Our FIRE Date
For writing about financial independence I sure haven’t spent a lot of time actually talking about the numbers, dates, and logistical aspects. There are lots of other bloggers who have gone down the IRS wormhole and figured out optimization. Since I like using the resources available to me, I have not recreated the wheel. Instead, I’ve played with their FI graphs and calculators to set my own targets and FIRE date.
How much money do I need to retire?
The generally accepted wisdom is that you need 25x your annual expenses in savings to retire. There are of course conversations within the FIRE world that 25 times is too conservative/aggressive, but it is a good place to start.
This is a key reason why we track our monthly expenses. The less we spend each year the sooner we can retire, and it is what makes very early retirement go from a dream to a reality for many people who learn these secrets. You can see our August expense report here.
The first year I tracked our spending we spent a little over $40,000. To hit full FIRE we would have needed to save over $1,000,000. I think someday we will hit that number, since I’m not sure we will both RE, but it is a lofty goal. When I saw that number and did the math, we knew we wanted to make some changes to bring our FIRE date closer.
We’ve hacked frugal dates, food, and hobbies to reduce our spending and are on pace to spend ~$27,000 this year with a mortgage payment! This effectively reduced our required savings to retire by $325,000! Moving our FIRE date much sooner!
When is our FIRE date?
The awesomeness of setting yourself up to retire early is that there’s lots of built in flexibility. We don’t plan on working until our bodies give out and can’t sit still for nine hours a day (yeah, we don’t do physical labor, we sit in cubicles). Our FIRE date is a moving target.
I know that is such a cop out! But with our flexibility and stage in life we have a lot of unknowns:
- If/when we will have kids – no kids yet, but we plan to have at least one, and while we can spend all day planning for how they will change our lives/goals, I’ve learned that you can’t really plan kids
- Stock market variations – I’m a planner, setting a hard date now is building myself up for failure. I would be so disappointed if a crash occurred and things outside of our control took away me meeting my goal. The stock market has been on a sharp rise lately. I’m not going to predict what will happen from here, but I will plan my investments and savings goals, and (in theory) stay the course regardless of what’s happening in the market.
- Graduate school – Mr. Kiwi is thinking of getting his PhD. FIRE has given us the flexibility that our lives don’t depend on earning two engineering salaries, so he may choose to halve his salary to pursue a passion. This will obviously change our savings rate, but it would also come with the assumption that Mr. Kiwi will work a bit longer to use his Ph.D. and hopefully find a forever job that he loves.
- Lifestyle inflation – our spending is very lean right now. While we both feel like we live a luxurious life, that may change over time and we may up our spending slightly. I’m not thinking we would ever spend $100k/year, but maybe in the long term saving for our original spending makes more sense.
We have a couple of dates that serve as our benchmarks of potential FIRE dates:
- LeanFIRE – May 2020!
- FIRE if we have kids soonish – May 2024 (assuming one stops working)
- Late FIRE – September 2026 – This is our true goal. For us to reach FI before either of us turns 40! Originally in our FIRE journey this seemed like a lofty goal. Now, I can’t envision a future that would stop us from reaching this.
- Current FIRE? – Well technically we have reached FI, if we sell our house and use Geo-arbitrage. I’m not counting this one really, but it is fun to dream sometimes!
We also are talking about taking a sabbatical at the same time. We would use some of that time to travel and recharge. But we would also spend extra time developing our side hustles. In a dream scenario the money would start flowing in from our side hustles and they could be full time hustles.
I’ve been bit by the entrepreneurial bug and would feel closer to FI if I could eliminate the giant office building and bureaucratic structure of a classic 8-5. This may even prevent us from reaching the late FIRE goal, but it also has the potential to speed up the LeanFIRE goal.
FI does not equal RE
Financial independence does not equal retiring early. Hopefully one of us will find our dream job or maybe we’ll be able to monetize our passions. When we reach financial independence we may or may no retire early.
We also enjoy hustling and may RE before we reach our full FI number. That’s been bouncing around in our heads a lot lately, now that we’re about halfway to our FI date. The stock market is slowly starting to make us more money than we do by trading our time away in the office.
I love seeking FI and the options it gives. Setting a firm FIRE date has been less of a priority as the date grows nearer. The flexibility we’ve created for ourselves is more apparent and exciting.
Let’s get the conversation going, when’s your FI date?