The shockingly simple math to early retirement
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Cutting all unnecessary expenses and reducing the cost of necessities.Dovetailing nicely with the movement towards minimalism, common practices include: However, not all FIRE fans continue to create income. For many, it’s more of a “create your own work” and/or “work optional” philosophy than that of “early retirement” in the traditional sense.
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#THE SHOCKINGLY SIMPLE MATH TO EARLY RETIREMENT FULL#
Perhaps the distinction is that those doing so in the FIRE movement have already created a degree of financial independence that frees them from “golden handcuffs.” They are free to make money with their passions, full or part-time, with little financial pressure, working from the location of their choice with flexible schedules. In our minds, this isn’t so much “early retirement” as it is simply choosing a non-traditional career path, which can be a positive thing. Some are entrepreneurial and even start businesses, such as successful personal financial blogs like Mr Money Mustache and (started three years before its founder quit his job). Some are real estate investors and landlords. In reality, many of the self-proclaimed retirees who quit their jobs in their 30’s or 40’s (sometimes even late 20’s) are anything but “retired.” Some within the FIRE community cultivate multiple streams of income that continue on after traditional work ends. “Early Retirement” or Creating an Intentional Life? Travel, freelance, blog, volunteer or do whatever “work” inspires you-or no work at all.Withdraw only four percent of your assets annually (which can be adjusted upwards for inflation).(If you spend $50k per year, your target number would be $1,250,000.) Retire from traditional work when your investments equal 25X your annual expenses.Invest the difference-typically in a simple, low-fee portfolio of index funds, although real estate is also favored.Live simply and spend substantially less than you earn.Earn an income that allows you to save.The “rules” behind FIRE are simple, as is the basic math used by the community: Most are attracted to simple living and time freedom. Some like to travel, others are homebodies. Many retire in their 30’s or 40’s, but some as early as their late 20’s. (It’s hard to save aggressively on a less-than median wage.) Largely male in the early years of the movement, now there are plenty of women and families in the movement. Who is the typical FIRE follower? Many come from the tech world, engineering, or other well-paying industries. It goes by the FIRE acronym (financial independence, retire early) and it’s gaining significant traction amongst (typically) high-earning young adults who envision a different, more flexible lifestyle. There is a growing community of people dedicated to quitting their jobs at increasingly younger ages. George Burns The Early Retirement Movement When I was sixty-five I still had pimples.”