Does the concept of early retirement movement (FIRE) make sense to you?

The FIRE movement believes that the traditional retirement age of 65 is too late and insists that with some smart planning and serious frugality, you should be able to retire earlier than that.

What is the FIRE Movement?

The FIRE movement consists of people across the country who believe that you should retire before you reach age sixty, with some even advocating for retirement at age thirty. If you think that’s impossible, just look at one of the leaders of the FIRE movement, Mr. Mani Mustash.

Extreme Frugality Steps

To make the FIRE movement work, you need to combine aggressive saving with extreme frugality. This may be the toughest part of the FIRE movement for most middle-income individuals. If you’ve read about frugality before, you may have only scratched the surface compared to how some people in the FIRE movement choose to live.

Save 50% or More of Your Income

What do you do with all that extra saving when you’re no longer spending it on regular purchases, shopping, and bills? Save it in a low-cost index fund. Many FIRE-focused households and individuals put all their money into a Vanguard fund for the S&P 500. This fund charges only 0.04% in fees for the Admiral Shares version, which is available to those with at least $3,000 to invest.

Calculate Early Retirement Date

If you spend $25,000 per year, then $100,000 in savings gives you four years’ worth of living expenses. By cutting your expenses as much as possible and saving at a high rate, you will eventually reach an early retirement point that allows you to leave your job for good.

Of course, most people want to spend more than $25,000 on expenses. While many individuals have found success in the FIRE movement, the reality is that most people would not be happy living such a frugal lifestyle, if they could even maintain it at all.

But that doesn’t mean you can’t learn something from the FIRE movement. If you can take small steps to cut expenses and increase savings, you might find yourself on the right track to early retirement too, perhaps not at age thirty, but certainly before you turn 65.

Source: https://www.thebalancemoney.com/does-fire-early-retirement-make-sense-for-you-4160765