Independence Day 2024: Can FIRE get you freedom from a regular 9-to-5 job?

Tired of your 9-to-5 job and want to rather sprawl cross-legged near a beach while hearing the rumble of sea waves crashing into the shores? This may sound too tempting, albeit unrealistic, however a number of young people are working tirelessly to make this goal a reality in pursuit of what is known as Financial Independence Retire Early (FIRE).

So, what is FIRE? It is an acronym whose origins are unknown but was popularised by the best-selling book: Your Money or Your Life by Vicki Robin and Joe Dominguez. One of the key concepts of the book is that investors should assess every expense in terms of the number of working hours it took to pay for it.

The idea behind this is that investors should save enough money that they can afford to retire comfortably. The ideal FIRE number is supposed to be 25 times the annual expense. This means when you save an amount which is 25 times your annual expense, then you may stop working and thereby use a small portion of the corpus every year for the remainder of your life.

“FIRE is being discussed in India more often now. Thanks to social media where some share their success stories and readers aspire to be like those. As far as my opinion is concerned, I do advocate financial independence but retiring early just because you have achieved financial freedom may not work for all,” says Preeti Zende, a Sebi-registered investment advisor and founder of Apna Dhan Financial Services.

“However, financial freedom improves self-confidence, gives wings to aspirations and dreams and reduces stress and tension in shouldering family responsibilities. So, it is vital to work towards financial freedom in a planned way,” she adds.

Chartered Accountant Deepak Gupta, says, “Financial Independence and retire early is what today’s generation need. We are often stuck in home loan, car loan, credit card bills etc. and thus the dream to retire early remains unfulfilled. Youth should be encouraged to save, invest in mutual funds instead for promoting Financial Freedom.”

How to do it?

One may wonder how it is possible to save so much money. It, well, is not like a sprint but a marathon. You have to save for years before you can retire. Put simply, you need consistent saving and disciplined investment to be able to create such a massive corpus.

“Some people believe that achieving FIRE may not be feasible for many. It may be true but with focus and disciplined investments, trying to double your primary income every 6-8 years and controlling unnecessary lifestyle expenses with increased income can surely help you to achieve the FI much earlier.,” adds Zende.

Some collateral damage

It is, meanwhile, vital to realise that saving enough money may not always be the sole motivation to retire. Sometimes work itself keeps you engaged and therefore, happy and content. So, merely because you have sufficient bank balance should not incentivise you to retire from a job, argue the sceptics of FIRE.

“Retiring early has its own set of cons where you lack identity suddenly if you only identify with yourself to your job, if you do not have any hobby or passion to pursue you may not know how to use your time productively, you may come under social pressure of not doing anything as others are busy in their routine, and unfortunately, you may run out of money soon if FIRE calculations were not done correctly” opines Ms Zende.