Consideration #1: You’ll Need to Spend Wisely
The big factors of the FIRE program are income, expenses, and time. The idea being, the bigger the gap between income and expenses, the less time it will take you to reach financial independence. And while it may sound extreme, depending on your timeline and desired income level in retirement, you could be looking to save more than half of your income to put toward early retirement. This is something that would need to be calculated individually, as it is based on your income level and current expenses. However, living a frugal lifestyle now is almost always a universal requirement of the FIRE program and other early retirement seekers.
Consideration #2: FIRE Followers Don’t Embrace Traditional Retirement
For those looking to retire early using the FIRE method, “retirement” doesn’t mean sitting around and doing nothing. FIRE followers are typically more focused on the first part of the acronym, “financial independence,” than they are on retiring early. That means that they’re likely to still work in retirement or pursue a passion project they were previously unable to due to the confines of a full-time job.
Consideration #3: You’ll Want a “Why”
Like many financial goals, it can be hard to find the motivation to skip dinners out or splurging on a new outfit. When you have a nondescript idea of retiring early, there’s little motivation to skip out on some enjoyment today for the possibility of an early retirement a decade down the line. Instead, those who have embraced the FIRE method often put a “why” to their savings programs, and it’s important to get as specific as possible. Define your “why” and let it guide you in making positive progress toward your financial independence.
The FIRE program is an appealing method of reaching retirement early on in life and allows for its followers to find the flexibility in doing what they love. It does, however, take self-discipline and the ability to spend less today in order to save for tomorrow. If you’re considering the FIRE method, it may be wise to work with a financial professional who can help you understand your current spending habits and what you’ll need in order to find financial independence for an early retirement.