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You can retire early by saving 3/4 of your pay. But isn’t that only an option for the rich?

FIRE, which stands for ‘Financial Independence; Retire Early’, is a financial plan that is supposed to let people stop working as early as their 40s.

Most Brits expect to retire later in life than their parents or grandparents did. The reason? Money. Someone - us, our former workplace or our government - has to foot our bills for each year in which we are spending money but not earning any. And because UK life expectancy has gone up a lot since a retirement age was first introduced, the cost of these retirement bills is getting bigger and bigger.

To make them more affordable, the UK government has raised the state pension age while companies have made private pensions less generous. Most people who are currently working-age therefore won’t be able to afford to retire at 65 like previous generations.

Unless, some say, they follow the FIRE plan. To do that, you've gotta spend very little throughout your 20s and 30s and instead invest large chunks of your salary in high-interest funds. And by ‘large chunks’, we're talking half to three-quarters of your after-tax earnings until you’ve accumulated savings worth 25x the amount you tend to spend in a year.

You’ve probably already spotted a problem or two with this plan. Such as the fact that the average cost of day-to-day living for a single British household (i.e. rent or mortgage payments, bills, food and transport) is £15k a year. Which means that even assuming you don’t ever spend anything on going to the cinema or having an after-work beer or jetting off on holiday, meeting FIRE's saving targets requires you to (a) be exceptionally frugal, (b) have a partner or multiple roomies to split costs with, (c) have a higher-than-average salary, or (d) all of the above.

But being available only to people who are both comparatively well-off and super-disciplined isn’t the only criticism that’s been levelled at FIRE. Another is how miserable we’d all be if we refused to ever treat ourselves to things and experiences we don’t strictly need but make us feel good. And because there’s some evidence that stopping work entirely makes us feel depressed and void of purpose, some people argue that retiring at 40 wouldn’t even be a particularly good thing for us.

But plenty of others think that both individuals and our economy could benefit if we all adopted some of the principles of FIRE, even if most of us didn’t take it to the extreme. Cutting back on indulgences helps us be more sustainable in an era of climate change, for example, and saving more money towards our retirement is seen as a way to make sure we can live comfortably throughout our old age.

Read our explainer on: money.

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