What is the F.I.R.E. Movement? 

Who wants to wait until they are 67-years-old to retire? Not me–and probably not you either.  F.I.R.E. stands for Financial Independence, Retire Early (“FIRE”).  This movement encourages young people to save and invest aggressively so we can retire much earlier than 67 and even as early as in our 30s and 40s.  

For many Women of Color, retirement is not an option at any age.  Many of us have seen our grandmothers, aunts, and mothers work incessantly throughout their lives.  This does not have to become our reality, with the right tools we can become financially independent and re-write the legacies we want to leave for our families.        

In this post, we’ll define retirement and FIRE, we will show a few examples of how FIRE. can be achieved, and we’ll provide you the tools to embark on your own FIRE journey. 

Why is FIRE Important?

The Social Security Administration has determined that the full retirement age for millennials is 67-years-old.  This means that at age 67 we can begin receiving full Social Security benefits–if eligible (undocumented people, for example, would not be eligible regardless of age).  Even then, lawmakers consistently look to push this age threshold even further into our 70s citing “financial imbalances” and an increase in life expectancy.   

As Women of Color, we simply cannot depend on the promise of Social Security benefits as our key to retirement.  FIRE allows us to take matters into our own hands and retire well before 67.  What if you are okay working until age 67?    Retirement does not have to mean sitting on a far away beach sipping on Piña Coladas for the rest of your life–though many of us would love to trade our day jobs to do just that. 

Retiring early can mean changing careers to something you are truly passionate about, spending more time traveling or with loved ones, or simply having control over your own time. 

Sounds great? Let’s talk about how to do this. 

What Does it Mean to Be On FIRE?

The FIRE movement recommends you save and invest 50-75% of your income to retire between your 30s and 40s.  But don’t let these high percentages discourage you–remember, you and only you make the rules for your retirement plan.  

You may think that you could never save 50% of your income because you don’t make that much money to begin with, or like many Women of Color, you are a provider for your family.  Regardless of your circumstances you can save and invest.  As you kick off your FIRE journey keep in mind: 

1. How can you keep your expenses low?
   • To be on FIRE you need a clear understanding of your needs and wants and Finance Independence must be a big want.  Anything that does not make it to your needs or wants list must be cut out.  Saving and investing, even small amounts of money, can have a huge impact long term. 
2. How can you make more money?    
3. • Women of Color are nothing if not creative.  We’ve all seen women in our lives run all types of side hustles to bring in money.  Let’s learn from them and jump start your side hustle.  

Different Types of FIRE Journeys

The traditional FIRE journey which requires saving and investing 50-75% of your income can be too restrictive for some of us.  Here are a couple of alternatives:

1. Slow FIRE: balances spending today and investing for tomorrow.  This form of FIRE will increase the time that it takes you to get to your FIRE number, but allows you to live some of your boujee girl dreams along the way.  
2. Barista FIRE: Another fun alternative to traditional FIRE is Barista FIRE.  This is not about spending all of your money on coffee.  This is defined as “retiring” while still holding part-time jobs for additional income and health benefits.

There are many other ways to achieve FIRE that we will be exploring in future posts.  I assure you there is a method that works for you. 

How to Get Started on Your FIRE Journey

Calculate Your FIRE Number

Your FIRE number is the total value of assets you would need to live off passive investment income.  The Trinity Study, points to the 4% rule, which provides  the formula below: 

Annual Expenses x 25 = FIRE number 

For example, if your living expenses are $5,000 per month, your annual expenses are $60,000 and your FIRE number is $60,000 times 25, or $1.5 million.  This does not mean you need to save $1.5 million—you need to invest a fraction of this and let compound interest do the rest!   

Pay off your debt 

Tackling your debt is an important part of your FIRE journey, check out our first article to learn about some common ways to become debt free.

Start Investing Into Tax-Advantaged Retirement Accounts

The easiest way to start investing is through a 401(k) account.  Many of us may already be investing through employer sponsored accounts without even knowing it.

Ask your Human Resource team about your 401(k) options and start contributing a percentage of your checks.  This is especially important if your job offers a 401k match.  This means that your employer will match your 401(k) contributions up to a certain dollar amount.  This is free money, at the very least you should be contributing the maximum amount that your employer will match.   

Are you ready to be on FIRE?  Start daydreaming about retiring early, create vision boards, journal, or do whatever you need to do to stay motivated.  FIRE is about consistency.  If there is a month where you are unable to meet your saving and investment goals, forgive yourself and get started again as soon as you can.  

To learn about some of the basics for kick start your personal finance journey, check out our first post.  Get started in changing the game!