Financial Independence Retire Early (FIRE)

[dowie]

Agree with most of the principles but aren't you over-egging the pot requirements a bit?
If you have a couple of mil and withdraw something sustainable like £80k a year as a couple, you won't be paying much tax and you're probably living like you earn more than double of someone on a wage who is also paying a mortgage and saving for retirement. Hardly a lower middle-class lifestyle.

Sure 80k a year is maybe not "lower" middle class per se, but also it might be more like 60k as a couple - some rocky investment performance and you may need to be careful. If you've got kids too then that can all quite easily be spent.

But it all relative - who is going to pay off a mortgage and save up 2 million as a couple or one million as an individual by their 30s or 40th birthday? Someone probably earning say a good six figures by that point - what sort of holidays will they typically go on, what do they spend on clothes, food, eating out etc.

 

[413x]

I think the secret to the best life is finding out how to be really happy day to day. Having holidays and other trips that deliver great experiences is wonderful but no matter what happens and regardless of your situation you are going to be left wanting if you aren't really happy in your normal life. Those other things are always going to be the exception rather than the rule. When you find that, the other stuff is just the cherry on top.
I wouldn't claim to be there yet but for me the main things that are helping me get there are:

• Have friends and family I care about and have fun with close by and see them often (multiple times per week)
• Try and live healthily and eat well
• Be productive with things that interest me when not working (not just at the weekend)

Retiring then means doing even more of the things that make you happy every day and so being even happier. Hopefully some more fun experiences as well - but they are a bonus.

Definitely agree

Having a job you don't really care about writes off most of the week and winter in the UK is dark nights. This makes most of winter hard.

On weekends I try to make most of it going out hiking etc.

I've identified I would like a better climate than UK. But my dogs health makes that difficult. But identification is important!

I think i kind of know how to make life better. But making it happen still eludes me.

Ive also discovered a few things I need to shed.
A high maintenance garden being fairly high up on that list!

 

[Mr Badger]

I've just got back from the pub with mates.

My one mate is literally that man, and he'll never get off that hamster wheel. He has no kids. He's not happy, but won't change.

I'm not knocking people who commit to FIRE as a way to make the most out of their life. But there are evidently people out there who just save/invest money for the sake of it, with no plan to actually enjoy it at any point. Which does seem sad.

The other mate has xxxx all, but has three kids. He's living in his mum's spare bedroom, and lives day to day. He's said if he dies owing money to people, that's their problem and not his. He's happy enough.

I'm doing OK, but have three kids, and the costs that come with that. I'm looking at retiring a couple of years early, and any retirement is likely to be looking after grandchildren and helping out financially. I'm happy enough with that.

That's some yin and yang in your social group. I couldn't handle that sort of insecure, live for today approach to money, especially with people depending on me.

 

[EvilRob]

Sure 80k a year is maybe not "lower" middle class per se, but also it might be more like 60k as a couple - some rocky investment performance and you may need to be careful. If you've got kids too then that can all quite easily be spent.

But it all relative - who is going to pay off a mortgage and save up 2 million as a couple or one million as an individual by their 30s or 40th birthday? Someone probably earning say a good six figures by that point - what sort of holidays will they typically go on, what do they spend on clothes, food, eating out etc.

Yeah, pretty unlikely for anyone who is on PAYE to get there before what just looks like retiring a bit early rather than FIRE.

 

[200sols]

Agree with most of the principles but aren't you over-egging the pot requirements a bit?
If you have a couple of mil and withdraw something sustainable like £80k a year as a couple, you won't be paying much tax and you're probably living like you earn more than double of someone on a wage who is also paying a mortgage and saving for retirement. Hardly a lower middle-class lifestyle.

It's nowhere near that simple. At 30/40 with just 2 million and a couple wanting to withdraw 80k a year you are exposed to big sequence of return risks. It's not guaranteed, you also need that money to grow a lot to counter inflation which over longer timescales compounds massively and if in the early days markets take a large % drawdown as they can do your plans are in tatters.

