When I first started exploring the idea of FIRE, I consulted a couple of people I knew and trusted who had experience in this area. One friend, who is now in his 70s, retired at age 51. He was on FIRE before it was a thing. The second friend has a real estate business, a day job in technical sales and a side hustle. He is much younger than I am, but he has enough passive income set aside that he could retire tomorrow if he wanted.
Both of my mentors started by asking me how much I’m saving and how much my expenses are. I have an idea of my savings and expenses now, but I have no idea how to estimate what they will be in five years when I hit the target date. In addition, the plan is to move from a HCOL state to a lower cost state, and purchase a new (smaller, possibly fixer-upper) house with the proceeds from the sale of my current home.
Their question was a good one, though. The goal is to save 40% or more of our income before retirement and to have enough cash flow before age 65 that we don’t have to tap into retirement funds (401K and pensions) until regular retirement age. Spending less than we make (a lot less) is a huge challenge for us, especially since we are still paying college costs for one of our daughters and we haven’t historically been as disciplined as we need to be to make this work. That said, we feel like we are in a great place to meet this challenge head on. In a later post, I will share details of our current savings and expenses.