[Womble]

I've been reading around the topic of "FIRE" for about a year now, but I don't think we've ever discussed it on TAS before. FIRE stands for "Financially Independent, Retire Early". Say what?  Well, give me a minute and I'll do my best to explain....

• Let's say you spend everything you earn as you earn it, and save nothing. State pensions etc apart, that means that you won't ever have anything saved up for the future, and in effect have to keep working forever.
• Now let's look at the other extreme - suppose you can somehow live without spending anything at all. If you could do that, you could conceivably stop working right now.
• Now let's look at something in the middle. If you were able to live off half of your wages and saved the other half, investment returns aside that means that for every year you worked, you'd be able to live in retirement for another year with the same standard of living.
• Now let's get a bit more extreme and say you could live off a quarter of what you earned and saved the other three quarters. That way every year of working in effect buys you three years in retirement.

Still with me?  Remember this is all hypothetical stuff at this point.


Well, some boffins have figured out that if you can save and invest 25 years worth of living expenses, you can retire now (pretty much regardless of your age), and live off those savings, with very little chance of running out of cash before you pop your clogs. (This is called "the 4% rule".)


So, what some people are doing is adjusting their lifestyles until they can save some really high percentages of their takehome pay. Then, when they reach that magical 25x living expenses level, they either quit work altogether, or scale it right back (e.g. working purely for the love of it, not the money). How long would that take? Well, take our 25% / 75% example above. If each year you could save three times your annual living expenses, you could reach 25 times that in (25/3), which is only 8.5 years.


Of course this being the internet, there are loads of websites and blogs devoted to this topic. It's important to say that I'm not decided on it one way or the other. In particular, going fully hair shirt all for one magical day in the future when you can give up work seems a bit crazy to me. However, there are other FIRE concepts such as having a stash of emergency money saved so that you aren't dependent on a paycheck from month to month (and can hence escape a difficult job or home situation if you need to) that do seem sensible to me.


Anyway, if you're interested to find out more, here are a few links you might want to look up:


https://www.mrmoneymustache.com - "Financial Independence Through Badassity". In particular, start with "The shockingly simple math behind early retirement", which is a longer version of what I tried to describe above.


https://www.frugalwoods.com/ - A financial independence and homesteading blog, which has now also been turned into a book. This is FIRE with a smallholding bent.


Mad Fientist - A blog and podcast site, with lots of tools for figuring out finances and all things FIRE.


Why all this FIRE talk is a load of irresponsible rubbish (Hint to the author - you've missed the point - you're spending far too much money!)


Anyway, let me know what you think! 

[Fleecewife]

Looks to me as if the concept blithely ignores the Fates,     away and sniggering.  You can plan every minute detail of the next 50 years, then suddenly find a very nasty illness grabs you by the...pigtail, and suddenly you can't work, and having never thought of yourself as one of those sickly folk who get ill, you find yourself without sickness benefit too.  Then the double whammy - your spouse suffers something even worse.   Purely hypothetically of course.   

[pgkevet]

Two flaws i see here.

The first and most major is your 4% rule based on 7% savings growth. Point me at a system that guarantees perpetual 7% return on my capital and i'll shower you with kisses although the rule is still flawed by stating average 3% inflation...we all know it's varied much more than that in the past and this is yet another example of a finance type house advertising rates on their best portfolios (out of many mediocre successes and failures) over a short period of time to hook the investor.

The second flaw is the premis that one can cut down personal expenditure to save a high percentage and when that 25X is reached one can retire..Yes if you could do that scrimping and saving then you could retire by continually scrimping and saving. As in shivering through 25 winters to be able to retire and enjoy yourself is one thing . To shiver through 25 winters for the ability to shiver through the rest is not as attractive.

However you are correct that most folk waste money instead of putting some aside and then they expect the rest of us to bail them out... our capitalism is designed to encourage that spend behaviour.

[chrismahon]

It's very difficult to voluntarily cut back on expenditure- it has to be forced on you. Usually this means redundancy and a period of unemployment during which you have time to (and must) look at your expenditure very carefully. When we moved we searched for a South facing house with nothing to block Winter sun to cut down substantially on heating costs, but this was a concept the agents had never come across, so we had to go to all viewings with a compass. The net result was a heating cost official estimate 3X more than actual cost appearing on the home buyers report, because the official survey doesn't consider solar gain either.


I know plenty of people who waste their money, having never given expenditure much thought other than complaining about the cost- then just paying it. Seems things they 'need' we don't. The confusion arises with the difference between 'needs' and 'wants'. So we did manage to retire 10 years early on a tiny budget, knowing that we could have all we needed but very little we wanted, apart from our home here in France of course.

[macgro7]

Blah blah blah numbers numbers etc

My father in law closed his business 5 years ago (at the age of 50) and lives of rent from the properties he bought within last 20 years. He never had a mortgage - paid of his house in 5 years.
His business was so simple - curtain s blinds interior design etc.
However now that he stopped working he developed diabetes, back problems, can't sleep at night - basically he's got way too much time. From working 6 days a week, waking up at 6am and coming back home at 11 at night to going to sleep at 3am and waking up at 2pm.
First first life wasn't really a life bit his new life isn't a dream either.

