Those that live on a fixed income often struggle to make ends meet. This is a common occurrence for those who have retired early and don’t have any extra money such as savings. Those who become knowledgeable about this situation before it happens to them can do a lot to avoid this issue. One of the things they may want to focus on is Financial Independence and Early Retirement, which is often referred to as FIRE.

What is FIRE all about?

FIRE has become a movement of a growing group of individuals who are looking towards a future that includes financial independence. They don’t want to be working the rest of their lives to achieve this. These are people who have the desire to retire early.

Retirement in the early years

For many, when they think about early retirement it may be just when they reach the age that they can qualify for their pensions. This is often around the 60-year mark. For those that have become part of the FIRE concept, this is way too long to wait to enjoy retirement. Their idea of early retirement is when they are in their forties or thirties. Some that are really enthusiastic are setting their retirement ages when they are in their late forties. For those who are not as yet familiar with FIRE, this may come across as wishful thinking or merely a ‘pipe dream.’

Too much debt to even consider FIRE

When first hearing about the FIRE approach the first thing that comes to the mind of many is that this is just not achievable for them. They are only middle-income earners, and many have a huge debt load. It is going to take them years just to dissolve their debt.

Its not all about money

Money is always the main issue when it comes to thinking about retirement. But, according to FIRE enthusiasts, it isn’t just about money. Money becomes the boss of the average income person. It dictates what they can and cannot do. Promoters of FIRE want people to focus more on financial independence which means putting themselves in control of their life, and not letting money have the control.

The definition of retirement

Something else that is soon discovered when individuals begin to learn about FIRE is the participants’ definition of retirement may not be in the traditional sense. It doesn’t mean that all FIRE participants have given up their jobs. Financial Freedom to those involved in FIRE is more about being free to enjoy the money that a person has to further their goals and fill their dreams. To FIRE members it means having the choice of whether a person needs to work or not.

What is classified as Financial Independence?

Financial independence is not just being in a position where you have enough money to pay your bills with a little bit left over for savings. A formula to determine financial independence means having a net worth that is twenty-five times greater than a person’s annual income.

Requirments for making FIRE work

There are two components that are needed to achieve FIRE. One is the ability to be able to cut back on expenses. The other is having a job that pays a decent wage. With these components, a plan can be implemented to allow a person to implement FIRE.