Why F.I.R.E might be the spark you need


  • What is F.I.R.E
    • I.R.E stands for Financial Independence, Retire Early
    • I.R.E was inspired by the 1992 book, Your Money or Your Life
    • It’s a financial movement defined by extreme savings & investments
  • How F.I.R.E Works
    • By saving 70% or more of annual income, F.I.R.E aims to retire early and live off small withdrawals from their accumulated funds
    • I.R.E practitioners aim to save 25x their annual expenses. This strategy is based on two common retirement strategies: The 25x Ruleand the 4% Rule, each of which help people set up “safe” rates of withdrawal from their retirement savings.
    • Maximize your income while minimizing expenses
    • 3 types of broad approaches to FIRE:
      • Fat F.I.R.E-Being able to retire without altering your current standard of living. This requires the most aggressive saving and investment strategies
      • Lean F.I.R.E-Being willing to live a minimalist lifestyle to cut expenses to bone in retirement. Lean FIRE individuals aim to survive on say, $25,000 annually.
      • Barista F.I.R.E-This is between the two extremes of Fat and Lean F.I.R.E. Maintain more than a minimalist lifestyle in retirement through a combination of savings and part-time or gig work.
    • How to get started with F.I.R.E
      • Planning-Having a comprehensive, detailed plan is key to this. Understanding how much you realistically need to save versus how much you can comfortably decrease your expenses.
      • Increase revenue-You may also have to be willing to increase your income whether that be by getting a second job, getting a promotion, or creating additional revenue streams to achieve your goals.
      • Discipline-After you have a detailed financial plan, you need to have the economic discipline to stick to your budget.
      • Investing-Investing is one of the core values of F.I.R.E. Set aside a set percentage of income every month for investment to allow you to grow retirement savings to a point where they can reach financial stability in your later years.
    • Risks of F.I.R.E
      • You don’t save enough & outline your savings
      • Sequence ore turns risk
      • You’re miserable changing your lifestyle so drastically
      • If you’re planning on F.I.R.E to retire early (30’s-40’s), you may not be able to take full advantage of employer-sponsored retirement plans such as a 401(k).