What is FIRE Finance? You’ve probably been hearing and reading more and more about people that are retiring early after saving up a bunch of money at an early age. This is the FIRE Movement, and it’s basically a retirement planning system that takes the guess work out of retirement planning.
Table of Contents
FIRE Finance Math
FIRE Finance tells you two things:
- How much money you need to have saved and invested before you can retire
- How much of that portfolio you can spend every money and never run out of money during retirement
The Rule of 25
The Rule of 25 tells you how much money you need to have saved and invested for retirement. That amount is 25 times your annual expenses.
When your portfolio reaches this amount, you’ve got enough money to retire. Here’s more info on how and why the Rule of 25 works.
The 4% Rule
The 4 Percent Rule helps you figure out how much of your portfolio you can spend each month without ever running out of money.
That amount is 4% of your retirement portfolio. Click here to learn more about how the 4% rule works.
Financial Independence Early Retirement
When combined, the Rule of 25 and the 4% Rule create what’s known as FIRE Finance. Obviously having enough money to become financially independent is appealing to most people. And if you’ve ever been fed up with you job and wanted to walk away, you can understand why the FIRE Movement is attracting more people by the day.
If you’re interested in learning more, check out these related articles and resources:
- The Newbies Guide to Understanding FIRE Finance
- What is FIRE and How Does it Work?
- A FIRE Calculator
- Determining the True Retirement Cost of Anything