Financial Independence Retire Early (FIRE)

[throwaway4372]

To get that sort of regular middle-class boomer, living in a nice area with a reasonable retirement income plus some savings for emergencies or big purchases could require something like:

Paying off a home worth £800k+ and a pension worth over a million + say a good six-figure amount across your ISA, savings and regular stock portfolio.

For me part of the plan is to retire up north. There's a lot of room to choose between having a better house or having money left over. My house is worth £400k and I won't ever be owning a house worth more than that. Everyone's expectation is different, but having modest expectations makes FIRE a lot easier.

 

[D.P.]

FIRE is definitely much more challenging in most of Europe than the US and is essentially impossible if you have children.
And while ensuring you are sufficiently saving for retirement and gaining financial independence in case of job loss etc is critically important, living like a hermit just to quit a job and continue to live like a hermit without the option of enjoying life and no job to give your life satisfaction is extreme.


My quality of life improved massively when I simply stopped caring much about costs. I'll happily pay more for a better flight that doesn't require horrible lay over or 3am alarms, or hotels with more facilities and better locations, enjoying a meal at a restaurant that I know i could cook for 20% of the cost but I don't have to put in the time and energy. Then again i don;t waste money on things that don;t bring me enjoyment or make my life easier. I only buy 2nd hand cars, and run them until the repair cost or risks of breakdown become too high, and even then I only buy cheap family cars as their enitre purpose os to transport me and my gear from A to B.

 

[dowie]

i wish someone told me about FIRE or even Vanguard platform/Index Funds when I was in school.

I agree with this - some basic financial planning stuff ought to be on the curriculum, ditto to stuff about credit cards, mortgages, car finance etc. "Home economics" is a thing already but rather than just baking a cake or whatever some other practical life skills ought to be there for people growing up in homes where parents aren't financially savvy.

I only really found out about Vanguard about 5 years ago, granted, Vanguard is still only online through a website rather through an App (which is to check balance only), overall it is still easy to get into. I wish this was available back when I was in university. I remember when I was at uni I bought some DVDs from Amazon and thought "I should buy their stock", even £100. Amazon didn't make a penny in profit at this point in time and their stock was obviously very cheap compared to now. I didn't know who to call, now anyone can do that now on an App and there is so much information now on YouTube.

Back then these things almost felt like it was all behind a course at university or your parents were financially savvy and had known about where and how to do these things.

I'd disagree with this though - I'm an elder millennial and there was plenty of information available online - I mean the trading the stockmarket thread in this very forum is now 15 years old so I'm not sure you can blame lack of info so much as lack of curiosity.

Halifax Sharebuilder was launched in 2001 - you could have literally walked along your local high street and asked for info but Google would have revealed far more - there were a bunch of online/discount brokers available from the late 90s onwards - places like Hargreaves Lansdown, Fidelity, Charles Schwab would give you access to funds (including Vanguard) and individual equities.

One of the main sites for info was the motley fool or fool.com (also advfn and interactive investor), all of those had BBs/forums just like this one in the early 00s. I bought this book back in the 00s, this is the *third* edition from like 2002, fool was launched in 95 and the UK site in 97... their whole thing has literally been promoting the benefits of compounding and emphasizing how saving early is great.

This stuff *was* available back when you were in university, you only needed to open up google and find it.

 

[adam cool dude]

Shouldn't we be getting more working-age people back into work? There is an issue in the UK called economic inactivity where working-age people are not in work and not even looking for work. One of the causes is mental health which is fair enough but another cause is as per this thread - early retirement. It didn't work out for the 2 people who I know that tried it at 55. Both of them ended up back in work, one at 59, the other at 63 because they couldn't make ends meet.

Even if you retired at 55 to make that gap to 65 requires a lot of money.

If I semi retired at 55 but still worked twice a week till I was 65 I would have earnt over 200k over that time.

You need an absolutely massive pension pot to cover that whilst still being in the same position as someone else at 65.

For me personally I see no issue with working until old age.

Think of it as free gym membership for old age that you get paid for.

 

[throwaway4372]

I read my first book about investing in 2006 ish, at university, one of my friends had invested his student loan which he didn't need and pocketed the profit, seemed worth learning. After uni though, I never had any money, garbage income due to 2008 financial crisis (I made a loss in my first year of work as a graduate), paying extortionate rent for mouldy bedsit (oxford prices), having to buy old cars and having to fix them, trying to get a house deposit together then emptying my bank account to buy a house, then spending half my income on the mortgage, then getting a bit lucky and being able to overpay the mortgage and clear it, and that was about 2 years ago. In FIRE books they talk about starting to invest in your 20s, but that's the curse of the UK, you just don't have any spare money in your 20s (or even 30s now).

 

[D.P.]

Even if you retired at 55 to make that gap to 65 requires a lot of money.

If I semi retired at 55 but still worked twice a week till I was 65 I would have earnt over 200k over that time.

