ChatGPT recently calculated a ₹12.5 crore retirement corpus for a Delhisourced tech professional earning ₹25 lakh per annum who wants to retire early.
The calculation is based on the ‘Financial Independence, Retire Early’ (FIRE) concept, popularized by enthusiasts who want to live off their savings without working. The idea is to build a retirement corpus that can generate enough income to cover annual expenses without depleting the principal amount.
How does FIRE number work?
The FIRE number is calculated by multiplying the desired annual retirement income by 25. In this case, the tech professional wants to earn ₹25 lakh per annum in retirement. ChatGPT used this number to arrive at a corpus of ₹12.5 crore
This means that the tech professional would need to save and invest ₹1.25 crore per year for 10 years to reach the desired corpus. However, this is a simplified calculation and doesn’t take into account various expenses like inflation, taxes, or market volatility.
What this means
The calculation highlights the challenges of achieving financial independence, especially for individuals with high living expenses or low savings rates. The FIRE number serves as a rough estimate, and actual numbers may vary based on individual circumstances.
To achieve this goal, the tech professional would need to be disciplined about saving and investing a significant portion of their income every year. They could also consider increasing their income through raises or side hustles, or reducing expenses to free up more money for savings.
A reality check
The calculation also underscores the importance of starting early and being consistent with savings and investments. By beginning to save and invest at 25, the tech professional has a decade-long head start compared to someone who starts saving at 35.