I think with planning it would be fine, strategic use of index linked bonds to provide an inflation linked base income over the years and let the rest grow in equities should allow them to live a good life regardless of what the stock market does.

It's dream stuff for most people anyway, for people on more modest incomes the key is starting early, there is a huge difference between compounding for 20 vs 40 years.

 

[Penfold101]

Ive also discovered a few things I need to shed.
A high maintenance garden being fairly high up on that list!

You need to shed the shed…?

 

[Trifid]

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.

Going back to this, I actually think this is right at its core, it is about maximising savings in order to achieve financial independence, you could even say aspirationally to show it is possible on a average wage to retire significantly before normal pension age. However, in practice, I'm not convinced many are doing this long term as the cost of living is just too high and I expect most pursuing FIRE are more likely in my shoes with more income then needs, engaging moderately in consumerism and investing the rest with the aim of taking many years off their retirement age. I personally still think this is FIRE, but the reputation and criticism is built on the former more strict definition.

 

[robj20]

I was all set with a planned retirement at 50. But having a disabled child put a stop to that, now it will be what ever age I can take my pension.
It might be a case of reducing days though who knows what will happen. I do currently put away 25% into my pension though (age 39)

 

[arknor]

What if I told you I could make you rich and give you a night you'd never forget?

Are you launching a crypto currency

 

[Semple]

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

Hearing more and more about early retirees having planned badly (or not planned at all) and then being forced back to work.

Financial knowledge in this country has always been quite woeful and it's really only those who take an interest in the subject who broaden their financial knowledge (excluding those who work in that industry). That leaves lots of ordinary people who have little interest or little appetite to gain some financial knowledge, which leads to them making bad decisions.

I highly suspect we'll see many more of these from the covid era where many people in their 50s decided they actually no longer want to work, and without figuring out whether they could afford to live until their 80s/90s, or retiring with nothing to do because they can't afford it.

 

[Zefan]

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.

Agreed that lifestyle expectations are a massive part of it but ugh not sure if giving up the QoL piece of not having to live up north is worth it

 

[dlockers]

Are you launching a crypto currency

Lol

 

[Begbie]

Hearing more and more about early retirees having planned badly (or not planned at all) and then being forced back to work.

Financial knowledge in this country has always been quite woeful and it's really only those who take an interest in the subject who broaden their financial knowledge (excluding those who work in that industry). That leaves lots of ordinary people who have little interest or little appetite to gain some financial knowledge, which leads to them making bad decisions.

I highly suspect we'll see many more of these from the covid era where many people in their 50s decided they actually no longer want to work, and without figuring out whether they could afford to live until their 80s/90s, or retiring with nothing to do because they can't afford it.

This terrifies me, I keep trying to speak to both sisters to not rely on state pension when they get older and it falls on deaf ears.

If your not lucky enough to have a very good pension plan through work, you really need to be saving and investing or you could have a really **** last 20-30 years.

 

[throwaway4372]

Agreed that lifestyle expectations are a massive part of it but ugh not sure if giving up the QoL piece of not having to live up north is worth it

I'm from the north, I don't really belong in the south, people walking past each other without saying hello is grim

It also ties in with looking after my mum as she gets old and needs it. She might already be getting a bit iffy, seems to unlearn things, couldn't text message the other day but has done it for 20 years. It just required a little thinking to figure it out and she couldn't even begin trying. Tested her with a few games of chess at xmas, she taught me to play but can't think ahead even 1 move now. It's weird coz she seems fine generally, most people wouldn't notice any difference. Not really sure whether it's a problem or not tbh, she wouldn't be open to hearing it if it was. So for now it's just on my radar as something to keep an eye on and have a plan to move if needed.

 

[slinxy]

Hearing more and more about early retirees having planned badly (or not planned at all) and then being forced back to work.

