Louise Cooper

‘Fire’ may let you retire early but it’s a miserable way to live

With four cats and two children to feed, I’m not very Fire. But then I am not sure I want to be. ‘Fire’ is the ‘Financial independence, retire early’ movement that has proved popular among burnt-out millennials wanting to quit the corporate rat race. 

It began in America with a 1992 book, Your Money or Your Life, which advised followers to live frugally and simply in order to achieve financial independence. One of its biggest proponents is a man dubbed Mr Money Moustache, who describes himself to his 112,000 Twitter followers as a ‘thirtysomething retiree who now writes about how we can all lead a frugal yet badass life of leisure’.

He told me that to be truly Fire, I should limit the number of children and pets that I have, as both are expensive. But that is not enough. Fire involves extreme austerity, significantly limiting the amount you spend, and saving hard — up to 75 per cent of your income. What it promises in return is the possibility of retiring in your thirties or forties. The plan is to build up an investment pot that is 25 times your annual (highly restricted) spend — invested in low-cost stock market investments, preferably tracker funds. So if you can restrict your spending to, say, £1,000 a month, or £12,000 a year, then you should be able to retire once your pot of invested money reaches £300,000. If you spend £2,000 a month, then you need a pot of £600,000, and so on. 

This calculation relies on academic research that states that you can take 4 per cent of your invested money out of a fund per year and not hurt the capital invested over the long term, even allowing for inflation. 

Simple maths, however, shows how unachievable Fire is for most of us.

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