What is it?
Have you heard of people retiring early? Or maybe the term FIRE but didn’t know what it meant? Well I’m here today to tell you the basics behind what ‘retire early FIRE’ is!
FIRE stands for financial independence retire early. This means that once someone has reached financial independence, they will retire earlier than the traditional age of 62. Yep, you heard that right, retiring earlier than the age of 62 or whatever age you planned to retire at. They have the freedom to leave the corporate world and pursue things in life that they are passionate about. Or simply spend those quality years with their children as they grow up. The point is, FIRE gives people to freedom to be able to enjoy their life how they want to.
Who wants it and why do they want it?
Who wants to retire early? I love my job!
False.
I don’t love my job. If you do, then kudos to you and l’d love to know more about that actually! I myself never really had a “dream job.” That’s a lie. I wanted to be an astronaut and then that drove me to getting a degree in an industry just to be an astronaut. Turns out it’s pretty hard to be an astronaut and funny enough, I didn’t enjoy the industry at all that I went to school for. Why do we make 18 year olds decide what they want to go to school for at that age when they really don’t know what they enjoy at all?
Who actually dreams of working 9-5 under the direction of someone else? Is it really that fun? Again, if you’ve found the fun, then share with me what you do. But it’s always felt like prison to me and it’s not how I’d like to spend my life.
Personally, I’d like to spend my time here on this earth in quality time with my loved ones. Experiencing the city I live in. Traveling around the globe and learning more about other cultures. I’d like to have time to work on my own projects around the house. Take up wood working. Focus on my fitness. Becoming a great photographer. But when I’m working a 8-5 job, the time is gone to be able to do all those things I love. I’m sure you have many things that you’d like to do yourself but don’t seem to have the time for.
This is where retiring early comes in to place. By strategically managing your finances, people have been able to retire early and pursue life outside the corporate world full time. They are brining in money passively so they have time to do the things they love. This is why people want to retire early and pursue FIRE.
How do you get there?
In order to retire early and reach FIRE, you usually need to bring in enough money to cover their spending. Many people do this through investing in things such as index funds or real estate. The FIRE community often uses something called the 4% rule. In short, the 4% rule says if you were to withdraw 4% from your investments over your life, you’d never run out of money. You need to save enough money that the 4% earnings covers your annual expenses. With their expenses covered, it is usually said that someone has reached FIRE and can now retire early from their job.
Now you know the simple basics behind what FIRE is. FIRE and having the ability to retire early gives people the flexibility to live their lives how they want and not to have to be tired to the rat race for the rest of their lives. They can spend those quality years with their family while their kids grow up. They can spend time traveling the world. The point is that it gives people the freedom to do what they want.