🔥 FIRE (Financial Independence; Retire Early)
According to Wikipedia.org [1]:
The FIRE (Financial Independence, Retire Early) movement is a lifestyle movement with the goal of gaining financial independence and retiring early.
The main ideas behind the FIRE movement originate from the 1992 best-selling book Your Money or Your Life written by Vicki Robin and Joe Dominguez
TLDR
- Save $ (by always searching for ways to cut expenses).
- Avoid "lifestyle creep" even if your income goes up.
- Figure out the total annual amount of money you would need in retirement and divide that by .04. The result is your target number.
- Once you have that target number in diversified investments, you can retire!
Example
If my household's annual expenses to support our current lifestyle are (just picking a round number for simplicity) is 100,000, we then divide that by 0.04 (4%)[2] and the result is $2.5 million. That's the target number. Once my household's net worth is 2.5M then we can retire. Of course, if you are willing to live on less in retirement than what you have now, you can reduce your target number eg if in retirement you can live on 35,000/y then the target number is 875k.
⚠ There is a lot of nuance and assumptions in the above, and I am not a financial advisor - so definitely do your own research and talk to people you trust.
Challenges
- getting rid of existing debt
- being disciplined about not only saving money, but also to investing it
- even after maxing 401k, IRA, Roth, etc,
- and not touching it
- continually looking for more areas to save money and cutting down on expenses
- trading off time and comfort today in order to secure it in the future - indefinitely.
- getting access to high quality earning opportunities
- staying focused on the journey of "buying back" your time
- learning to have fun along the way
Resources
- Wikipedia FIRE
- Reddit FIRE Sub
- Other Sub Reddits:
- Mr Money Mustache Blog
- FIRECalc: A different kind of retirement calculator
"FIRE Movement." Wikipedia, Wikimedia Foundation, 1 Feb. 2023, en.wikipedia.org/wiki/FIRE_movement. Accessed 10 Mar. 2023. ↩︎
Mustache, Mr M. "The 4% Rule: The Easy Answer to “How Much Do I Need for Retirement?”." MrMoneyMustache, 29 May 2012, www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/. Accessed 10 Mar. 2023. ↩︎