- The average retirement age is around 64 years old around the world.
- You can retire earlier than the official retirement age, once you’ve attained financial independence.
- These 5 secrets of the Financial Independence Retire Early (FIRE) movement will help you leave the 9-5 workplace before you’re 64.
Are you ready to work in your job until you’re 64?
That’s the average retirement age across the world, with the OECD average pension age being 64.3 years old for men and 63.7 years old for women in 2018. If you’re currently 23 and don’t love the 9-5 typical work routine, you have 40 years of it ahead of you.
The Financial Independence Retire Early (FIRE) movement offers another solution.
The FIRE movement means having more ownership of your time. By saving and investing at least half your income, you’re able to retire as early as your 30s or 40.
Ownership over your time is the biggest advantage of the FIRE movement. From being part of this community, you can see people pursue passions, hobbies and volunteer for causes they love, without feeling compromised by salary expectations. If you’re motivated to join the community but want to know how it’s done, I’m here to spill the secrets I’ve learned about the FIRE movement so far.
Here are 5 Secrets of the Financial Independence Retire Early (FIRE) movement:
1. Have an emergency fund
We all know why you need an emergency fund, to protect you from life emergencies and financial shocks. It’s even more important to have this in place if you’re considering stepping away from your job as your steady income source. Make sure you take the time to build an emergency fund and manage your temptation to dip into it unless it’s actually an emergency.
2. Know your retirement number
The country you live in will have an official age of retirement that you normally aim for. Being part of the FIRE movement is setting your own retirement age. This means calculating your retirement number of the amount of money you need before you retire. There are plenty of early retirement calculators, which will provide you with an estimated retirement age depending on your savings rate and assumed returns. Make sure you check in with a professional to check that your retirement number is realistic and takes into account your individual circumstances.
3. Pay down your debt
Debt is one of the biggest barriers to saving and growing your money. It weighs on you because debt is an obligation and you stress about being able to pay it back in the future. Make sure you know what debt you’re carrying, and work out a plan to minimise its effect on growing your wealth.
4. Increase your income
If you want to improve your savings rate, increasing your income helps make that happen. You could negotiate for a pay rise at your day job or take on a side hustle.
5. Continue to save money in your budget
The other way to lift your savings rate is to save money in different areas of your budget. This could be cutting down on your grocery bill, given that food is likely one of your biggest expenses. Another strategy is saving money on power like your electricity bill to save money on an ongoing cost. All these saving choices add up.
But the real secret of the FIRE movement is owning your time.
For me, it feels like I’m working towards being able to own my time and choose how I use it. It’s sacrificing having everything I want now to be able to make choices I want later. If you want to step out of the 9-5 work routine, the FIRE movement could be your answer.