What is the FIRE Movement?

Financial independence, retire early is a lifestyle movement taking milennials by storm

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Traditionally, you start working in your teen years and continue for four or five decades, only fully retiring once you’re firmly established as a senior citizen. This means most of your life is spent getting up early five days a week and answering to a boss. If you’re lucky, you get to do what you love and set your own hours, but many would still rather be sipping a fruity cocktail by the ocean.

A new movement called FIRE (Financial Independence, Retire Early) aims to shorten that working time to as few years as possible. Embraced by millennials, this movement encourages workers to save as much as possible in their 20s so that they can begin enjoying the good life as early as their 30s.

But there’s more to the FIRE movement than simply retiring at a younger age than usual. The goal is financial independence, which means, even if you keep working, you’ll have a freedom that you wouldn’t have otherwise. Before you start saving, it’s important to understand what embracing the FIRE movement means for you.

Consider the Realities

You don’t have to earn six figures to participate in FIRE, but it does mean sacrificing now for financial freedom later. That may mean giving up annual vacations and luxuries like nice cars and a lavish home. Ask yourself if you’d rather leave the workforce early or enjoy those extras now. You may find you can strike a compromise between retiring at 35 and retiring at 65 so that you can sacrifice less now.

According to a report from GOBankingRates, if you have $1 million at retirement, it will last 12 to 26 years, depending on the cost of living where you live. Your own lifestyle preferences will also play into how far your dollar will go. Calculate your monthly expenses and determine how much you’ll need to sustain that way of living for the number of years you hope to enjoy retirement.

Live Frugally

You don’t have to give up everything to retire early. The goal is to create a net worth that is 25 times your annual expenses, which creates true financial independence, money management experts say. This means focusing and setting as much money aside as you can. Staying in a home worth far less than you can afford, owning older vehicles and driving them as long as possible, and skipping extras like fine dining and gourmet coffee will go a long way.

Have the Right Mindset

If you’re interested in FIRE because you want an escape from a job you hate, you’re looking at it from the wrong perspective. The goal is to achieve financial independence so you can do what you want later in life.

This may mean freelancing or launching your own startup. You could decide to finally write that book or sell crafts on Etsy. Having that goal in mind can help when you’re making all those sacrifices.

Achieving financial independence means you’ll be able to breathe a little easier. Instead of living paycheck to paycheck and enduring toxic work environments, you’ll have the freedom to resign if you need to and do what you love. If you can drop out of the workforce altogether and relax in your dream home, all the better. The key is to make a plan that you can live with and stick to it.

The Fire Movement - By the Numbers

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