Firetys - Retiring with your own funds and on your own schedule

Personal finances
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FIRE (Financial Independence, Retire Early) has been mentioned in several threads, but I wonder if there would be eager discussants for a dedicated group? The ‘Free Lord/Lady’ (Vapaaherra/rouva) thread is, as I understand it, mainly for those who have already achieved the goal, so I haven’t really dared to write there yet. And perhaps the definition of FIRE and a ‘free person’ is also a bit different? Perhaps FIRE involves more about managing one’s own expenses, and from the perspective of being a ‘free lord/lady’, freedom might include not having to compromise much on living standards on the way to the goal or after it?

Within this thread, we could discuss FIRE in general, celebrate each other’s milestone achievements, share our FIRE numbers and goals, and offer advice if someone needs it. I myself have been looking for a like-minded discussion group, as I don’t have similar goals among my close circle. I’ll now write down a few guiding questions to kick off the discussion, and I’ll answer them myself. But the floor is open otherwise. :blush:

What is your goal and its timeline?

My spouse and I aim to retire financially independent in 4 years. We will be around 40 years old, parents of children under 10. Both of us will have investment portfolios of around 400-500K, plus a shared debt-free home.
We have calculated that 40K annual gross capital income will be sufficient for us as a family, as housing will be debt-free. This means we would receive a total of approximately 2300€/month net. We are used to living on less than that amount, so I believe this sum will be quite sufficient for our family. This amount could be achieved with an 800K investment portfolio at a 5% return, or a 1M investment portfolio at a 4% return.

Where are you currently with your goal?

The current situation is that we have an investment portfolio of about 550K. I consider a 250-450K increase realistic even sooner than in a few years, but I have a fixed-term employment contract that I intend to see through honorably.

Have you cut expenses/what is your savings rate?

We don’t calculate exact savings rates; we only track our net worth. Our family lives a normal middle-income everyday life. We travel, but on a budget. We eat healthily, occasionally at restaurants. We rarely buy new things, but we don’t compromise on hobbies. We are quite aware of our expenses and have tried not to raise our standard of living with our increased income. Ecological factors also play a role in why I don’t buy new items that can be found in good condition used.

What kind of life after retirement?

The extra 40 hours/week would be used for our own and our children’s hobbies, couple time, family time, outdoor activities, traveling, and learning new things. The hope is also to care for our own aging parents ourselves someday, to the extent that all parties find comfortable. After all, 40 hours feels quite little when you start dividing it among all the interesting things. :sweat_smile: We already have everything in our daily lives, we just want to increase the amount. Homeschooling children and longer vanlife trips around the world are also possible. Currently, we live in Central Europe, and we’re able to travel around Europe quite nicely over the next few years.

Here’s the start, let’s see if there are other FIRE enthusiasts! Feel free to ask/answer questions that I didn’t think to ask here.

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Vapaaherrat/-rouvat - Kokemuksia?
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I have a “spurgu-FIRE” (lean FIRE) goal set for about 5 years from now, where I would manage to scrape by on just my portfolio’s returns (assuming a 4% net yield). I don’t fundamentally plan to quit working yet at that point, but I would strictly limit the work I’m willing to do. Over a 10–15 year period, this could turn into “classic FIRE,” where I would live comfortably on the annual returns alone. I would have reached my goals already, but unfortunately, half of my portfolio is in “Hesuli” (Helsinki) and Sweden. For classic FIRE, the portfolio still needs to roughly double.

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The same timeframe as the captain, meaning in 5 years it looks like there’s a possibility to start a poor man’s FIRE, though for me these timeframes have been constantly changing because I’ve managed to exceed every goal I’ve set so far, and thus my timeline has been shrinking the whole way.
For us, potential children also play a role; over the next 5 years, they will either come along (which naturally changes the situation as the need for money increases) or they won’t, and I’ll reach retirement on schedule.
So I definitely intend to leave the workforce as soon as it’s possible; I’ve already reduced my work so much that I’m practically on minimum hours without quitting entirely.
One can’t really talk about cutting costs in my case, as there never really was any lifestyle creep in the first place. Most people probably consider our standard of living miserable: we don’t go to restaurants or other places people think of going, the house is cheap, the car cost ten grand, there are no kids or pets, and no expensive hobbies. Perhaps the only concrete change I’ve made for FIRE is that travel was completely cut out for about 5 years. The intention is to gradually increase this now that we’re starting to get reasonably close to the goal.
My savings rate while working full-time seems to have been between 75-80%; this period also included the major house renovations. Which, of course, every FIRE enthusiast does themselves.
In retirement, I’d like to get back to exercising more goal-orientedly; I assume I’d still have a few “pretty good” years left in terms of physical activity, and I look forward to rehabilitating myself from these years of strain from sedentary work.
More traveling, visiting relatives, and time for new ideas. I could even learn to make furniture; becoming a carpenter after reaching FIRE doesn’t sound like a bad idea at all.

