What’s Our FIRE Goal?

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 old posts (which I hadn’t done since I started writing again), the first mention I find is in 2016. Here, we start with a very simple goal – to retire before pension age without reliance on the pension. We’d also like to keep or only slightly reduce our standard of living. This is a high-level goal not particularly in the true vein of FIRE, but it’s still a great starting point.

I was expecting the pension age to be raised from 67 to 70 by the time we get there. There’s been no rumblings yet, but we still have 20 years to go. This is enough for 5 governments to make changes.

So, I would say yes, in general that is still our goal.

Pre-Retirement Spending

In 2017 I looked at how we want to spend our money in the lead up to retirement. We listed short, medium and long term goals such as travel, replacing cars and moving house. While I quantified the estimated costs for each of these, it didn’t lead into any sort of detailed savings plan.

What We Want To Do In Retirement

We also predicted what we would like to do in retirement – not really defining our why, but a list of activities we could see ourselves keeping busy with when we weren’t working.

I later detailed my perfect retirement. Here I compared a retirement I don’t want, with one I do want. I sensibly noted that it’s up to me to make this happen. Since then, I feel this is something I’ve lost. Retirement is a vague, amorphous concept rather than a plan.

And that’s it. I can’t find a single post on this blog where I set a solid goal.

Without a FIRE goal, how do we know whether we can enjoy eating out in our retirement?

FIRE Investor Policy Statement

I did find an unpublished ETT Investor Policy Statement from 2016:

Retire by 60 at the latest on an amount that is at least equivalent to ASFA’s Comfortable Lifestyle ($60,000/annum for a couple as of 4th December, 2016). Happy to drawdown on our external investments until superannuation is reached (at current rates of investment and return, we can expect to receive a combined $100,000/annum from our super at age 67).

Mrs. ETT will turn 60 in 17 years. To achieve our stated goal we require 7 years x $60,000 = $420,000. This equates to $24,706/year = $475/week = $950/pay = $2050/month. This does not take into account the benefits of compound interest, nor the effects of tax. Due to uncertainty in the market, positive interest benefits will be considered bonuses to allow an earlier date of retirement, or higher spending in retirement.

Well. It is more specific but there’s still prevarication. “At the latest.” “At least”. We need to commit! We were working towards retiring at 60, funding the years between 60 – 67 with our investments, then accessing our super at the pension-eligible age of 67.

Is Our FIRE Goal Still Relevant?

No! I’m shocked to find that a core aspect isn’t realistic. I was working on the assumption that we would live off ASFA’s comfortable lifestyle as a minimum, but we spend $80,000 a year, not $60,000. It turns out many calculations of how much less you will spend in retirement are based on no longer having a mortgage, and reduced costs as children become independent. However, we haven’t had a mortgage for nearly a decade. We don’t have children. What we do have is 5 years of budgeting in YNAB to show we consistently spend, on average, $80,000 a year.

Now, I did build in some leeway as I said “This does not take into account the benefits of compound interest,” which as we know is very powerful. I received a pay rise in 2019 so increased monthly savings to $2,250. Sometime between then and now I increased it further to $2,700 a month. Unfortunately that’s now been reduced back to $2,000 to cover future tax bills. That’s less than our stated goal to reach $60,000 so we clearly have some working through to do.

What Are We Working Towards?

I check in with our investments twice a year at dividend time. We’ve had some pretty fantastic growth over the last few years. In our heads, we created a stretch goal that matches LateStarterFIRE’s – to save up enough money outside of super to retire at 55, fund five years of living, and access our super at 60. I highly recommend reading her post in full; this is the sort of serious thinking we will need to articulate to keep us on track.

It’s not good enough to have a goal in our heads. Is our primary goal achievable? Is our stretch goal even vaguely achievable, or are we kidding ourselves? I’ve just booked Mr. ETT in for a sit-down so we can revisit not only the financial side of FIRE, but what we want to do along the way. We need a SMART goal that we can track our progress against. I’d love some help!

Have you published a FIRE goal and plans to get there? Do you know of other FIRE bloggers who have? Or any good articles on setting a FIRE goal? Please share links in the comments!

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