Financial knowledge in this country has always been quite woeful and it's really only those who take an interest in the subject who broaden their financial knowledge (excluding those who work in that industry). That leaves lots of ordinary people who have little interest or little appetite to gain some financial knowledge, which leads to them making bad decisions.

I highly suspect we'll see many more of these from the covid era where many people in their 50s decided they actually no longer want to work, and without figuring out whether they could afford to live until their 80s/90s, or retiring with nothing to do because they can't afford it.

it's not just the ones that are planning to retire early, a lot of people just coast to the "finishing line", then when they get to their 60s or even worst when they hit retirement age they discover that they have to work longer or change their lifestyle drastically.

The vast majority of people just put money into a pension without knowing anything about.. some even opt out.

There's nothing wrong with planning, the sooner you start and the longer then in theory the more prepared you will be.. but life throws spanners in, there are ways to plan against most of them like income insurance.

FIRE isn't for everyone, but until you really look into it how do you know it's not for you? it may not be for you at the moment but life changes and you may be able to start it a few years later.
On the flip side, people take FIRE to extremely, then burn themselves out or then forced to go crazy with the spending... I know a guy who owns three houses, none of them are in a fit state to be lived in, if he would have spent some cash on the maintenance, pay for professional services/advice when it was needed then the houses wouldn't need pretty much a rebuild.

I heard a story of a lady who been using the same water to boil her pasta for months, just to save that extra few pennies... yeah she may hit her FIRE number a tiny bit quicker, but what about the medical costs? also most people's FIRE number is calculated at what they are living like that the moment.. It's only costing x per year, and I'm going to live for y years, so xy is my fire number. Do you really want to be reusing the same water to boil your pasta for the y years? the Fire number should be worked out on the lifestyle that you want not what you forced yourself into.

The main thing that stops people from retiring early is lifestyle creap.. they get their yearly payraise and then change their mobile/sky contract or they get a promotion at work or a new job and decide that they need a bigger car. if people didn't lifestyle creep or try to keep up with the Jones, then most people can shave a few years of work.

Life is a marathon, save at your pace, don't burn yourself out but try to get your personal best/goal.

 

[adam cool dude]

I do think it is possible if you chose to live a nomadic lifestyle.

I could buy a lorry with trailer and get the trailer fitted out as a house for around 50-100k all in if I did it myself. Most likely better than some 1 bedroom flats too.

We pay at the moment £166 a month on council, £80 a month on water and £180 on gas and electricity plus £600 a month on the house.

That is a grand a month you could invest. Close to 250k over 20 years. Just from not living in a house.

It is very easy to live in laybys and industrial estates if you really needed to then move on when needed. You could even plan it where you stay in the country to keep yourself out of trouble. Solar gives you all your power for free and you can take water from rivers and clean it yourself.

You could even buy a small piece of land off someone and use that like gypsies as a place to stay.

All you use your wage for is food and maintenance of the truck which is tiny compared to what you would spend on a house.


A lorry driver can easily net 4k a month take home with the majority of that being invested. Say you started at 25 by the time you are 45 you could have invested 720k into whatever.

You would also still have 500-750 a month disposable to do whatever you want with.

Reading that through I have essentially described a travellers lifestyle! Maybe they are onto something.

 

[Monkeynut]

I do think it is possible if you chose to live a nomadic lifestyle.

I could buy a lorry with trailer and get the trailer fitted out as a house for around 50-100k all in if I did it myself. Most likely better than some 1 bedroom flats too.

We pay at the moment £166 a month on council, £80 a month on water and £180 on gas and electricity plus £600 a month on the house.

That is a grand a month you could invest. Close to 250k over 20 years. Just from not living in a house.

It is very easy to live in laybys and industrial estates if you really needed to then move on when needed. You could even plan it where you stay in the country to keep yourself out of trouble. Solar gives you all your power for free and you can take water from rivers and clean it yourself.