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The interim goal is dividend income—from at least 12 different stocks across diversified sectors—of such a level that a job is mostly “as long as the work is interesting,” rather than a high-pressure grind and career ladder stress :smiley: Of course, in the same field as currently, but nowadays salary progression is clearly harder if you don’t want management duties alongside the actual work. Growth is faster in the stock market.

No actual timeline, but I’d say the goal will be met within the next 5 years, at which point I’ll receive net dividends amounting to roughly one-third of my net salary. It would also cover my fixed annual expenses (my share of the mortgage, maintenance fee, electricity including transmission, internet, and phone).

The ultimate goal is, of course, an independent life (together). With the current trajectory, I could retire at my current net salary level at around age 55, which is at least in my opinion a reasonable age—meaning you’re not yet one foot in the grave or needing a walker :smiley: There’s still time to keep living life. I don’t, however, live by scraping every penny into the stock market right now; I still spend money on experiences while I still have the energy :slight_smile:

Have you cut expenses/what is your savings rate?

Not really. Investments are probably counted in the savings rate, so then it’s roughly 20-25% of my net salary. It helps that I don’t really have any vices :smiley: Unless a new guitar every couple of years or something similar counts :guitar: My hobbies are “passive spending” because they are very gear-oriented (instruments, computers, woodworking), so there are really only one-off payments whenever I feel like it.

We travel quite actively, but a wide network around the world helps with that :smiley: And flights are obtained at a quite nice discount, for a certain reason. The latest 3-week trip to the Philippines and 2.5-week trip to Japan actually saved money, because the food there is significantly cheaper—and accommodation was free :wink: But this is a bit of an extreme case.

What kind of life after retirement?

Probably hobbies squared. There’s so much on my mind, but not nearly enough time. And coincidentally, some of the hobbies would be similar to my actual work :smiley: But obviously nicer when you can do your own projects for yourself.

Travel would likely increase somewhat as well, since there are still a few Asian countries left to see, a Canadian autumn road trip yet to be done, and small European towns to experience, as trips naturally focus on airport cities.

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What is your goal and its timeline?

The goal is a vague minimalist FIRE option without a strict schedule. In principle, the first checkpoint is in October, when my employment reaches the 20-year mark. At some point, I set that as a deadline of sorts for some kind of change. At that point, a decision will be made on some kind of FIRE experiment, which could be anything from resigning, a sabbatical, reduced working hours, or even study leave.

Where are you currently regarding your goal?

In principle, passive income already covers all my fixed expenses, but there isn’t an immense margin of safety. To smooth out individual economic downturns (like COVID) affecting passive income, I also have a cash buffer (and cash equivalents), and a debt-free house makes things easier, though in a way, it is also a risk.

Have you cut expenses/what is your savings rate?

I haven’t strictly “cut” expenses as such, but I’ve naturally lived a somewhat minimalist life for years with relatively good cost control. My annual savings rate has hovered around 70%.

What kind of life after retirement?

Personally, I could easily live the same way I do now, but with an emphasis on systematic exercise. Two workouts a day, meals, and self-education built around those. What else does a person really need? Fortunately, the whole family is introverted like this. Why not travel too, where you could substitute time and sweat for spending money.

