Retiring early might seem like an impossible financial goal for many, but careful planning and a massive amount of determination it can be done.
I was just introduced to a concept call Financial Independence Retire Early (FIRE) which is a method of living below your means to obtain financial independence and security as early as possible. The mentality behind the movement is where one strives to live life on their own terms and to get off the proverbial hamster wheel where you are dependent on your employer and have the freedom and security to do so which plus off my recent post about valuing our most limited resource, time.
What is FIRE
What is FIRE?
The concept of FIRE is based on the notion that retirement is determined by a financial number and not by a person's age. It focuses on keeping expenses low and savings high. That means usually saving anywhere between 50% to 75% of your annual income to retire well before the age of 65 and usually without any debt.
My Journey
Most looking to pursue FIRE typically start by picking what's called a FIRE number, which is the amount of money you'd need to have saved to generate enough income to cover your expenses without having to work. To determine your FIRE number, start off by figuring out your yearly expenses, excluding savings and taxes.
My Fire number is $60,000.
From there, calculate how much savings you'll need to generate that much income without having a paycheck. I use the 4% rule, which says that retirees can safely withdraw about 4% of their savings a year without running out of money.
To generate my $60k I’ll need to save $1.5 million.
If you want to find your number it’s as easy as calculating 25 times your current annual expenses. That number could last indefinitely with regular 4% yearly withdrawals)
That number is pretty large but there’s many ways to help reach it. These include increasing your streams of income, cutting expenses or taking on additional work either now or part time in retirement.
All I know is we need to push this type of thought as cooperate America is slowly killing this generation. I’m hoping crypto will drastically increase my pace of retirement.