Escape the Rat Race with FIRE
The FIRE movement (Financial Independence, Retire Early) is all about achieving financial freedom and retiring earlier than traditional methods allow. Let’s dive into the details:
What Is the FIRE Number?
- Your FIRE number represents the amount of money you need to be financially independent and retire early.
- Essentially, it’s the sum that allows you to live comfortably without needing to work for the rest of your life.
Calculating Your FIRE Number: The Rule of 25
- The rule of 25 simplifies the process. Multiply your annual expenses by 25 to determine your FIRE number.
- For example, if your yearly expenses are Rs. 15,00,000, your FIRE number would be Rs. 3,75,00,000 (15,00,000 × 25).
Factors to Consider:
- Savings Rate: The more you save, the faster you’ll reach financial independence. A higher savings rate accelerates your journey.
- Investment Returns: Expected annual returns play a crucial role in achieving your FIRE number.
- Withdrawal Rate: Most FIRE followers withdraw 3% to 4% of their savings annually to cover living expenses in retirement.
Adjusting Your FIRE Number:
- Understand that your FIRE number will evolve as your life changes.
- Calculate an estimate and be open to adjusting it as you grow and adapt.
Remember, FIRE isn’t a one-size-fits-all approach. It’s about finding financial flexibility to create the ultimate life flexibility.
