Have you heard of fire?
F.I.R.E. stand for Financial Independence Retire Early. The concept is that you invest enough money to live off of your investments and become financially independent. For some this could mean retiring early as well.
You can calculate your fire date!
Now this is one of the most exciting yet frightening things to do. I can recommend the calculator from Choose FI.
Here are some startling examples (All assume you want to retire at 60, have 1000 $ starting capital and invest 500 $ monthly at an interest rate of 8%).
Starting at age 25:
Ending balance: $ 1,163,233
With a 4% withdrawal per year (what you could take out without hurting your investments) of $46,529 / year
Starting at age 27:
Ending balance: $ 980,713
Safe withdrawal rate: $ 39,228
That is shocking! Only two years make a difference of $7,301 per year and $182,520 in total capital, with the same investment rate and same starting capital.
The good news
If you play around with the calculator you can find a number that works for you. If time is on your side I congratulate you. If you are not in your twenties anymore, don’t get discouraged. Many fire participants have started at an older age and successfully changed their lives. It is empowering to know your possibilities. I invite you to check out the calculator and see your possible fire future!