What Seniors Need to Know About the FIRE Movement
The FIRE movement, meaning Financial Independence, Retire Early, is a financial movement dedicated to saving as much as possible, as quickly as possible to retire as early as possible. Learn more about the FIRE movement and what we can all learn from its principals to improve our financial situation.
Updated on Dec 06 2019
The FIRE movement, meaning Financial Independence, Retire Early, is a financial movement dedicated to saving as much as possible, as quickly as possible to retire as early as possible. By contributing at least 50 percent to 70 percent of monthly income to savings, followers of the FIRE movement hope to retire at 30 or 40 and live off savings and withdrawals from their portfolios.
Learn more about the FIRE movement and what we can all learn from its principals to improve our financial situation.
What is the FIRE Movement?
With a goal to retire in their 30s or 40s, FIRE followers save and invest aggressively, setting aside somewhere between 50 percent and 70 percent of their income. FIRE gurus encourage debt-free living, robust savings, low-fee investing, and choosing life over money. To do this, they need to live minimalistically with incredibly low expenses while simultaneously increasing their income.
The goal of most FIRE followers is not to stop working. Typically, their goal is financial independence, where they do not have to work full-time.
Key Retirement Principles from the FIRE Movement
The majority of American workers would agree that the FIRE movement is not a reality for most of us. It requires a high income, usually in the six-figure range, and the desire and ability to live extremely frugally. Despite its extreme lifestyle demands, the FIRE movement can be particularly helpful for people who are approaching retirement but have not set enough money aside to cover retirement costs.
These principles from the FIRE movement can help even those approaching retirement make great strides in retirement savings:
1. A focus on the future
Less than 41 percent of Americans have thought about their retirement savings needs. Following the FIRE movement requires that you consider your financial future and calculate how much you will need to live comfortably in retirement. To get where you want to go, you need to know where it is you want to go. You also need to know where you stand in comparison to those goals. FIRE followers have a clear definition of their retirement goals and a plan to get there.
2. Spend less.
FIRE movement followers need to know where their money is being spent and think critically before spending it. Having a clear understanding of monthly bills and costs will allow you to cut spending and increase savings. FIRE followers can clearly differentiate between wants and needs and stick to a budget that maximizes savings.
3. Make more.
Following FIRE means that you have to find ways to boost your income. If your full-time job does not allow for income increase, consider other means of income. Start a small business, deliver flowers, or invest in a rental property. Think creatively and outside the box for ways to boost your income and dedicate more to savings.
*If you are one of the many Americans that have not prepared for retirement, contact a financial advisor today. Fiduciary financial experts can help you develop a proactive retirement plan that can better prepare you for a financially independent future.
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