The idea of a super-early retirement has touched off heated discussions. Find out why.
FIRE is an acronym that stands for “financial independence, retire early.”
The idea behind it is that if you make the right lifestyle choices, you can save a significant amount of money — enough to retire much younger than the traditional retirement age of 65.
FIRE’s true believers say it’s possible to retire at 45. Or 35. Or even younger.
The FIRE movement traces its roots to Your Money or Your Life, a 1992 book by Vicki Robin and Joe Dominguez that popularized the concept of financial independence: having enough money to pay your bills so you don’t have to work.
Another writer who gets credit for stoking FIRE is Jacob Lund Fisker, author of the 2010 book Early Retirement Extreme. Fisker says he was able to retire at 33 from his job as a nuclear astrophysicist by saving a ton of money, then learning to get by on just $7,000 a year.
Though one popular rule says you should save 10% of your income for retirement, Fisker says he set aside 70% of what he earned. The FIRE movement has adopted saving 70% as the ultimate goal.
How do you do that? The FIRE faithful say it’s simple: make more money, invest it well, and don’t spend any more than you absolutely have to.
The FIRE movement has attracted some doubters, including personal finance icon Suze Orman, who is definitely not a fan.
Orman says if you want to retire way early, you’ll need $5 million, $6 million or maybe even $10 million, because you never know what life might throw at you. But Pant is an enthusiastic FIRE supporter.
Other followers of FIRE say Orman doesn’t seem to get that few people need an excessive amount of money to live on comfortably, or that insurance and an emergency fund can protect you from financial disaster.
The FIRE movement isn’t for everybody, but it’s hard to argue with its underlying principles:
That’s a good course of action for leading a wise financial life — regardless of whether you dream of retiring decades earlier than most people.
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