You need to understand how to calculate the number of years it will take to reach financial independence. In traditional retirement planning, you tend to focus on a certain age to retire. With the FIRE Movement, you focus on how quickly you can become financially independent. Calculation Example:
Years to Financial Independence (FI)
Annual Expenses $40,000
Annual Take-Home Pay $90,000
Annual Savings (56%) $50,000
Years to FI (Early Retirement Grid) 14.2
Source: FourPillarFreedom.com – Assumptions: 5% annual return with a 4% withdrawal rate
Watch the full episode, FIRE: Financial Independence or Fad?