You need an absolutely massive pension pot to cover that whilst still being in the same position as someone else at 65.

For me personally I see no issue with working until old age.

Think of it as free gym membership for old age that you get paid for.

Indeed I think it would be very dangerous to retire early and do nothing stimulating.

What does make sense and is in the back of my my is building up sufficient savings and pensions that I can change jobs and reduce hours and work stress once I am 50 or so. Maybe work for a startup at a basic pay to cover bills and work 35 hours a week.

 

[slinxy]

I personally don't think I will retire early, unless I'm forced to... I'm going to coast to retirment.
Work hard for the next x number of years till I've paid off the house and have plenty in my pension and stocks/shares then take a less stress job somewhere to pay me my pocket money till I retire.

As someone has already said, there's ten years of potential earnings, but what's more important is the 10 years of compound interest on savings and pension.

my mum recently passed away, her pension plan was to raise kids and have the kids look after them when they are old.. while we try our best, unfortunately in current world, that plan is no longer feasible, unless you don't want your childern to have a life of their own... I always wanted to FIRE, but having experinced what happen with my mum and dad, I rather work a few more years than not have to put that reasonability a family members.

There are those who FIRE for the whole of their lives, leave school and sign on till the day that their get their state pension. Sometimes I wonder if that's not the smart plan rather than the "rat race" that most of us are living.

 

[Ascendancy]

I've never really given much thought about what actual age I'll retire. I've been vaguely following the various FIRE subreddits on Reddit for a while now, but I don't think I'll get close to their definition of the word 'early' at this point

I live pretty cheaply, no kids etc and aside for the occasional PC upgrade/technology impulse buy I don't really have a lot of crazy outgoings. I've got an emergency premium bonds account that would cover my essential costs for 2 years if I ever lost my job or the roof fell off my house or something, and any excess money just gets shoved into pension/VWRP.

My plan is to just keep doing this for the next 20 years and see what's what.

I'll tell you what though, I've tried talking about this stuff with other people my age (37) and oh boy it's depressing. No savings, no desire to invest anywhere, some people have even opted out of the auto enrollment pension, and those that still have it still just have it in whatever the default investment pot is that's like 70% bonds or something with the 3% contribution from their salary.

I'm not sure what retirement for these people is going to look like, but I don't think it's going to be pretty.

 

[SupraWez]

Interesting

 

[413x]

Even if you retired at 55 to make that gap to 65 requires a lot of money.

If I semi retired at 55 but still worked twice a week till I was 65 I would have earnt over 200k over that time.

You need an absolutely massive pension pot to cover that whilst still being in the same position as someone else at 65.

For me personally I see no issue with working until old age.

Think of it as free gym membership for old age that you get paid for.

Even doing 2-3 days a week is a year you don't need to have back saved into a pension.
That's 30k saving. And you keep busy, active, mental stimulation.

I'd much rather work 55-65 tapering down number of days worked a year. Than work until 60, saving my ass off. Compromising my "good years" to suddenly stop at.

With my mental health record it's probably dangerous to not have some form of "work". As much as I'd love to have the money to not work.. I'd need a pension of 50k plus to make the most of it. That simply isn't going to happen.

 

[Trifid]

This is amazing IMO - it's all about giving yourself flexibility - but is not really FIRE as Diddums so perfectly summarises above IMO. FIRE - as a movement - seems more about rejection of typical timescales (sometimes to a fault) and a sort of ASAP FOMO, which is what I referred to in my first response to the thread.

Maybe, but it can be what you want it to be to get the the goal of financial independence, retiring really is optional at that point, for instance in USA, Barista FIRE is used to just get a job to get health insurance. 2 people I know who retired early now have side gigs, one runs a cafe for adults with down syndrome and another flies round the world adjudicating music competitions. I started out before knowing any definition, I just wanted to buy 3 years. Ultimately I'm cautious of committing too early, there are lots of stories about early retirees being bored or lonely in early retirement and if someone has made life all about saving, then I can see them falling for that trap by not having anything to retire to, I prefer to keep my interests active.

 

[I kill Bunnies]

I would definitely have targeted FIRE, if it wasn't for having kids!

 

[darkgen]

The frugality aspect is something I've been subscribed too for my entire life and combined with a low-key existence with very few external wants or distractions, I've managed to pull the plug on my professional life at 47. Investment interests cover my annual expenditures which do include 1 or 2 holidays per year and I'm still getting toys here and there and managing a weekly bar routine.

Now almost 50 and I consider myself retired. Being child-free has greatly enabled this type of life-style of course.

 

[Efour]

Is this gonna be relevant to anyone considering it today ?
Ai will take over 25% of the workforce in the next 25 years
Probably looking at WW3 in thew next ten years, that will reset anyones FIRE
UBI will probably be a thing or necessity, "soon"

I wish i started investing/property/etc earlier in life but i squandered everything in the pursuit of happiness in my 20s.

100% agree teaching this stuff in school would be useful but then you don't have your moder serf class. ~Not everyone is getting comfortable.

