I ran into a college friend after years. Once we had finished with the canteen, the professors and everyone we had lost touch with, I started complaining about work — the commute, the meetings, the same week repeating itself. I said what most people in that mood say: I would love to stop in about ten years.
He nodded and told me that has a name now. FIRE — financial independence, retire early. Everyone I know seems to want it. Almost nobody I know has checked whether they are anywhere near it.
So here is the check. It takes about two minutes and it is more useful than any amount of daydreaming.
Rich is a ratio, not an amount
Being financially secure has very little to do with a headline number. Someone with ₹3 crore and a lifestyle that costs ₹40 lakh a year is in a tighter spot than someone with ₹1.5 crore and a lifestyle that costs ₹8 lakh a year. What matters is the relationship between what you have and what you spend.
So the number worth knowing is simple: your invested savings divided by your annual expenses. If you have ₹1 crore invested and you spend ₹10 lakh a year, that ratio is 10. Read it as "ten years of my spending". That is the honest reading, and it is the one to start from.
Note the phrase is your spending, not an extravagant version of it and not a stripped-down one. Use what your life actually costs, including the irregular things — insurance premiums, school fees, the annual trip, the repairs you forget about until they happen.
Where the "25 times" rule of thumb comes from
You will often see the claim that you need 25 times your annual expenses. It is simply the inverse of withdrawing 4% of your pot in the first year — 100 divided by 4 is 25. That withdrawal figure came out of studies of long historical return sequences in a particular market over particular periods.
Treat it as a rough illustration of the shape of the problem, not as a target and certainly not as a promise. It is arithmetic built on assumptions about future returns and inflation, and neither is known in advance. Change an assumption slightly and the multiple moves a lot. Nobody can hand you the correct number for your own retirement, because it depends on how long you live, what markets do while you are drawing on the pot, and how flexible your spending turns out to be.
What the ratio is genuinely good for is showing you the distance. A ratio of 2 and a ratio of 18 are different worlds, and you should know which one you are in.
Count only what you can actually spend
When you do this calculation, count liquid financial assets — things you could convert to money in a reasonable time without wrecking your life.
The house you live in is not part of the pot. You cannot sell the bedroom to pay for groceries. Nor is a stake in a family business you cannot exit, or jewellery you have no intention of selling. Those may be valuable, but they do not fund a monthly expense, and counting them makes the ratio look better than your position really is.
The moving target underneath
There is one more thing that makes this harder than the arithmetic suggests. The denominator does not stay still. The ₹10 lakh your life costs today will cost more later, because prices rise. Over a retirement measured in decades, that drift is not a detail — it is most of the problem.
That is the real reason the pot has to be invested in assets that can grow rather than parked somewhere safe and static. Not because growth is exciting, but because a fixed pile of money loses purchasing power against a spending figure that keeps climbing. Growth also brings volatility, which is its own problem when you are drawing money out. Both sides of that trade-off are real.
Do the sum
Add up what you have invested. Add up what a year of your life costs. Divide. Whatever the answer is, you now know something specific instead of something vague, and specific is what you can work with.
This article is general information for education only. It is not investment advice and does not take account of your circumstances. Investments in securities are subject to market risks; please read all related documents carefully before investing.
