How bumpiness and certainty set your number

Asha fills in the calculator and reaches two questions that sound like settings: how bumpy her investments are, and how sure she wants to be. She picks Balanced and 8 in 10, because they sound sensible. Her FIRE number for stopping at 58 comes out at ₹5.46 Cr in today's money. With steady returns it would be ₹3.79 Cr. The two answers she barely thought about added ₹1.67 Cr to it.

What a bumpy year looks like

Her investments are expected to return 11% a year before costs. That is the middle of what can happen. A single year can land well above it or well below it, and bumpiness says how far. The calculator tries 400 futures, and in each of them every year's return is drawn around the middle.

On the timeline this range is the yellow band behind the return line. The line itself stays where it is, because it is the future of average luck.

Why a bumpy year costs money

While you are still investing, a bad year mostly delays you. In retirement it does more damage, because you keep taking money out while prices are low. The shares sold to pay for that year are gone before the recovery comes. So for each future, the calculator works backward from the end of the plan and asks what corpus that future needs on the day you stop. Futures with bad years early in retirement need a lot more than the rest.

"How sure do you want to be?" picks from that list. At 8 in 10, the FIRE number is the corpus that is enough in 320 of the 400 futures. At 19 in 20 it has to cover all but the worst 20.

Each step up in certainty costs more than the step before, because the last futures covered are the worst ones. The calculator shows these numbers under each answer, for your own plan and date.

One row can look wrong. Balanced at even odds, ₹3.69 Cr, is less than the ₹3.79 Cr that steady returns need. Even odds covers the middle future, and in this model the middle future does a little better than the future of average luck. Losses come bunched into bad stretches that are rare and deep, so ordinary years run slightly above the average, and a little more than half of the futures finish ahead. Bad years early in retirement push the other way. Just above even odds they win, and from there on a bumpier plan needs more than a steady one.

The cushion

Asha's number splits in two. A future of average luck needs ₹3.79 Cr to pay her spending, her reserve and her legacy. The other ₹1.67 Cr is the cushion: what 8 in 10 certainty adds on top, so that the plan also survives the bad futures it promises to cover. The cushion is the price of the certainty. It is money she has to save, so it is years she has to keep working.

If you stopped working today

The same sum works for any date, including this month. For Asha, stopping today would take ₹8.69 Cr invested today, of which ₹3.05 Cr is the cushion. The calculator's "Stop working today?" button shows this for your plan, split into what it pays for. At 30 that is far out of reach. The number falls with every year you keep working, because each year adds savings and takes a year of spending off the end.

A lower certainty is a smaller number and an earlier date, bought with a higher chance of cutting back later. Why the average path is not enough explains why the order of good and bad years matters so much.

Open this plan in the calculator