Just don't have kids if you wanna retire early and do stuff travel, live in relative comfort. (probably a huge regret latter on)
scrimping your whole life doesn't sound fun to me either.

 

[danlightbulb]

I'd disagree with this though - I'm an elder millennial and there was plenty of information available online - I mean the trading the stockmarket thread in this very forum is now 15 years old so I'm not sure you can blame lack of info so much as lack of curiosity.

Halifax Sharebuilder was launched in 2001 - you could have literally walked along your local high street and asked for info but Google would have revealed far more - there were a bunch of online/discount brokers available from the late 90s onwards - places like Hargreaves Lansdown, Fidelity, Charles Schwab would give you access to funds (including Vanguard) and individual equities.

One of the main sites for info was the motley fool or fool.com (also advfn and interactive investor), all of those had BBs/forums just like this one in the early 00s. I bought this book back in the 00s, this is the *third* edition from like 2002, fool was launched in 95 and the UK site in 97... their whole thing has literally been promoting the benefits of compounding and emphasizing how saving early is great.

This stuff *was* available back when you were in university, you only needed to open up google and find it.

You have to know about something, or at least have an idea of it, to Google or otherwise search for it.

If no one in your circle knows about something, and you don't happen to come across something, then it's likely to pass you by and you are none the wiser.

When I was c.20 years old, the word 'invest' was synonymous with risk and loss. Because of that it was never given a second thought. I wasn't taught how to make money. I wasn't taught any of the principles underpinning investment and financial products. My family didn't have much anyway so of course this wasn't ever something that I learned from them either.

So whilst I agree with you the information is there, that alone is no good you need to either be pointed or prodded to it or be lucky to come across it and notice it. And even if you do know about something, you need the means to take advantage as well, money makes money as they say.

I would wager there is tonnes of stuff we could all be improving upon to make more money but we don't know about it so we don't do it.

 

[Mr Badger]

Even doing 2-3 days a week is a year you don't need to have back saved into a pension.
That's 30k saving. And you keep busy, active, mental stimulation.

I'd much rather work 55-65 tapering down number of days worked a year. Than work until 60, saving my ass off. Compromising my "good years" to suddenly stop at.

With my mental health record it's probably dangerous to not have some form of "work". As much as I'd love to have the money to not work.. I'd need a pension of 50k plus to make the most of it. That simply isn't going to happen.

I remember when I was little my grandmother telling me that a pound saved is a pound earned!

This FIRE stuff is interesting, especially considering that most people in the UK don't even have enough savings to cover their outgoings for three months, let alone enough of a private pension pot to maintain their standard of living once they reach state pension age. I did work with a guy who on a fairly basic salary managed to pay off his house in something like 10 years. But he literally was the weirdo who lived on baked beans, didn't drive, never went out and had to be forced to take his annual leave. Not a lifestyle I would want.

I know quite a few people who retired in their fifties, but that was usually by being made redundant and given the sort of defined benefit pension deal that doesn't really exist anymore. These days if you can build up the funds to retire (say) ten years early (e.g. 58 rather than 68) whilst still having a life, then I think you are doing well.

 

[fez]

I'm convinced my quantum stocks are I an epic bubble supported by this average Joe access + Fomo + hype etc.

I thought it was generally accepted that the widespread adoption of ETF and people pouring their pensions into investment based products has pumped the value of stocks up massively.

 

[d_brennen]

I just visited 3 graves of family and a friend who didn't live long enough to retire let alone early. I'm planning on semi retiring at 55 (14 years) but I'm not going to slow down on living life to do it

 

[danlightbulb]

I thought it was generally accepted that the widespread adoption of ETF and people pouring their pensions into investment based products has pumped the value of stocks up massively.

Absolutely. The mainstream advice for DC pensions now is 100% equities and a global diversification which by it's nature is heavy in US.

This information is readily available.

And so it follows that US equities are overvalued, the US economy is benefiting from the capital growth and the likes of the UK are struggling for investment because no one wants to put more than 5-10% here.

We're all paying for US GDP growth because of where we put our pension funds, which is in turn suffocating our own growth and contributing to our poor services and lack of wage progression. Ironic.

 

[413x]

Absolutely. The mainstream advice for DC pensions now is 100% equities and a global diversification which by it's nature is heavy in US.

This information is readily available.

And so it follows that US equities are overvalued, the US economy is benefiting from the capital growth and the likes of the UK are struggling for investment because no one wants to put more than 5-10% here.

We're all paying for US GDP growth because of where we put our pension funds, which is in turn suffocating our own growth and contributing to our poor services and lack of wage progression. Ironic.

Yeah it's becoming more pyramid scheme than the past.
UK shares are undervalued. But put your money in there and you won't do well.
I mean look at BTC. It has no intrinsic value. Yet it continues to blow past every "it'll never get to x figures" prediction.

And yeah not investing in our country really hurts but have to follow the crowd.