Let’s start with what FIRE stands for—Financial Independence, Retire Early. Isn’t this what everyone wants?
I have a theory about how this movement started. There has been a lot of research in the financial planning space and trying to figure out how much you need in investment assets and how much you can take out over the course of your retirement (safe withdrawal rate) without running out of money. Ultimately, the general idea of a ‘safe’ withdrawal rate settled around 4%. The reality is that there are SO many variables that have to be monitored with course corrections along the way, but 4% can be the baseline.
My guess about the FIRE movement is that people started embracing this 4% concept, worked the math and came up with their ‘number’, thinking they can retire once this number is reached. Here’s the first problem with that concept-all of the research done, was based on a 30-year time horizon.
To me, the FIRE concept means choices. What I mean by having choices is that you don’t have to stay in that job that you hate; you don’t have to wait until ‘retirement’ to finally travel the world. Once you understand your financial life, you can learn the tradeoffs and set yourself up to have choices.
Check out this article that Financial Journey LLC was quoted in last month in Think Advisor where financial advisors give tips for those interested in FIRE…..or choices.
These choices are essentially the essence of Financial Planning and what Financial Journey LLC does for its clients. If you are ready to have a trusted partner to walk on this financial path with you, set up a call with us today.
Financial Journey LLC is a registered investment advisor offering advisory services in the state of Virginia and in other jurisdictions where exempted. Information provided is for educational purposes only and not, in any way, to be considered investment or tax advice.