Retirement Plans: What is the F.I.R.E. Movement?
What will retirement look like for you? Knowing your retirement goals and planning for them well in advance is an important process for everyone. This usually involves:
- estimating your future expenses in retirement
- identify the assets and income you will need to cover those expenses
There's a small community who are taking retirement planning a step further. They're known as the F.I.R.E. Movement.
What is the FIRE Movement?
F.I.R.E. stands for: Financial Independence Retire Early.
These folks understand that retirement is not an age, it's a financial number.
Instead of waiting until age 65 as a default, individuals save aggressively, cut back on expenses, and maximize their income. In many cases, people are able to retire in their 30's, 40's, or 50's.
Achieving F.I.R.E. rarely means retirement in the way we might normally picture it. The importance of Financial Independence is that people don't have to work a full time job if they don't want to. However, most end up continuing to work part-time if they enjoy their job, or they take on entrepreneurial projects. The point is that they have freedom of choice.
For many, this path to FIRE is a bit too extreme. Nevertheless, there are some valuable take-aways that anyone can use to improve their retirement outlook.
Smart F.I.R.E. practices even if you don't pursue F.I.R.E.
- Think ahead. Be intentional about your retirement and map out a plan.
- Find creative ways to keep your expenses low so you can put more into savings.
- Look for ways to boost your income, like a side hustle.
- Make saving and investing a priority. Put at least 15% of income towards retirement.
- Max out contributions to your 401k and IRAs each year.
- Remember that retirement isn't an age. Work toward saving to the level you need to sustain the lifestyle you want.
For more about how to get started in the F.I.R.E. movement, check out the Afford Anything resources by Paula Pant.
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- Michelle Chang