The FIRE Movement – what’s all the fuss about?•
Chances are you’ve heard a lot about the so-called FIRE movement lately. FIRE stands for Financial Independence/ Retire Early and it’s all about gaining financial independence early so you can retire earlier. Here’s what you need to know!
What is the FIRE movement?
Who doesn’t dream of retiring early and spending the rest of their lives on a beach, travelling the world or simply enjoying life’s pleasures before the legal retirement age? With the retirement age of most Americans being 66 years old right now, and this looking to increase over the coming decades, some people are putting serious effort into saving early so that they can retire in their 30s/40s or 50s instead.
There have been a number of success stories posted on The Wall Street Journal, Washington Post and The New York Times lately that focus on the lucky few that have managed to quit their boring/dissatisfying jobs in favor of spending more time with their families, or traveling, or living with less, leading more and more people to ask whether they too could do it.
The FIRE movement was inspired by the book “Your Money or Your Life” by Vicki Robin and Joe Dominguez, in which the writers compare the expenses and time spent at work against hours of your life. Every expense is compared to the time spent at work in order to earn that amount, the premise being that time spent at work takes up so many hours of your life, so why not save the money quickly so you can really live life to the fullest?
“I early retired & management allowed me to work less hours.” – anonymous employer review at Image Appi
How does it work?
Ultimately, the FIRE movement centers around a program of extreme savings and investment that allows people to retire far earlier than their normal budgets and retirement plans would normally allow. Many followers of the FIRE movement dedicate up to 70% of income to savings in order to eventually be able to quit their jobs and live solely off small amounts taken from these savings.
Followers of the FIRE movement normally spend a number of years working a traditional job whilst saving around 70% of what they earn! Once their savings reach approximately 30 times their yearly expenses, or around $1 million, they often feel able to quit their day jobs or retire completely. But in order to make sure that they have enough money for retirement, they only use around 3-4% of their savings every year, something which requires serious willpower.
Did you already check out our tips on retirement savings? Here is what you need to know!
Why has the FIRE movement attracted a lot of hate?
Of course, the movement has attracted a lot of haters too, especially since many are quick to point out that early retirement isn’t something that the average worker can realistically achieve. Retiring early seems to be something only reserved for those in the top jobs who could afford to save in ways that others can’t.
Others have pointed out that many of those who have retired early have avoided the cost of having children, or they quit before their kids went to college, meaning they can get access to college aid.
Finally, extremely high rates of saving can come at the expense of current quality of life and lifestyle meaning that you could really suffer for those years whilst your working. Plus the pay off might not be that great if you can only live on tiny amounts of money for the rest of your life.
“There are excellent compensation packages offered, even early retirement.” – anonymous employer review at SAP
Why not find a job you actually enjoy instead? That way, spending time at work and saving in the process will be much more fulfilling. Here at kununu we can help you with that, we have 3,578,000 authentic reviews from real employees on our site, so you can find out everything you need to know before you go to the job interview.