Retirement Planning: Why FIRE is the most followed strategy to retire early?

Retirement Planning: Why FIRE is the most followed strategy to retire early?

There are a lot of options when it comes to planning for retirement as a wide range of investment instruments are available in the market. These days one of the unique retirement planning strategies is gaining more popularity as it focuses on savings and regular income generation for early retirement. The ‘Financial Independence, Retire Early’ or the FIRE strategy offers a well-planned roadmap for early retirement.
With this retirement savings plan, one can consider the possibility of beginning savings from as early as the age of 18 and in their mid-30s, they will be close to becoming financially independent. Notably, the FIRE movement has also become one of the most followed strategies for retirement planning, thanks to the range of advantages that it brings along.
Scroll down to know about the concept in detail and its benefits.
What is a FIRE movement?
Many people plan an early retirement as it offers numerous advantages including the option to live a stress-free life with their family. However, people need to ensure that they save enough funds to meet their post-retirement expenses and financial needs. This is when the FIRE movement comes into play. As the name suggests, the ‘Financial Independence, Retire Early’ is a kind of financial planning that simply means to promote early retirement with a meticulous investment strategy.
This method encourages individuals to achieve financial independence as early as in their 30s or 40s by making significant savings from their income and investing them in relevant assets.
Key features of FIRE strategy
Some of the key features of the FIRE movement are:
– Those following the FIRE savings method need to be extremely disciplined when it comes to saving and investing. One should also pay off their debts and start generating passive income before retirement.
– The goal of the method is to become financially independent to take retirement in your 30s or 40s. 
– For this method, individuals can save and invest up to 70 per cent of their earnings.
How to use the FIRE method for financial independence?
Assessing current financial status: Before starting investments, one needs to evaluate his/her current financial situation to determine where they want to be and how to get there. Assessing the finances can also help to evaluate debts.
Decide your goals: Before beginning the FIRE method, individuals should set a few goals for the future that they can work towards. It is important to have a plan for short-term, medium-term, or long-term financial objectives.
Clear debts: Achieving financial independence is difficult if one has impending dues. Thus, one must begin by paying off their debts. In case, there are some essential debts like home or car loans, one needs to find the right balance between paying off the loan and investing in the right assets.
Investments: Instead of putting all your money in one basket, an investor should inculcate good financial habits and invest in multiple reliable investments that generate passive income. Some examples are mutual funds, asset leasing, stocks, gold, real estate and NPS.
Have multiple income sources: Having multiple sources of passive income is also important for gaining early financial freedom. While this will pay off in the future, it can be achieved by diversifying your investment portfolio.
Track your spending: One of the primary and important steps is to track your spending and avoid unnecessary expenses. Any sort of extra splurging on outside food, ordering online or unnecessary shopping can be avoided.

https://www.zeebiz.com/personal-finance/news-retirement-planning-why-fire-is-the-most-followed-strategy-to-build-retirement-corpus-tips-for-financial-independence-early-retirement-in-30s-stst-256076

Recommended For You