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It seems many here have quite similar situations, and even the timelines align pretty well. :grinning_face_with_smiling_eyes: I’ll pick up on that “trying out FIRE” part by saying that we’ve also decided to retire on a specific date rather than hitting a specific sum. So the numerical target is a bit vague, somewhere between 800k–1M—ideally more rather than less, of course. But mentally it’s somehow easier to process things when you know that on that agreed-upon date, we’ll see how well the portfolio holds up. Personally, I don’t find it particularly worrying if I have to bridge a shortfall in portfolio returns with a small work project occasionally. I’d rather step away from the working world earlier without a massive margin of safety than wait an extra X years to retire in a more secure position. This is influenced by the fact that the kids are small right now, so every extra year worked is time away from them. And perhaps also because meaningful work projects or gig opportunities are relatively easy to find if the need arises.

If you’re in a relationship, are you pursuing FIRE together? Or will one partner keep working much longer than the other? Or if you’re single, do you think it’s challenging for dating when you’re outside the workforce living off your investments, while your peers presumably aren’t anywhere close to that? :blush:

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I see many thoughts and plans here that are familiar to me as well. My own goal is to rely fully or partially on investment income by the age of fifty. I still have about five years to go until then. The size of my net worth is, of course, an important enabler for that. Currently, it is around €500k, and the goal is to double this over the next five years. That should be enough. But I’m not sure if I’d want to stop working entirely. The idea is certainly very tempting, but maybe I’d still like to do some projects and work 3–6 months a year. Fortunately, I still have at least five years to think about what I really want.

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My spouse doesn’t want to leave the workforce, but they still save and invest with almost the same level of dedication. In my opinion, this doesn’t require having the same goal, as long as we’re on the same page. If one person’s spending habits, for example, were completely different, it would cause difficulties for both (I wouldn’t reach my goals, and the other wouldn’t be able to do as many things as they’d like).

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There’s a lot of thinking about when to quit working. The main challenges are the required rate of return and the margin of safety.
Next year, I could already transition to living off my portfolio, if my sense of security allows. It would be nice to invest more in family and leisure time at 53.

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If you’re looking for advice, at least reduce your risk significantly by the time you plan to rely on your investment assets. If you intend to nearly double a portfolio in a few years, it must involve either significant risk or significant leverage.

40 is quite a young age, and congratulations on that—well handled! I’ll be well over that myself, but I have an age in mind for when I’ll start working as a freelancer. So, I don’t plan on quitting entirely, but rather significantly increasing my hourly rate and significantly reducing my working hours. My work is interesting, so I have no need to “get rid of” my job, but yes, I can find ways to spend my time without work as well. In any case, my goal is that kind of hybrid model. And I’ve learned that it’s not worth setting goals that are too rigid; life situations change, after all.

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I don’t FIRE in the traditional sense of the word. Meaning saving every possible cent and aiming to be free from the obligation to work in 10-15 years.

Instead, I take a more relaxed approach to FIRE. I don’t calculate savings rates or strive to live an extremely frugal life. The purpose is to live a life I enjoy while saving and investing a significant portion of my income. Keeping humanity and self-compassion in the mix.

I didn’t find it appealing to spend my 20s just staying home doing nothing and accumulating money while my peers were traveling the world, partying, going to festivals, and having experiences.

Where am I now? I have about 100,000 euros in investment assets, accumulated over 10 years. Definitely not at a breakneck pace. At the same time, I’ve done everything mentioned above: traveled the world, partied more than the law allows, and attended 300-400 gigs. ”Lived”. All this on a monthly salary below the Finnish average.

I’ve toyed with the idea that I could convert my investment assets into apartments with suitable leverage and live as a gentleman of leisure already. The obligation to work is already gone.

I wrote about this topic on my blog earlier.

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Actually, I don’t have a very high-risk portfolio, nor very high leverage; my salary just quadrupled when I went to work abroad, and because of that, tens of thousands of euros more are now flowing into investments every year. That 250K will therefore already be invested from my earned income, and then capital gains and investment increases/decreases on top of that.
Before this assignment, the target was 10 years later. And on the other hand, before this assignment, I didn’t think I’d want to leave working life, but now that I’ve had a bit of a break from working in Finland and also from that lifestyle (the rat race), it would feel quite challenging to return…
But basically, those hybrid models do sound very sensible. You can access them sooner, and they already allow for a life situation that feels very free.

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It occurred to me that I hope expenses haven’t grown right along with income; otherwise, the drop to that planned €2,300/month could be quite jarring (assuming there’s currently about €50,000 a year left over for investments on top of your living expenses).

