Playing with Fire
The concept of Fire – financial independence, retire early – promises the ability for people to reach a point at a young age where they don’t need to work. Nick Martindale explores the logistics.
The idea itself is relatively simple. Individuals – usually in their 20s or 30s – undertake a life of frugality with the aim of saving around half their monthly income to create a pot of money that would enable them to retire early, possibly from the age of 40. It works on two key assumptions: first that individuals need savings of around 25 times their annual outgoings, and second, that by taking out 4% of this a year they can generate enough income to live without having to work, and without impacting on the real value of the portfolio.
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