Are you considering retiring before your full retirement age? Then you’re a part of the FIRE Movement, also known in long-form as "Financial Independence, Retire Early.” The Movement requires you to accumulate enough wealth to support your lifestyle without a paycheck or income from financial retirement programs.
To be successful, you’ll need to save and invest aggressively during your working years. Essentially create a passive income portfolio, and for those striving to achieve this, the goal is to stop working in their 30s or 40s. Aside from a lifestyle without work, the outlying benefit is learning about money management, budgeting, and monitoring.
If you’re interested in how the FIRE Movement might work for you, start by looking at your annual spending and expenses. That determined financial number is then invested primarily in equities, real estate, or a side hustle, assuming that the proceeds will be enough to live off for at least 30 years. Jordan Grumet, author of "Taking Stock" and host of the Earn & Invest podcast says, “This allows a safe withdrawal rate of 4% of total investments, inflation-adjusted, each year.”1
Early retirement may sound fantastic, but before jumping on the Movement, there are drawbacks to consider. Consider that you may have to pay your medical insurance, and there isn’t a company 401(k) with employer matching to grow your nest egg. There’s also a genuine concern that your investments are subject to the market rollercoaster and may not perform as you expect or need.
The FIRE Movement is born from the book “Your Money or Your Life” which speaks to FIRE's mantra of consuming less while living better.2 It requires a detailed plan, commitment, and most importantly, the guidance of a financial professional.
While you may not be prepared to join the FIRE Movement, having a financial strategy is something worth putting in place and reviewing periodically. We can help with that, so call our office today.
This document is for educational purposes only and should not be construed as legal or tax advice. One should consult a legal or tax professional regarding their own personal situation. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products offered by an insurance company. They do not refer in any way to securities or investment advisory products Insurance policy applications are vetted through an underwriting process set forth by the issuing insurance company. Some applications may not be accepted based upon adverse underwriting results. Death benefit payouts are based upon the claims paying ability of the issuing insurance company. The firm providing this document is not affiliated with the Social Security Administration or any other government entity.
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1 https://money.usnews.com/money/retirement/aging/articles/a-guide-to-the-fire-movement
2 https://www.investopedia.com/terms/f/financial-independence-retire-early-fire.asp