You could even buy a small piece of land off someone and use that like gypsies as a place to stay.

All you use your wage for is food and maintenance of the truck which is tiny compared to what you would spend on a house.


A lorry driver can easily net 4k a month take home with the majority of that being invested. Say you started at 25 by the time you are 45 you could have invested 720k into whatever.

You would also still have 500-750 a month disposable to do whatever you want with.

Reading that through I have essentially described a travellers lifestyle! Maybe they are onto something.

Gypsies might come and nick your trailer, though, so best invest in some dags.

 

[D.P.]

Agree with most of the principles but aren't you over-egging the pot requirements a bit?
If you have a couple of mil and withdraw something sustainable like £80k a year as a couple, you won't be paying much tax and you're probably living like you earn more than double of someone on a wage who is also paying a mortgage and saving for retirement. Hardly a lower middle-class lifestyle.

Even if you reduce your required outgoing significantly in retirement such that you have pretty much no life, the simple economics of saving and investing enough in 20 years let alone 10 years is basically impossible unless you follow an extreme lifestyle and are equally extremely fortunate in career and lack of expenses (market crash, lost work from illness, children)

 

[potatolord]

I'm not knocking people who commit to FIRE as a way to make the most out of their life. But there are evidently people out there who just save/invest money for the sake of it, with no plan to actually enjoy it at any point. Which does seem sad.



That's some yin and yang in your social group. I couldn't handle that sort of insecure, live for today approach to money, especially with people depending on me.

My friends have some interesting discussions about money and careers!

Mate 1 could retire today, if he wanted. His job is killing him with stress. His problem is that he's built his life on toil and saving and has no idea what we will do when that's not there- and I know that scares him.

Personally, I think the FIRE thing only works for people who have high earnings from day one of their working life- and probably no kids. For your average earner, it's unrealistic.

 

[MichaelAwkward]

I do think it is possible if you chose to live a nomadic lifestyle.

I could buy a lorry with trailer and get the trailer fitted out as a house for around 50-100k all in if I did it myself. Most likely better than some 1 bedroom flats too.

We pay at the moment £166 a month on council, £80 a month on water and £180 on gas and electricity plus £600 a month on the house.

That is a grand a month you could invest. Close to 250k over 20 years. Just from not living in a house.

It is very easy to live in laybys and industrial estates if you really needed to then move on when needed. You could even plan it where you stay in the country to keep yourself out of trouble. Solar gives you all your power for free and you can take water from rivers and clean it yourself.

You could even buy a small piece of land off someone and use that like gypsies as a place to stay.

All you use your wage for is food and maintenance of the truck which is tiny compared to what you would spend on a house.


A lorry driver can easily net 4k a month take home with the majority of that being invested. Say you started at 25 by the time you are 45 you could have invested 720k into whatever.

You would also still have 500-750 a month disposable to do whatever you want with.

Reading that through I have essentially described a travellers lifestyle! Maybe they are onto something.

I don't think you have to go to that extreme. For example with your housing costs, I'm already able to save an extra £2.4k a year from those figures due to spending less on council tax, water, gas and electricity. I assume you live in quite an old/larger house than me.

It's obviously the truth that it is easier to do if you're an above average earner, without children, and with relatively low housing costs. If you also avoid lifestyle creep/aren't a very good consumer then it's even easier.

I wouldn't call it an extreme lifestyle... it just means I'm able to save 60-70% of my wages each month into relatively reliable/safe investments. I still eat steak, go out, have holidays, etc. We don't plan to live much differently when we do stop working. I wouldn't know how to spend £80k between us per year... first world problems.

There are probably quite a lot of younger couples in similar circumstances, but perhaps don't save as much due to consuming more, or wanting to "upgrade" to a more expensive house.

Currently we plan to either sell our cheap flat when we both hit FI and buy a house somewhere cheaper, or keep the flat for the rental income and become one of those landlords everyone hates whilst we travel around/rent overseas/etc.