Financial Independence Retire Early (FIRE)

Retiring in your 60s is too old/ Retire by 30 instead.

Financial. Independence. Retire. Early

The FIRE movement is made by people with this idea in mind.

Generally when you hear FIRE its not something you are interested in. As well as the word retirement. Unless you are approaching 65 you don’t think you qualify.

To make FIRE work you need to become extremely frugal and save! It requires cutting back on groceries, trips, clothes, and other miscellaneous expenses.

People are starting to retire as early as their 20s nowadays.

Rules to FIRE:

Determining what you need to retire at any given age, you’ll need to calculate how much you will spend during retirement.

Lean FIRE is an easier method of FIRE, it releases the extremity of FIRE saving.

Barista FIRE allows you to retire early but requires that you work a part-time job for health benefits and extra income

Fat FIRE requires more money than the two above methods. Gives you more security in your retirement but it is tough.

  1. FIRE starts with understanding your financial lifestyle. Define what financial independence means to you. Retiring because you hate your job is not a goal. Self- reflect on the real reason you want financial independence.
  2. You must strategize. Calculate how much money you need to reach your definition of financial independence.
  3. Recover your debt. You cannot retire early owing debt. If this is your reality this is your first step in FIRE. Debit controls all valuable assets

Financial independence means that you can live with your life without considering earning money. This method doesn’t mean you have to quit your job. You are free to work as little and as much as you want.

FIRE’s main focus is not retiring early. In fact, it’s about creating financial independence living out your wildest dreams.

More than 50 percent

Create an annual budget to plan expenses. It’s best to put your savings into a fund with interest. Many financial advisors suggest using 401K or IRA to invest at least 10 percent of your income. These are restricted retirement saving accounts have a minimum age to withdraw. It’s not the age of 30.

Financial Advisors for You:
JP Morgan
Wells Fargo

By committing up to 70% of income for savings starts your journey to FIRE. Once savings have reached over 30 times your yearly expenses you may retire.

How to calculate early retirement

To retire in 5 or 6 years the most important rate is your savings rule. The higher the rate the earlier you can retire.

Hypothetical

Earn 5% investment return
4% withdrawal number
Middle-income family current income $50,000
Current Annual savings $35,000
Current Anual expenses $15,000
Current Savings rate 70%
You can retire in 8.8 years

CalculatorCalculator(1)Calculator(2)

While the idea of retiring in the next nine years may excite you, is this enough money?

I’ve linked below the retirement calculator use to create these figures.

*Retirement calculator*

How to make sure you have enough money for retirement?

How old are you going to get anyways?

Chances are you going to live longer than the age of 84. The longer you live, the longer you are going to need living expenses. There is no way to predict inflation in future years. For a retiree to generate $50,000 a year after they stopped working they will need $1,500,000 to support a 30- year retirement.

Retire at 30 you’ll need at least a 60- year retirement fund. $3,000,000.

The worst thing you can do is not save enough. Think about cutting back on family expenses and save. Being retired doesn’t mean you cannot work either. Earn extra money to afford unnecessary expenses throughout the years. Part-time jobs are ideal for people in this situation. Making extra money that their necessary expenses do not account for.