Students are encouraged to get a stable job once able to, then work until retirement at 67, where they will spend their last years trying not to break their back from sneezing.
This traditional approach to a career may satisfy some, but students often look forward to leisure time to pursue their passion which can not be done comfortably during a standard 9 to 5 job.
However, a new movement, FIRE, was born during the millennial era, sparking the idea of Financial Independence and the Retire Early. This new idea started to evolve into different forms for unique situations.
The most common FIRE approach is leanFIRE. This means living as frugally as possible and saving as much money as you can to retire early. Saving up to 1 year of living expenses within 4 months is possible by putting away at least 75% of your income.
Elizabeth Ayoola from Nerdwallet suggests, “ Those who believe in minimalist lifestyles and can live off very little tend to fall into the lean category. They may save more than half of their income to achieve financial independence faster.
However, sacrificing quality of life by living frugally may not be the best option for many people, therefore, FatFIRE will allow for a more lavish lifestyle while still allowing the possibility to retire early. FatFIRE requires one to still be aware of their spending, while aggressively investing savings into diverse profiles of assets, compounding the wealth for early retirement.
Time Magazine writer and fatFIRE supporter, Catherine Hiles included in her article, “fatFIRE is a good option if your goal is to stop working entirely. You’ll have enough passive income to support yourself without taking on a part-time job in retirement”.
BaristaFIRE is for the workaholic people who want to still work, but not the full 9 to 5 commitment. It is also for people who want to pursue a less lucrative career. Saving money during a full-time job will allow for a person to work a lower-income job living off of the new job and the old job savings.
New Orleans-based author and FIRE supporter, Paris Woods, explains, “I think I might find myself in the category of folks who are doing work that is meaningful and see working as playing some role in their lives for the foreseeable future, but want the freedom to only do work that is meaningful and accept roles that meet their personal requirements”.
Another FIRE approach is CoastFIRE which has 2 stages. The first is investing aggressively in diverse profiles. Then once a sufficient amount has been invested, investments can be lowered or stopped allowing for compound interest to grow the profile, hence coasting. This will not make one financially independent, requiring them to work, but it allows more demanding work to be relaxed since you have another income.
Research scholar at Stanford Center on Longevity and journalist, Steve Vernon suggested,” You can still plan for reducing your working hours before you retire in your 60s, giving you more time for enjoying life while you’re vital and healthy and before you retire completely”.
The FIRE approach is a lifestyle that can allow students to think about retirement at the start of their careers. It is a common solution for those who do not want to work the same mundane tasks until 67, allowing them to express their leisure time, thus creating a quality life.
