The FIRE Movement (financial independence, retire early) is a methodology aimed at empowering people to retire in their 30s or 40s. Here are the basics of how it works.
Start Saving Half Of Your Income
The idea is that you set an age that you want to retire, then determine how much money you will need to live on. Then you start putting half of every paycheck in the bank and in strategic investments, in addition to paying off 100% of your debt—including your student loans and mortgage. This does not include what you are investing in your employer retirement fund.
Is It Really Possible?
In order to save half of your income, you will need to scale way back, minimalist style. However, not everyone’s goal is to 100% retire but to grind it out for 15 or 20 years and when they achieve FIRE to continue working jobs that are less stressful and have more freedom. For example, doing contract-based projects, online work, or working a part-time job.
The Downside Of FIRE
For most, living slim gets old fast and reentering the traditional workforce can be an extreme challenge after an early retirement. It’s also important to keep in mind that the founder of FIRE is a US blogger who ‘retired’ at 30, but his online business is successful and he continues to earn around $400,000 annually. Yes, he lives a simple life but he has the comfort of a cushion.
Financial advisor Suze Orman is avidly against the Fire Movement primarily due to the loss of compounding retirement investments and the inevitable financial invariables. However, there is a happy medium between living your current life and scaling way back—if not to retire to achieve an improved quality of life.