FIRE - Financial Independence Retire Early is a popular idea. The social norm of retiring in your 50s or 60s means many people have 20-30 years or work to look forwards to. But what if you wanted to retire at 26? The idea of FIRE is to do just that. Social security allows you to take benefits from the age of 62, but most people want to retire earlier.
Flexibility
The most important part of FIRE is the ability to retire when you want to, even if that's well before 62. FIRE also doesn't mean quitting your job. You can retire from one job and continue working on another and just keep the process going until you're ready to really retire! It's more about being able to pursue your dreams by having financial independence.
Freedom
The definition of financial freedom is when your net worth is 25x your annual income. That means that you've saved up enough money to pay your bills for 25 years, something most of us can only dream about. This isn't about having a high paying job and then just leaving early because you hate it. It's about doing a job you enjoy, even if that's just the average 9-5 and working towards your dream goals.
Cost?
There is a certain level that allows you to do this. Much of it means cutting back on unnecessary expenses and considering secondary sources of income to build up capital that gets you to that point. To be able to afford to put away this sort of money you have to have the income that allows you to do it, something many who don't make a living wage will struggle to do.
The Rules
Simple maths means that for every $100 per month you can save you'll need to put back $30,000 less over your lifetime to reach financial freedom. To achieve FIRE you need to balance time, expenses and income so that you're putting aside as much money as possible for future needs or towards your financial goal. The more space you can put between savings and expenses the closer you are to reaching your goal and the faster you will achieve it. Many FIRE enthusiasts lead very simple and frugal lives to achieve this.
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