Deciding when to retire is a big question, and it becomes even more complicated when you throw the notion of early retirement into the mix. The FIRE movement is all about reclaiming financial independence and stopping work sooner. But is it right for you? Keep reading to find out.

What Is Early Retirement?

As the term suggests, early retirement is all about ending your career or finishing working younger than the average retirement age.

In the UK, the average retirement age for men is just over 65, and for women, it’s 64.

You need to reach the State Pension age to be eligible for the State Pension. This is 66 for women and men right now. But for those born after 5th April 1960, it will increase to 67 and then 68.

So, if you want to retire early, you need to organise your money and achieve financial independence — and this is where the FIRE movement comes in.

The FIRE Movement Explained

Financial Independence Retire Early (AKA the FIRE movement) is steadily growing in popularity. This movement is dedicated to extreme savings and investment strategies that allow people to grow their retirement savings and retire earlier in life.

This movement is most popular with younger people, especially those in the millennial generation. Rather than working on the traditional timeline, the FIRE mindset is about saving around 70% of your annual income and retiring from work when your savings reach 30x your annual expenses.

Following the FIRE movement requires dedication and an adjustment to living below one's means. Most followers are diligent about every transaction and cut out all non-essential spending.

How Do You Retire Early?

Retiring early is a dream for many, but it is not always achievable. Critics of the FIRE movement say it is only possible for people who earn significant incomes, e.g. six-figure salaries. You also need to start saving early, which gives younger participants a head start.

However, if you are interested in retiring early, there are a few ways you can approach it. Such as:

  • Adopting a minimalist lifestyle and saving the majority of your income.
  • Growing your savings via high-risk investment strategies.
  • Balancing simple living and medium-risk investment strategies.

There is no right or wrong way to approach the FIRE lifestyle. It also depends on how much you earn and how much you want to spend on your current lifestyle.

How Early Should You Retire?

Knowing when to retire is a personal decision, but the one factor that matters is your financial independence.

If you are not financially independent, you should wait until the State Pension age. Otherwise, you won’t have the means to support yourself.

If you have the means to provide for yourself, do some calculations and determine whether your savings can sustain your current lifestyle. Understanding the numbers will help you make smart decisions that do not put you at risk — and a financial advisor can help you with this.

Saving Money For Retirement - The Takeaway

Saving money for retirement and planning ahead is essential. However, it is critical to remember that early retirement is not possible for everyone. As the critics say, it is usually only possible for those on high incomes, and it takes a lot of planning and some potentially risky investments.

When in doubt, work with a professional to plan your finances. Or keep learning via the Cash ASAP blog.