In my case, I decided to set my monthly budget to the net salary of my last job, which my investments have so far covered with a reasonable margin of safety (2-3x). If I hadn’t felt I could afford that without dipping into the principal, I would have stayed at work longer, because I didn’t want to have to start scraping by. Of course, major purchases (homes, cottages, cars, etc.) and constant travel are off the table for now; it’s a fairly basic everyday life, albeit with more free time.

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It hasn’t actually been difficult at all not to raise our standard of living, which brings a lot of confidence to our decision. :grinning_face_with_smiling_eyes: Of course, direct comparison is challenging since the costs of living and housing vary between countries. But we were satisfied with our standard of living before the pay raise, so I guess that’s why it was easy to continue on the same track. Our FIRE level is in line with that proven standard of living. The original goal was indeed higher than the current one, but in the end, we prioritized reaching the goal earlier over a rising standard of living, as we are happy and satisfied in our current situation anyway.

How about others—has your goal evolved upwards or downwards over the years?

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I’m playing with the idea that I could convert my investment assets (100,000 euros) into apartments with suitable leverage and live as a man of leisure right now. The necessity to work is already gone.

It would be interesting if you could elaborate a bit on how that is possible? What kind of returns would be achievable with such a small amount of capital by investing in rental properties using leverage?

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Same here. I have never tried to maximize savings; instead, I’ve traveled alone and with my family, pursued hobbies, and otherwise celebrated life. Actually, the thought that I could one day really live off capital income only occurred to me a few years ago. This, too, might only realistically happen in about 10-15 years. Maybe I don’t even want to leave paid work entirely, but move to a more relaxed role.

I have calculated that a portfolio of about €1M would enable this, providing a return of 4% per year. This would allow for a decent life once the mortgages are paid off and the offspring have reached adulthood. There is still a long way to go. Currently, I spend an average of over €4,000 per month on an annual level, so a €1M portfolio wouldn’t be enough by any means.

There are some wildcards to potentially advance a possible FIRE:

  • There are wind power projects in progress, and the rental income from these would significantly increase my capital income. By reinvesting these, the stock portfolio would grow more rapidly. I hope the projects come to fruition.
  • Through inheritances, I have received partial ownership in various properties. I don’t include these in my investment portfolio because I don’t have 100% control over them, and on the other hand, selling them could be difficult (the value of my shares is €50-150k, hard to say). If I managed to liquidate these without causing family feuds and reinvested the money, the stock portfolio would pick up even more speed.
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I am a single man in my early forties who works two jobs and has very low monthly expenses. On the other hand, I don’t make any purchases unless I absolutely have to. My larger non-essential expenses are gifts for loved ones and friends, as well as charity, though charity accounts for less than 1,000 euros a year, so not much.

My debt-free net worth is somewhere around 400,000 euros, and my mortgage will be paid off quite soon. So, I will soon be able to invest even more as my expenses decrease—though a mortgage is, in a way, paying yourself.

Below is a bit of a stream of consciousness from memory. :slight_smile:

1. What is your goal and its timeline?

I don’t have clear goals; it’s possible I’ll work a lot my whole life if it feels good. I’m noticing more and more that I’m starting to fall behind in working life; I think I’m still very efficient and productive for my employer in my main job, but I’m not very “smart.” I have ADHD and a perceptual disorder, difficulties learning new things, etc. (I won’t go into everything :slight_smile: ). In working life, my areas of expertise are easier to automate and robotize, as has already happened. More intelligent people have taken on more roles, and the more rapid-fire brainpower is needed in work, the less I can keep up—though I am very resilient and so-called “tireless,” that hasn’t always been enough to succeed in everything.

If I can’t keep up in the working world in the future—if jobs disappear or I feel I’m becoming poor at my job and taking a spot from someone else—I can leave the workforce in a relatively short time. I think development isn’t so fast that I couldn’t stay in working life until I’m nearly fifty.

I like to do things 100%. For example, with my gym hobby, I lived like an athlete (I’m still careful about what I eat and I train hard, but I don’t live the lifestyle of an athlete anymore). Now, with my investing hobby, I’m happy to give it my all: lots of work, a high savings rate, and a lot of studying. If I leave the workforce, I don’t think I’ll have that same passion for investing.

