Last post, we defined our numerical FIRE goal. In this post I’ll explore whether it is achievable. Is it too ambitious? Or perhaps not ambitious enough? Let’s get to work! Our FIRE goal: to retire at 60 (in 2033) on $80,000 a year. To determine how much we need to generate this amount, we are using the 4% rule. This rule states we require 25 times our expenses ($2,000,000) to access an inflation-adjusted $80,000 a year for the rest of our retired life. Yes, it is simplistic. Yes, it is based on historical returns. No, it can’t predict the future or cover nuances for every person saving for FIRE. However ... Show Me More!
It’s time to review our FIRE savings against our goals. We have continued saving on auto-pilot for the last three years. Are we on track? If not, what do we need to do to meet our goal? Initially, we didn’t set a FIRE goal. Rather than reaching for an age when we could retire, I was working backwards. I took the retirement age as the age you can access the pension in Australia (67). Then, knowing we spend $80,000 a year, I was reducing 67 by 1 year for every $80,000 we saved. Using that calculation, we can retire early by 5 years, or at 62. Now, that’s nothing to ... Show Me More!
I recently realised that we’d lost sight of our FIRE goal, so it’s time to revisit where we are, and where we want to be in the future. Part of where we’d like to be is not just saving, but enjoying our money in line with our values. In this post we’ll review our spending goals. Going back to the very basics, I started with Pete Matthew’s Meaningful Money podcast Season 2 from 2016. This series was immensely helpful in getting us to actually start investing. One of the first episodes was named “Why Invest”. To be honest, listening back nearly five years after we’ve been investing to reach FIRE, ... Show Me More!
After allowing the practicalities of saving for FIRE to continue on auto-pilot for three years, I feel like it is time to come back, review where we are, and look at our FIRE goal. A Vague FIRE Goal The first thing to note is that I can’t remember what our old goal was! That has to be a cardinal sin for someone reaching for FIRE. I know we want to retire early, but what age is early to us? I’m 48, and we are following a SlowFIRE path (i.e. still spending a lot with a low savings rate). That is where this blog comes in handy. Going back through my ... Show Me More!
Let me start by acknowledging that this is a post of privilege. I support paying tax. Sometimes I’m a direct beneficiary of what those taxes are spent on (health, education, roads). If not, my taxes go to benefit others who are not as privileged or lucky as I have been (pension, disability, unemployment benefits). Growth We have the majority of our FIRE savings in a Vanguard Managed Fund. As most of you know, last year was extraordinary in terms of market returns – over 20% for our superannuation, for example. Mr. ETT and I were astounded to see we had earned $40,000, of which $31,000 was Capital Gains. The year ... Show Me More!