Catch the FIRE: Financial Independence, Retire Early

Retiring early with complete financial independence is a dream for most of us. But achieving this goal is not as unrealistic as you might think.

With the right strategy, gaining financial independence and security and retiring early is possible for anyone with a consistent income. You just need to know the basic steps.

To help you bring your dream to life, we’ve outlined the philosophy behind FIRE and how you can implement it into your retirement plan for future financial liberation.

What is FIRE?

FIRE really is the acronym for Financial Independence, Retire Early. It’s a lifestyle and financial movement aimed at increasing investing and reducing expenditures to gain financial freedom before the average age of retirement, thus allowing people to live their later years in total financial security.

Sounds good, right?

Even though most people retire between the age of 62 and 66, the average retirement age is actually increasing over time. This is mostly because people lack the financial support and resources to retire at a “normal” age, thus prompting them to work for longer than usual.

But that doesn’t have to be the case for you. With a strong savings and investment strategy, cultivating wealth at an earlier age can enable you to retire when it suits you, rather than when it suits your job.

8 Tips for Achieving FIRE

Being able to retire early comes with plenty of benefits. It becomes easier to look after your health, support family members, explore hobbies and travel. But it also comes with an increased sense of well-being and lower overall anxiety, especially anxiety relating to work and finances.

So how can you start preparing yourself for early retirement? There are a few ways.

Below is a list of eight tips to bolster their financial affairs and get ready for a secure, stable, and relaxing departure from the working world.

1. Weigh up your future priorities

Before you start setting up an early retirement plan, it can be useful to first determine why. What is it that motivates you to step away from work and live out your days from home or wherever you choose to be? Is it to focus on a new project or hobby? To take care of a family member?

Figuring out what your future priorities are and will be is a good place to start when sketching out a FIRE plan for yourself. This will allow you to make more informed financial decisions moving forward.

2. Pay off your debt (and avoid accumulating more)

Debt is an enemy to us all. If you have it, preparing for early retirement may require some more time and even more careful planning. Paying off your debt is a great start to any long-term financial savings plan, so naturally, it is an important component of the FIRE strategy.

And not only that, but once you’ve paid off your debt, resisting the urge to accumulate more is essential. Early retirement requires consistent fund-building, and debt logically obstructs that process. Our Financial Advocates can help you determine the best debt pay-off strategy for your situation.

3. Avoid prematurely withdrawing from your retirement accounts

One of the most critical aspects of saving for early retirement is resisting the temptation to withdraw funds before your preferred retirement date. If you’re going to go all in, go all in.

Every now and then, you might experience the urge to withdraw a sum from your retirement account for a holiday, car payment, or some such expense. And while emergencies are perhaps a different story, it’s important to keep your eyes on the prize and stay committed to your FIRE plan for the future.

4. Set up multiple streams of income

Having multiple streams of income is a great method for achieving financial independence in any person’s life. Just one stream of income makes you vulnerable to unexpected changes and economic fluctuations. Setting up multiple ones will make those curveballs much easier to manage.

This could include starting up a side hustle or part-time job that allows you to work flexibly between your main job requirements. It doesn’t have to be something big. Freelance gigs, small investments, or selling products online are all effective ways to diversify your stream of income. They also teach you valuable skills like budgeting and calculating profit margins that can help you manage your money better.

5. Invest early and often

Throughout the years, investments have consistently been one of the most effective methods for wealth building. But don’t wait to invest. The earlier you make investments, the bigger the payouts will be later down the line. Even if you’ve never invested before, it’s never too late to try. You also don’t have to go at it alone. You can speak to a local investment or financial advisor to ensure that you’re making financially smart decisions. Whatever you choose, start sooner rather than later. Making these decisions as early as possible will ensure you’ve accrued substantial interest by the time you retire, making them well worth the effort.

6. Take advantage of employee benefits plans

If the company you work for has a strong employee benefits plan, you can use that to your advantage. For example, some businesses allow employees to purchase company stock at a discounted rate, or they may even provide you with a matching contribution from your employer.

7. Save, save, save

When it comes down to it, straight-up saving is still one of the safest and simplest ways to prepare for early retirement. Being financially disciplined and putting money away each month is a small but highly effective move that you will never regret making.

People save money for a wide variety of reasons, but contributing to your future early retirement is one of the best reasons to save. Even small percentages of your salary each month makes a difference!

Set Your Future On FIRE

Retiring early can often seem like an unrealistic goal but an early retirement means increased financial security, better mental and physical health, and more opportunities to travel and explore other interests.

With the FIRE approach, you can start preparing yourself for a more stable life post-profession that’s easy to manage and easy to achieve within your working lifetime.