Lessons from the FIRE Movement

FIRE, which means Financial Independence / Retire Early, is an investment practice and lifestyle that focuses on saving aggressively and spending frugally. While the movement has been around since the 90’s, it has gained more exposure recently as the financial fallout from COVID-19 has more people considering what financial independence and freedom mean.

FIRE adherents recommend that you save half of your net income. Yes, that’s a whopping 50%, compared to the usual recommendation of 15%. They also suggest you’ll need to save a total of about 25 times your annual expenses. So, if you can live off of $80,000 a year, you’ll need $2 million in savings to be financially independent. This approach isn’t for everyone, but there are still some takeaways from which we can all benefit:

Don’t Spend Your Pay Raises
Devote the extra money from your pay raises or bonuses to your retirement goals.

Seek Sources of Passive Income
For example, an investment in a rental property can provide passive income, which in turn provides financial flexibility.

Be Mindful of Investment Expenses
Over time, investment expenses add up. Talk with your financial advisor to know exactly what you’re spending.

Select the Right Type of Investment Accounts
If you’re planning to retire early you may not be able to access retirement accounts before age of 59 1/2 without paying a penalty.

For some, retiring early is a dream come true; for others not so much. That’s what’s so fun about being a financial advisor. We get to work with clients who have a variety of goals and preferences. If you’d like to talk about retirement, we’d welcome the conversation. Click here to schedule a call with one of our advisors, or call 602-343-9301.

This content is provided for informational purposes only. It is not a guarantee of future success, is subject to change, and is not intended to serve as the basis for an individual’s financial decisions. Investing involves risk, including the loss of principal. Strategy Financial Group does not provide specific legal or tax advice. Please consult with a qualified professional for guidance on your individual situation. Investment advice is offered through Strategy Financial Services, LLC, a Registered Investment Adviser. Insurance and annuity products are offered separately through Strategy Financial Insurance, LLC.