Catching fire: opportunities for early retirement

Image credit: Pixabay / Alexas_fatos

One of my long-term goals is to simply retire. Early in my debt reduction days, I read about fire motion and it actually appealed to me. Burn represents Financial independence, early retirement. The philosophy is to stay debt-free and have a high level of savings, staying below one’s means for retirement.

I had a goal of saving about 50% of our household income. Not quite there, but not too far off (when you include all kinds of savings, including HSA and IRA contributions, etc. etc.). When we save 50% of your income, and take about the same amount to spend in retirement, one year of work = one year of living expenses saved!

With my husband’s job, he will be eligible to retire (with a pension!) in 50 years. At 43 now, that sense of completion feels more real than ever. We ran the numbers and we’ll actually make more in retirement than he does now, so there’s no reason to work longer than that. You talked about getting a side hustle or a part-time job to keep busy, but it would be more of a “fun” job than a job that’s meant to pay the bills.

In my job, I don’t get any kind of pension so my retirement income comes from my own retirement account that I contribute to (and the employer matches up to 7%). I can retire at any time, but obviously we will be better off financially if I keep working longer. That means …. I know myself. I already know that when the hubs retires in 7 years…. It will be difficult for me to continue working full time.

This brings me back to the idea of ​​fire. I was used to traditional fire. But, recently I learned that in addition to the general philosophy of fire, there is also the coast and fire.

All fires!

Common fire that’s when you save enough that your investments can cover your living expenses forever, allowing for early retirement. Usually people use the 4% rule (which subtracts 4% from savings/investment per year for life). To figure this out, you’ll calculate your projected annual income and multiply by 25 to get the amount you need to retire. For example, if your annual income is $100k/year, then you may need $2.5 million to retire.

The coast that’s when you end up suffering too much early in life until you hit a number, which is not left, will continue to increase and reduce retirement when you plan to retire at the right time. Let’s say the goal is to have three million in 55 years. If you can save 1 million in 40 years, you don’t have to make any contributions. That 1 million will continue to grow and could reach 3 million by the time you retire at 55. That way, you can save by attacking early, then just “coast” right where the interest is compounding.

Death was a blanket that’s when you want to have a higher standard of spending than traditional fires or coastal philosophies, both of which emphasize living well to prioritize savings. Maybe you like to travel, have expensive things, want a luxurious lifestyle, or live in the high life. With this philosophy, multiply your annual income by 30- 40. Let’s say you spend $ 150,00 / year, you will need $ 4.5 – 6 million to retire well.

Retirement Planning

This whole concept really intrigues me and brings up topics and questions that have been starting hubs conversations and discussions. For example, you think that when the children grow up, we will downsize our home to something smaller and cheaper. I think the opposite – that maybe we can get a house with less square footage, but that we can go up according to the builder and the purts, which may not mean that it is more expensive. .

Then it becomes a question of how much I like the “lifestyle” (home and travel are my two biggest things) vs. retirement. If I want a nice home and I want to keep moving, then there’s no way I’m going to retire when the hubs retires in a Penny-Pinch and keeps costs down, then there’s a possibility.

I am currently dependent on continuing to work so that we can afford the lifestyle I would like to have in retirement. But it’s actually a fun thought experiment and leads to some great financial conversations about our goals, where we want to be, etc.

WHAT DO YOU THINK? Does the movement of fire make you cry? If so, which one?

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