As I researched the best way to calculate this number, I came across the Trinity Study, the source of the well-known 4% rule, and this simple formula for calculating your FIRE number: We realized that even if we did not reach our early retirement goal, we would still be on track to retiring at some point-and considering we had loved ones who could not say the same, we were eager to at least start.Īs soon as I learned that retirement could happen at any age, I needed to determine our personal FIRE number: the total value of assets we would need to accumulate in order to live off passive investment income. But, at the same time, it was empowering.Īs I calculated how much we would need to invest to retire early, my husband and I started to view FIRE as a game that would make planning for retirement fun. I was scared, wondering whether we would ever be able to retire since we didn’t start investing consistently until our thirties. On the one hand, knowing this number left me and my husband worried. Simply put, your FIRE number is the amount of money you need to have invested in order to live off those returns and quit working. Now, I know that retirement doesn’t magically occur at a certain age, but rather when we can afford to pay our annual expenses with passive income. The higher your savings rate and the percentage of income you don’t spend, the faster you can become work optional.īefore learning about FIRE, I thought retirement was something that only people with pensions could do at the age of 65. It’s a movement that encourages people to live below their means so they have more money to invest towards early retirement or part-time work. What Is a FIRE Number, and Why I’m on This JourneyįIRE stands for financial independence, retire early. That’s how quickly a FIRE number can change your life. Less than a year later, we’re now on track to become work optional at 47. But my husband? Well, he was 32 years old without a dollar in a 401(k) or an IRA. Fortunately, I had some money invested in retirement accounts with previous employers from my twenties. I was unemployed, married with two children, renting in a high-cost living area, and experiencing a global pandemic. I didn’t start thinking about retirement until I was 33 years old.
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Live off of the “4% safe withdrawal rate”ģ.We want to help you make more informed decisions. Earn 5% investment returns after inflation during your saving yearsĢ. meaning your expenses are run off without you working for itġ. 👉Here are the broad savings rate % and working years required…Ħ. 👉*Your savings rate, as a % of your take-home pay = How much you take home each year (less) How much you can live on 👉Irrespective of Income, It turns out that when it boils right down to it, your time to reach early retirement depends on only one factor: “ Your Savings Rate” * 👌🏼 The Simple Math Behind Early Retirement * But there is a solution to every question and how much should a person save for a better and early retirement Retirement Study found that while 76 percent of working age people in India expect a comfortable retired life, only 33 percent are actually putting aside money to fund that phase of life.
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