Financial Independence and Early Retirement, commonly referred to as FIRE, isn’t a complicated concept. But there are some nuances within the FIRE Movement that need a bit of clarification.
Things like the Rule of 25, Fat FIRE, the Safe Withdraw Rate (a.k.a. the 4% Rule) are all important variables that we attempt to clarify with the following six FIRE articles.
Consider this FIRE 101! Those that read these articles should come away with a solid understand of what FIRE is and how it works … and you just might be able to shave decades off your working career as well.
FIRE stands for Financial Independence Retired Early. One is considered to be FIRE when living expenses are covered by investment returns.
But FIRE is more than a math problem.
Using the Rule of 25 and the 4% Rule to figure out your retirement numbers is simple enough. But new FIRE definitions like Fat FIRE and Lean FIRE keep popping up. But not to worry! Our Newbie’s Guide to Understanding FIRE Finance has got you covered.
The Rule of 25, also know as the Multiply by 25 Rule, attempts to define how much money you’ll need to save for your retirement. Not surprisingly, based on its name, that amount is 25 times your annual expenses (not income).
The 4% Rule is a foundational component of the FIRE Movement. But what is the 4 Percent Rule and how does it work? Can an early retiree use this rule of thumb to plan for a retirement that could last 60 years or more?
Achieving FIRE might seem like an impossible goal at first, but it’s not an all or nothing deal. There are several noteworthy steps along the way to financial independence that are worthy of celebration.
Did you know that every $350 per month that you can eliminate from your budget reduces the amount you need to save for retirement by $100,000? Learn how to calculate retirement costs for anything.