The FIRE (Financial Independence, Retire Early) movement has seen an exponential increase in popularity in recent years. Today, it has become a widely discussed topic in the online community, especially among millennials and personal finance enthusiasts globally.
While retirement planning is not usually a common topic among younger generations, FIRE presents an interesting shift in the interest on achieving a sustainable early retirement.
What is the FIRE movement?
At its core, FIRE is a souped-up version of retirement. The main goal of FIRE is to achieve financial independence at a significantly earlier stage compared to the traditional retirement age, thus enabling one to retire early.
Another hallmark of the FIRE movement is to live frugally so as to save more when you are young and lead a low-maintenance lifestyle when you retire. As more people jump on the FIRE bandwagon, it has forked into two main camps supporting "leanFIRE" and "fatFIRE".
"leanFIRE" follows the traditional FIRE movement more closely, encouraging people to lead modest lifestyles by spending below their means, while diligently saving and building multiple income streams. "leanFIRE" itself has an offshoot termed "baristaFIRE" – where you lead a modest lifestyle but take on part-time work to supplement your income. This allows you to maintain employability, should you ever require to rejoin the workforce, as well as give you the flexibility to enjoy being part of the FIRE movement before being able to fully afford it.
In the other camp, "fatFIRE" is more for those who have been leading a comfortable lifestyle to accumulate enough wealth such that they can continue leading such a lifestyle even in retirement.
To achieve FIRE, retirement planning needs to start early
The exact age to achieve FIRE can and, should, vary between individuals. This is because it is highly dependent on your financial background, amount you earn and the amount of money required to sustain your desired lifestyle.
Regardless of the variation of FIRE movement you want to lead, you need to have a plan in place to achieve it. This is important implications as you are taking yourself out of the workforce – 1) if you don't plan prudently, you may not have the right skills to re-enter the workforce halfway into your retirement and 2) you still need to generate sufficient monthly income for your living expenses (that needs to last substantially longer than the average retirement timeframe).
Here are some actionable plans that you can consider implementing in order to achieve FIRE at your desired age.
