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What's your retirement age?

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One of my pet peeves is people saying "retirement age" when they mean "pension age". Retirement age is largely up to us. Here's how.

The FIRE movement

FIRE stands for "Financially Independent, Retire Early". It's a trend that seems to be gaining momentum. Basically, there's two parts to it:

1. Live on far less than our income.
2. Intentionally save and invest the rest.

Doing those two things can set you up for financial freedom long before old age kicks in.

Just how early are we talking?

It depends on your saving rate - the percentage of your income you can save. A 10% savings rate (Aussie workers, you get that in default superannuation) still means a long working life. Upping that to 15% gets us to a normal retirement a bit more comfortably.

Significantly bumping up that savings rate can really shorten our working years and give us many years of financial independence. If you're starting now, with no savings, this table can give you an idea how early you get there.


This table is by Mr Money Mustache, a prominent FIRE person in the US. He retired in his early 30s to start a family. Yes, you read that right. Retiring before starting a family. I guess he would have saved 50% or more during his very short working life.

Your saving percentage is up to you. Whatever extra savings you make do give you extra financial freedom; especially when invested well. Seeing just how many years of freedom are possible is certainly a big motivator to save.

If you're already well along the savings path, he suggests aiming to save up your annual spending multiplied by 25. This is where spending less really pays off. If you can reduce annual expenses by $10,000, you savings goal just got closer by a quarter of a million dollars!

(Sidenote: See my post on how to save $8,000 a year by having less stuff.)

What is Retirement anyway?

I tend to say "financial independence" rather than "retirement". At first it sounds weird to be "retired" in your 30's or 40's because we associate retirement with lawn bowls, daytime TV and 5pm dinners.

But what if "retirement" meant something different? You could make it whatever you want. Starting a band. Writing a book. Volunteering for a good cause. Coaching junior sports. Teaching adults a skill or hobby. Learning a musical instrument. Making art. It's limited only by our imagination.

Perhaps Financial Independence or Financial Freedom is a better description for now because of the connotations of the word "retirement". However it would be an interesting conversation starter to say "I'm retired" when asked "What do you do?". Just to see the reaction :)

What do you reckon?

When do you think you'll achieve financial independence? What would you love to do if you had the time and didn't need to work for money.

PS. My comments here are general observations and are not intended as individual advice. Please take your own circumstances into account and perhaps consult an expert.
PPS. The calculations above from the MMM site, assume investments that achieve growth of 5% above inflation.
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