FIRE has become a major trend for young professionals, and it's something that you're likely to see referenced when looking into your retirement. FIRE stands for "Financial Independence, Retire Early." It's a method of aggressive retirement savings that is designed to promote early retirement and general economic stability.
Why is FIRE Becoming Popular?
Under a FIRE plan, individuals attempt to save as much as possible during their youthful earning years in an attempt to achieve enough money to retire early. But that doesn't mean that they intend to live luxuriously: on the contrary, many FIRE planners cut their expenses drastically during their retirement in able to afford it.
The major philosophy of FIRE isn't to live as though one is wealthy: instead, it's financial independence. In other words, not having to work for someone else for very long. FIRE can be seen as a response to the growing retirement age: people have stopped retiring at 65 and are still retiring later than 67 or not retiring at all.
Just a few decades ago, many people could rely upon pensions or social security. Today, not everyone believes social security will always exist, and most people don't have pensions. This type of economic uncertainty has led people to try to strive for financial freedom.
How Can You Achieve FIRE?
The first step towards FIRE is generally meeting with a wealth management advisor. For FIRE to work, most people need to strip down their expenses as much as possible and start investing immediately. FIRE takes advantage of compounding interest: the earlier someone starts saving for retirement, the less they actually need to save.
But that doesn't mean that people can't achieve FIRE if they don't start saving early, it just means they need to save far more aggressively. Wealth management services can help in directing you towards the optimal amount that you need to save as well as ways that you can cut your post-retirement expenses.
Of course, FIRE isn't for everyone: some people prefer to save a little less and work a little longer.
FIRE is only one way that people approach retirement, but it's becoming popular because of how sought after financial independence now is. If you're interested in reviewing your retirement plan, determining how soon you can retire, or even starting a brand new retirement plan, your first step should be to contact wealth management advisor services. They'll be able to review your current financial situation to make suggestions.