Episode 1277
Can you really exit the workforce decades ahead of schedule? In this episode, we break down the Financial Independence, Retire Early (FIRE) movement, a personal finance philosophy popularized by millennials in the 2010s that prioritizes high savings rates and passive income.
Tune in as we explore:
• The Core Philosophy: How adherents aim to save far more than the standard 10–15% recommendation—often targeting 50% to 75% of their income—to shorten their working years.
• The Math of Freedom: We explain the relationship between savings rates and retirement timelines, including how a 75% savings rate could theoretically lead to retirement in under ten years. We also examine the "4% rule" regarding safe withdrawal rates and why some experts suggest a more conservative 3.25–3.5% approach.
• Variations of FIRE: From the frugal "LeanFIRE" to the high-spending "FatFIRE," we discuss the different subcategories of the movement, including "CoastFIRE" (front-loading investments) and "BaristaFIRE" (semi-retirement with part-time work).
• Origins and Criticisms: We trace the movement's roots to books like Your Money or Your Life and the Mr. Money Mustache blog. Finally, we address common criticisms, such as the difficulty of achieving these goals on a modest income and the risks of relying on high market returns.
Published on 1 day, 9 hours ago
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