For a growing number of workers, the FIRE movement has redefined retirement planning. Adherents of FIRE—an acronym for “financial independence, retire early”—aggressively save and invest their way to a early retirement. “The goal of this movement is for you to save and invest as much as possible, usually somewhere between 50% to 75% of your income, so you can retire earlier than the traditional retirement age,” says financial educator Katia Chesnok. “People who join this movement strive to retire before 65 years old, usually in their 30s or 40s.”
First introduced by the 1992 book Your Money or Your Life, the lifestyle has gained popularity through articles, blogs, vlogs, podcasts and books released to showcase how to swap full-time employment for a flexible, financially sustained life. There are a number of millennials detailing how to achieve FIRE, but, with most of the tips geared toward high-earning professionals, can a FIRE lifestyle be achieved by working and middle class professionals?
The answer is yes.
Personal finance expert Dominique Broadway advises those who aren’t in high-earning roles to, as with any aspiring FIRE members, get clear on how much money is needed to sustain their lifestyle. “You have to think about how much you need to make to live comfortably,” she says. “First, identify what lifestyle you want when you retire. How much do you need to have every year, every month to be comfortable?”
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A key metric for those within the FIRE movement is their FIRE number, or the number needed to retire early. After determining monthly expenses through budgeting, Chesnok advises people to multiply the amount of their monthly expenses by 12, so you can get the figure for your annual expenses. Then, multiply your annual expenses by 25, which is based on the 25x rule, which notes you need to save 25x your annual expenses to retire.
“To calculate your FIRE score, you also need your annual safe withdrawal rate,” she adds. “The most common example is that if your withdrawal rate is 4%, you need to multiply your budget by 25 to get your total, which is what you need to save to reach the FIRE goal.”
The 4% rule is discussed in one of Amon and Christina Browning’s YouTube videos. The co-creators of Our Rich Journey have produced more than 100 videos chronicling how they achieved FIRE by the ages of 39 and 41. Both former civil servants, the married couple bartered services; invested in real estate, …….
Source: https://www.wellandgood.com/fire-retire-early-without-being-a-millionaire/
