The FIRE movement

Can you really retire before 50? Well, those who follow The FIRE Movement (Financial Independence, Retire Early) believe they can.

How? They save and invest aggressively – somewhere between 50-75% of their income – so they can retire sometime in their 30s and 40s.

This doesn’t mean spending retirement sitting on a tropical beach somewhere sipping mojitos, it means reaching a point where they don’t have to work a full-time job anymore. It could mean working part-time or simply stopping altogether. It all depends on what variation of FIRE they follow.

We didn't start the FIRE

FIRE has been around for years, and it has now expanded to work better for different life situations and retirement goals.

This article isn’t personal advice. If you’re not sure what’s right for you, ask for advice.

I’m a Firestarter, you’re a Firestarter

The idea of leaving full-time work behind in your thirties or forties will appeal to many people but how feasible is it?

If you start work at 21, and hope to retire at around 40, you’ve got roughly 20 years to build investments that may need to last until your 80s and beyond. Your investments should continue to grow after you’ve finished work if you review them frequently to check they're working hard, but with no further contributions coming from your income, your withdrawals would need to be extremely disciplined.

To cut to the chase: it’s going to be really hard to amass enough wealth to afford to leave work in your thirties or forties. You would either need to be earning an enormous salary early on in your career or exercise iron will and discipline in your spending throughout your life.

It’s also worth considering that you cannot access your pension until at least the age of 55(rising to 57 from 2028). So, if you plan to retire earlier then you’ll also need to save and invest elsewhere, for example in an ISA. This means you may miss out on pension tax relief, which can really add up over the long term.

Pensions are a good vehicle for retirement as you contribute to them over the long term – perhaps as long as fifty years and you can benefit from tax-relief from the government and, if not self-employed, top ups from your employer. If you leave work completely in your thirties and forties you are missing out on years of employer contributions and tax relief to boost your income. (Put simply – you’re missing out on free money from your employer and the government.)

Let’s not forget the role of the state pension either which forms the backbone of most people’s retirement income but isn’t paid until at least the age of 66. To get some state pension, you need at least 10 years of qualifying national insurance contributions. To get the full state pension you need 35 years of qualifying national insurance contributions. So yes, years of graft, unless you receive NI credits or make voluntary contributions.

Find out more on the role pensions play on securing long-term financial resilience.

What can we learn from FIRE?

The long-term prospects of living a very frugal life without holidays or meals out could be off putting for many.

But, there are things we can learn from the discipline of FIRE. Such as the importance of optimising your income, saving more efficiently, and planning for the long term. Our 5 key building blocks for financial resilience is a good place to start. These will help you build your financial wellbeing, and you won’t be getting your fingers burnt.

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