How it works

Exactly what the calculator does, and what it leaves out, so you can judge how much to trust the answer.

1. Your plan becomes a yearly cash-flow schedule

Every rupee is placed in the year it is spent. Household spending rises with inflation and changes to your chosen percentage when you retire. Children's monthly costs and education fees rise with education inflation; abroad fees use their own rate, which should include rupee depreciation. A four-year degree is paid over four years, not as a lump sum. Goals already in the past are ignored. EMIs are fixed in rupees and stop when the loan ends. Health insurance rises with medical inflation plus an age loading until 75.

With a spouse or second earner, their take-home pay grows by its own rate until they stop working, and their EPF is tracked separately and unlocks after their own retirement. The plan runs until the younger of you reaches the “plan until” age; the chart still shows your age.

2. Each year is simulated

While you work, your SIP is split by your working allocation, and EPF, PPF and NPS contributions are added. Your take-home pay (and your spouse's) must cover spending, EMIs and all of these investments. If it doesn't, the gap is sold from your investments that year, so an unaffordable SIP is not counted as new money. Take-home left over (pay you neither spend nor put in the SIP) first pays any goals that fall that year; the share you choose of the rest (100% by default) is invested at your working allocation, and the remainder is assumed to be spent. Goals larger than the leftover are paid from your investments. When the calculator works out your SIP for a target age, leftover pay is not invested, so the SIP it shows is the whole amount you need to invest.

After you retire, rent, consulting income, any NPS annuity and your spouse's take-home pay (if they are still working) are counted first. The rest comes from investments, taken from whichever of equity, debt or gold is above its target share. This moves you towards your retirement allocation without any taxable selling just to rebalance. The emergency reserve is never spent: if a year can only be paid for by dipping into it, the plan counts as failed in that simulation.

3. Tax

You choose the regime; it applies to every year and to both of you. FY 2025-26 rules:

• New Regime slabs: nil up to ₹4L, then 5/10/15/20/25%, with 30% above ₹24L. ₹75,000 standard deduction on salary. Section 87A rebate up to ₹60,000 (income up to ₹12L) with marginal relief.
• Old Regime slabs: nil up to ₹2.5L (₹3L from 60, ₹5L from 80), then 5% to ₹5L, 20% to ₹10L and 30% above. ₹50,000 standard deduction. Section 87A rebate up to ₹12,500 if taxable income is at most ₹5L, with no marginal relief. While you work, the deductions you enter (80C, 80D, HRA and so on) reduce slab income; after you retire, only 80D on your health premium is claimed (₹25,000, or ₹50,000 from 60). Your spouse is assumed to claim none.
• Neither rebate applies against capital gains. Unused basic exemption does reduce LTCG.
• Equity and gold gains: 12.5% LTCG, with ₹1.25L a year of equity gains exempt.
• Debt fund gains: taxed at your slab rate.
• Surcharge (10/15/25%, plus 37% above ₹5 Cr under the Old Regime; capped at 15% on capital gains) and 4% cess.
• Rent after the 30% standard deduction; consulting income at 50% under 44ADA, or as salary if you choose.
• EPF, PPF and the 60% NPS lump sum are tax-free when withdrawn. The NPS annuity is taxed at slab rates.

Each withdrawal is solved so that, after tax, it exactly covers what you need. Only the gain part of a sale is taxed, using your average cost. With a spouse, the share of investments you put in their name is taxed in their hands, using their own slabs and exemptions; rent and the NPS annuity stay with you. By default the slabs rise with inflation; you can freeze them to see the effect of bracket creep.

4. Market simulation

Equity, debt and gold returns are drawn each year from lognormal distributions. You set the median return and the volatility; the equity defaults are an 11% median return and 22% volatility, in line with Nifty's long-run swings. The plan is run against 1,000 such histories. Every scenario you compare uses the same 1,000, so differences come from your changes, not from luck. “Chance money lasts” is the share of histories in which you never run out before the age you plan to.

The FIRE number is the smallest net worth at retirement, in today's rupees and with your projected asset mix, that reaches your confidence target. “When can I retire” finds the earliest age that reaches the target with your current SIP. “How much should I invest” finds the smallest starting SIP, rising by your step-up, that reaches it at your chosen age.

5. Limitations

• All gains are treated as long-term. Short-term gains, STT and exit loads are ignored.
• Inflation is a fixed rate. It does not vary between simulations.
• Equity, debt and gold returns are independent. There are no crash correlations or mean reversion.
• Tax on debt gains is paid only when you withdraw. Annual tax on EPF interest above the contribution limit is ignored.
• PPF is treated as fully available at retirement; in reality partial withdrawals follow the 15-year cycle.
• The NPS annuity is a fixed amount in rupees for life and is not passed on to a spouse.
• No surcharge marginal relief. Future changes to tax law are not modelled. Old Regime deductions are a single amount that rises with inflation; we don't check which sections they fall under.
• Your spouse's NPS and PPF are not tracked separately; include them in the joint investments. Clubbing of income on gifts between spouses (Sec 64) is not checked.
• Before retirement, rent is treated as part of your take-home budget.
• Real estate you live in is excluded. Add other property only through its rent.

This is a planning tool, not advice. Small changes to return or inflation assumptions move the answer by years. Try the pessimistic settings too.