Shockingly simple math mmm7/25/2023 ![]() I’ll define each of these in my own words. Let’s take a look at the different types of FIRE. People have different lifestyles, so there’s a different type of FIRE for everyone. That’s a lot of money to save for most people, but there are options to make it work with much less (e.g. If you have a $750,000 nest egg, you’d have to live off of $30,000/yr or $2,500/mo to be FI. If you have a $1,000,000 nest egg and you can live off of $40,000/yr or $3,333/mo, you are financially independent. See this post if you want to learn more: Updated Trinity Study. With a higher allocation to stocks, the nest egg would likely last much longer. Basically, with a mixed portfolio of stocks/bonds, there is a very good chance that your portfolio will last at least 30 years. The generally accepted “safe withdrawal rate” (SWR) in the FI community is 4%, based on the Trinity study. Put simply, you are financially independent once the income from your nest egg is equal to or greater than your living expenses. Freedom to spend time with my family when I want. Freedom to choose how I want to contribute to society (i.e. ![]() To me, being FI (financially independent) means freedom. I’ve found that many proponents of the FI/FIRE movement have a lot they want to do and accomplish, which is in contrast to the common misconception that we will just sit around once we hit FI. Many people, even traditional retirees, struggle with retirement because they don’t know what to do with their newfound free time. However, retiring from work doesn’t necessarily translate into a joyful life. On the other hand, FIRE suggests that you will retire early. You can work at something without necessarily considering the income prospects. Being financially independent means you have choices. What’s the difference between FI and FIRE? Put simply, the more you save, the earlier you can retire or be financially independent. In the post, MMM posits that your retirement depends on only one factor: your savings rate, as a percentage of your take-home pay. ![]() This is the MMM post that got me interested in FIRE: The Shockingly Simple Math Behind Early Retirement. The OG of financial independence is Vicki Robin (fellow Brown alum) and author of Your Money or Your Life, which was an instant NY Times best seller in 1992.įI and FIRE became somewhat mainstream through the Mr. Sometimes you’ll just see FI (financial independence).įIRE is generally achieved through aggressive saving, far more than the 10-15% recommended by most financial planners ( see Wikipedia: FIRE movement). But which type? There are many different kinds of FIRE.įIRE, sometimes also written as FI/RE, stands for Financial Independence, Retire Early. Do you ever wish you weren’t stuck in your job? Do you dream of a life where you can work when you want as much (or as little) as you want? ![]()
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