[chrismahon]

Good point Macgro7- no point in retiring without good reason. You definitely need an active interest outside of work or you will get horribly bored and your health will suffer, so darts and dominoes in the local pub doesn't count. Here we have a large number of retired and there are plenty of clubs to join on a wide range of interests. A lot of people walk daily, manage large vegetable plots or spend hours in the garage on DIY projects. At our local clay pigeon club by far the largest competition class is Veteran, which is 60-65 resulting from people taking up the sport after the state retirement age of 62. There are also lots of Super Veterans, so 65 and over, as it's a sport that can still be enjoyed and done well even into the 80's. We were lucky enough to start with chickens- addictive, ageless, cheap and unpredictable, so never a dull moment!

[doganjo]

I retired bang on 60. Never regretted it. Just me and my dogs to consider.  I had my government pension plus slightly less than that of occupational pensions. 

Husbands both had died in accidents(12 years apart) , but no insurance for that) Had land so splitit and sold cottage and 5 acres, kept 10 acres and built a big house (too big for me but very saleable with the land - horsey people)  Sold for almost double build cost, enough to move to more expensive area with less land. (less required as I got older and became unwell)

My outgoings reduced considerably - no travel fuel, less wear & tear on car, no need for 'office clothes', no office outings, lunches, gifts to colleagues, christmas cards and gifts to colleagues etc etc, smaller car needed because of less dogs as they died. And finally a smaller house now and less land so hopefully less maintenance both physically and financially

[SallyintNorth]

Hmm.... I thought that was what I was doing.  I stopped the rat race stuff and have been farming since just before 50.  I downsized to the community here just before 60.  Now I seem to be working harder than ever, both physical livestock type work and office stuff!  But never happier .

In my case, I’ve bought my little flat for cash; like everyone else here I share the communal buildings and space on the 32 acre holding and pay my equal share of the outgoings (which includes a communal mortgage on a proportion of the whole estate), and although it’s not cheap to live here, it’s not expensive either.  We grow some of our own food (almost all our own meat and milk, veg is harder on this shallow clay here), shop for food collectively, cook and eat together several nights a week.  When the time comes, I will, if I choose, probably be able to pay folk here to care for me - so long as that’s feasible for them and for me.

If I had to go back to the ‘real world’ (which we call “out there”, lol), I shudder to think how I would manage.  If I even wanted to live that life.... 

[Anke]

All a lot more difficult once you put children and family life into the equation....

[SallyintNorth]

All a lot more difficult once you put children and family life into the equation....

Hah, yes, I steered clear of that one!  Lol

[Ghdp]

BUT....thanks for the original post Womble. It is an interesting clue to what one might need to have to retire and for some of us chasing our tails between the day job, soothing holiday makers who not unreasonably want hot water when they turn the tap on [yep, that has been my Autumn]  and maintaining the collapsing fences and enormous hedges it is helpful to take stock and think what we would need to do to get there. I agree that years of self imposed poverty to be able to live in more years of poverty is not attractive but that is not what Womble said.
I shall sit down with my calculator and dream big.

[Womble]

Thanks All.


I think the reason that FIRE has become such a big thing in the USA is that they're even worse than the UK for people having ludicrously well paid but also boring as hell jobs, with no security. No wonder the cubicle dwellers are getting their calculators out and thinking "there must be a better way". And for every ten people who say "that can't be done", there's one who says "yes it can - I just need to be prepared to make the sacrifices".

However, the more I think about it, the less I want to sit down with my calculator and dream big. I'm dreaming small right now. Like, forget retirement for a minute. If I can find a job I love that pays well enough to live off 3 days a week's work (or of course reduce my living costs by 2/5), then I'd cheerfully work until I drop, in return for a happy balanced life that starts now. That just seems like a better way than mashing myself into the ground for X years in the hope of retiring..... and to what?

Actually, I think the 'what' is the most important thing here. People tend to think about what they're retiring *from*, but not what they're retiring *to*. (This is basically what you were saying, macgro7).

Still thinking..... and enjoying reading all your responses  .

[doganjo]

I suppose I need to temper my post a little.  All my working life I enjoyed my job as an accountant.  I never wanted to give it up until I saw my two husbands miss out on life and good pensions by dying too early. Two wake up calls, first one meant I changed to a less stressful job. Second one was when I retired.

And I still do the book keeping side of it as treasurer for various charities and small businesses.  (Smallholding Scotland being one of them)

[pgkevet]

I believe the US has totally different rules on their 401K and pension funds and can mange themselves and get more into direct share trading. Whether that's good or bad is immaterial but it does lead to many more websites touting the best way to plan for retirement - usually for a fee. It's much less common for average Joe UK to hold shares and trade despite the push towards that some years ago - more a case of using fund managers and many/most? of those don't do as well as a simple stock market tracker.

[Womble]

[member=16228]pgkevet[/member] , interestingly, most proponents of FIRE advocate putting pension savings into passive tracker funds, rather than trying to beat the market. Of course there are those who have gone for spread betting, bitcoin, whatever.


I have a mix of old employee pensions (in very boring, high cost funds), plus a self employed pension which I can invest where I like. Some of that is currently being looked after for me by a very nice man called Mr Woodford. He says he's lost about half of it so far, but with any luck I can have the other half back sometime in February  .