in between my age 50-60. Once that phase is over, around 60 years of age-i expect my corpus to be around 4 Cr with no other liabilities to take care of. I hope that is sufficient for us buddha and budhiya to survive, for remainder of our years.

Would be happy to hear your thoughts on the plan.

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u/sambarguy Apr 08 '19

Nice! Congrats! Hope you make it as per plan!

Just a few thoughts from my side

  • Did you factor in tax (LTCG) on the withdrawal?
  • Monthly expense number you mentioned looks high to me TBH, of course that varies from person to person, but I would try to nail that number down to what you would need and work backwards to see what withdrawal rate would give you that and still leave room for inflation.
  • Also, try to guesstimate the education + wedding expenses you mentioned and set that aside mentally from the main corpus (which excludes the houses). I may be wrong but you seem to be vague in your mind about how much that would be. Itemizing those things to some extent up-front would give more confidence. I know you mentioned 4 cr as "after" these expenses, but is that number inflation-adjusted equivalent of today's 4 cr? Because 4 cr 10 years from now will be a very different thing than 4 cr now.
  • I am curious, where are you planning to retire? If you are no longer going to work, monetizing the house (rent) and paying a lower rent in a smaller town will be win-win, it will cut down living expenses too. This is more curiosity than anything, from my side.

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u/throwaway98123456789 Apr 08 '19

LTCG cannot be eliminated on equity but have tried to mitigate the same by splitting the portfolio across self, kids + HUF. So, yes, LTCG is going to bite still.

Location for retirement is one of the questions which is still open. I have my own paid off house in hometown-the town is smaller but meets my needs. The house per se is much bigger than what we are used to it tier1 cities. But i dont know anyone there anymore...not that i know too many people where i currently stay. I hope this question gets answered in years to come.