Over the last few months I have actively enjoyed reading various blogs, websites, listening to podcasts and participating in forums on the topic of FIRE. Nobody can really teach you to be a millionaire, without really knowing your personal situation and struggle. However, you can still take first steps towards it by Save, Invest and Repeat.
Reading other popular FIRE blogs and hearing podcasts is also scary. There are so many active participants who are younger than I, and are miles ahead. Many earn way more than I do, and seem to have figured it all out.
At this stage, it feels like a lost opportunity, but that does not mean we cannot start now. Being late to the party does not mean we won’t enjoy it. Maybe Save, Invest and Repeat (or SIR as I would like to call it) later than others will not make you a millionaire, but it will still get results.
So, the first step is setting your goals, the s is in bold, because there are no singular goals in life. Instead of just looking at a goal of say 1 million Euros at 50, lets break them down to chunks which will allow us to focus on shorter time periods.
How do I set my goals when I do not know how much I will need after retirement! True, but you can come close in estimating it, some mention that 70% of your average expenses are a good indicator. However, the problem with this approach its more accurate as you age and less accurate if you are relatively younger(because inflation and life events will change this). The other way of doing it is tracking your monthly expenses for upto 2 years, remove those expenses which you believe will exist at the time of retirement and then estimate your monthly expenses. The big ticket fixed numbers will not vary so much.
Minimum expected expenses = (Average Monthly Expenses Now - Expenses Not expected to happen at retirement )
Real Retirement Needs = Minimum expected expenses + Unknown + Old Age Tax
Here, Unknown = This is a number which we cannot plan for now, so assume a percentage (say 2%) Old Age Tax = For lack of a better phrase, it is the costs of care and services needed at the sunset. It may be circumvented via care insurance.
So, now may I ask you to first come up with your magic number?
Next step, setting up a plan with byte sized goals.