This is probably not a very sensitive title for a blog, given the very vivid memories of the bushfires that devastated many parts of Australia this time last year. However, this blog is not about natural disasters. What I am referring to is the movement known as:
The idea behind the concept is to spend some years working in traditional employment, embarking on a very aggressive savings regimen – saving and investing a significant portion of their income.
F.I.R.E movement adherents tend to:
- Be aggressive savers while they are working – often saving up to 70% of their income
- They are generally very frugal with their spending
- Their objective is to retire from traditional employment at a much younger age, often in their 40s or 50s
They aim is to accumulate a lump sum of around 30 times their likely annual spending needs. The more frugally they live during the accumulation phase, the more they accumulate. Developing a frugal lifestyle during the accumulation period also means they will develop habits that enable them to live on much less going forward.
Once a F.I.R.E. person achieves their savings goal and retire, their aim is to drawdown around 3% to 4% of their savings pool each year. With investment earnings, they are generally drawing down less than they are spending, allowing their capital to grow in value and create protection against inflation.
The reality is that many people who achieve their savings goal do not completely retire in their 40s or 50s. They will often remain in the workforce, working on a part-time or seasonal basis, engaging in work they enjoy.
- consult or contract, capitalising on skills and knowledge gained during traditional employment
- develop new skills enabling them to seek alternative part-time work
- commercialise a hobby or interest.
The options are endless.
Having said that, ongoing paid employment may not be part of the mix for some. Proponents may plan to spend their early retirement pursuing their interest in the arts, travelling, home-schooling their children, or working in a voluntary capacity.
While the F.I.R.E. movement has been active for almost 20 years now – it was inspired by authors Vicky Robin and Joe Dominguez in the book Your Money or Your Life, perhaps there are alternative, hybrid options.
Rather than busting ourselves to get out of working in a job we do not like, perhaps we need to be focussing on finding a job or occupation that we are happy to pursue. As is often said, if we love the work we do, we will never work a day in our life.
As Australians age, the pursuit of happiness becomes increasingly more important. We are seeing more people retaining at least some workplace engagement beyond the “normal” retirement age.
Engaging in activities that provide fulfilment, a sense of accomplishment, and gives something back to our community can be a noble accomplishment.
For some, traditional work and retirement will be part of our lives. For others, alternative models like the F.I.R.E movement, or derivatives of it, will appeal.
Whatever your preference, become open-minded to the options and most importantly, strive to find fulfilment and enjoyment in your work and avoid being cast into a stereotypical mould.
On that note, that is it from us for the year.
Mark and I will give our soapbox a rest for a couple of weeks, and we will be back again sometime in January 2021.
As Mark so rightly said in his blog last week, 2020 has been a very challenging year. One where the pursuit of many goals and aspirations had to be sidelined.
We would both like to take this opportunity to wish each of our readers a very safe and happy Christmas and New Year. With borders now having reopened, many will be able to reunite with family and friends not seen for many months. If you are travelling, stay safe, exercise physical distancing, and remember to sanitise!
PK believes people have the right to accurate, affordable and unbiased information that addresses all aspects of their preferred retirement lifestyle, thereby giving them the opportunity to make informed decisions that will empower them to live out their lives with dignity, certainty and security.
Tealey’s ambition is to change how people think about their retirement, he wants people to dream, plan and realise retirement is not defined by a magical age prescribed by the legislation.