Definition of Safe Withdrawal Rate (SWR)
The Safe Withdrawal Rate (SWR) is the maximum percentage of your retirement corpus you can withdraw each year without significantly risking running out of money over a long retirement period. It is the foundation of FIRE planning.
The original '4% rule' comes from the Trinity Study (1998), which found that withdrawing 4% of the initial portfolio value annually had a 95%+ success rate over 30 years for US investors. For India, most FIRE planners recommend a more conservative 3–3.5% SWR due to higher local inflation (5–7%), LTCG taxes, no social security equivalent, and higher healthcare cost inflation.
Using a 3.5% SWR: if you spend ₹75,000/month (₹9 lakh/year), your FIRE corpus = ₹9L ÷ 0.035 = ₹2.57 crore. Using 4%: ₹2.25 crore. The difference in required corpus is significant. Use InvestKit's FIRE Calculator to model different SWR scenarios for your specific situation.