2. Where are you currently regarding your goal?

Clearly, the largest part of my wealth is in my apartment, and my investment assets are only 130,000 euros. However, I only started investing in 2018. I have been contributing to my portfolio with a very heavy weight since then, and it is growing at a relatively fast pace.

3. Have you cut costs/what is your savings rate?

I have always lived frugally since I was a child and haven’t really made any major purchases. Renovations related to the apartment have certainly been large, but they have partly paid for themselves—though not entirely.

Investing and the gym are my main hobbies, and they don’t really generate expenses. Additionally, I see people, and that often doesn’t involve spending money… well, we can brew coffee at home, and we rarely meet at restaurants, etc.

This style suits me, and I don’t recommend it to others because everyone has their own way of living. I’m happy this way, but many wouldn’t be. :slight_smile:

I apologize for not sharing everything and being fully transparent, which would be fair. It would be good to present all expenses and income in their entirety, but few people actually do that.

4. What kind of life after retirement?

If I have to “retire” at 45, I can easily continue this way of living. Well, a huge amount of hours will be freed up from work; on the other hand, maybe Inderes will still see some value in me then, so I might be able to work part-time.

It’s possible that in my fifties, I won’t be needed anywhere, so at that point, I’ll have more wealth. The same things I would do if I retired earlier would be to invest more time in sleep and generally just being relaxed—just being on the couch, for example, watching TV, and taking peaceful walks. I might get a nice, comfortable seaside cottage where I can spend time with my future dogs. Then I’d visit the city occasionally, go out to eat, etc.

Nothing too extraordinary, but generally just investing more time in sleep and rest, as well as people and cooking. Maybe there would be more of those “little luxuries,” like my own car, more restaurants, and such. A high-quality, stress-free life, without anything fancy. :slight_smile:

This is how I think and feel. I might be a bit “eccentric,” and I really want to live this way now, which might seem strange to others, and that is completely understandable. One’s own worldview is sometimes hard to explain. :slight_smile:

I’m keeping the option open that I can live differently, like how I might live in retirement.

I’ve had a lot of good luck in my life as well as a support network, so I’m not entirely the “architect of my own fortune.” Of course, I’ve accumulated my wealth myself—there’s no denying that—but on the other hand, the environment and everything else have made me industrious, such as the support network and “carrots.”

I hope the discussion stays on the topic of the opening post and that, at least because of my message, the conversation doesn’t “stray from the topic.” :slight_smile:

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Mitä sinulla on salkussa?
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This is such a foreign world to me that I just have to “like” and follow your stuff :smiling_face_with_sunglasses::popcorn:…

I don’t understand why anyone would want to retire young / leave the workforce. You must be doing something unpleasant. I can’t go more than a few days without wanting to develop something work-related.

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For me, the idea of having the option to live as a “gentleman of leisure” and focus on what I enjoy is the most important factor when aiming for financial independence. If work starts feeling like a slog, I’ll have the financial flexibility to switch to something else or even step away from the workforce entirely for a while.

In that sense, I agree that many people aim for retirement with far too rosy expectations. Meaningful activity—be it work, hobbies, or something else—in the right balance is a crucial part of happiness.

Perhaps the biggest weakness of the FIRE movement is that it doesn’t account for how easily expenses can rise when your free time increases drastically. That is, if you want to enjoy life rather than just scraping by.

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In my experience, the idea that “work is so enjoyable that you wouldn’t even want to leave” is quite a luxury. I believe the vast majority of workers wake up in the morning just for the paycheck, and if that necessity were removed, quite a few would stay home for periods significantly longer than a standard annual vacation. Of course, it’s good to have some kind of activity in life; rotting on the couch in front of the TV isn’t good for anyone. However, there are plenty of these pleasant pastimes in life, and in my case, work has never been one of them.

As for expenses increasing with FIRE, is this idea based on an increase in travel? For me at least, costs always go down whenever work is removed from the equation.

  • Less gas is used
  • General car maintenance/wear and tear decreases
  • The need for professional clothing decreases, and there’s no need to update other work-related gear.
  • There’s time to cook, so you don’t end up buying ready-made meals.
  • Useless “frustration shopping” is eliminated.
  • You have time. You have time to hunt for deals and do things like renovations yourself, for which many working people—especially those with families—don’t have the time.
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