Whilst it might seem like a pipe dream, with the right guidance and investment options an early retirement can become a reality
Almost everyone at one point or another dreams of retiring early. Forty is a common age for those with such aspirations, it’s an ideal time to make changes and focus on interests and inspiration. However, getting out of the rat race is easier said than done, which is why the experts at Currency.com – a tokenised asset cryptoplatform – have looked at whether it is realistic to retire 20-25 years earlier than usual… and, spoiler alert, yes, it is!
In the UK, the current age of retirement will reach 67 for women and men by 2028. So, what can you do if you don’t want to wait this long and retire early? And not at 50, or 55, but even earlier. Can it really be possible to retire at 40?
Fire: The early retirement movement
Rather than just being an idea, early retirement has now grown into a fully-fledged movement. This movement is known as Fire, (Financial Independence, Retire Early). Fire is made up of young people who have set themselves the task of achieving financial independence by the age of 40 to 50 years old, and in “extreme” cases, 30 years old. The movement originated in the US and the main idea is taken from the best-selling non-fiction book Your Money or Your Life, published in 1992.
Fire is about controlling your spending in detail, saving most of your income (up to 70% after taxes), and setting aside that money as savings. Another goal of the movement’s objectives is to get rid of all debts, including mortgages, as soon as possible.
One of the most well-known representatives of the movement is the Canadian, Peter Adeni, who blogs under the nickname, Mr. Money Mustache. Adeni quit his job as a software engineer in 2005 when he was 30, having amassed a modest $600,000. Adeni lives in Colorado and spends no more than $24,000 a year on a family of three.
Investing
Fire is not just about saving as much money as possible, but also about investing. Investments can provide a form of passive income that allow individuals to live in the way they choose.
If you are interested in the Fire movement, then you can trade popular tokenised index funds on Currency.com. Some of the biggest and most popular index funds include:
- tokenised SPDR S&P 500 ETF
- tokenised Vanguard S&P 500 ETF
- tokenised iShares Core S&P 500 ETF
Considerations
One of the main drawbacks of the Fire strategy is the fact that a person who retired at the age of 30-40 may not be hired for a good job if they suddenly, for some reason, decide to return to their previous work. This is especially true if you had a high-paying job and were then absent for several years.
In the UK, Fire is not quite as popular as in the US, but the idea is catching on. Research from Wealthfarm showed that one in four 18-34-year-olds have set early retirement as a financial goal, with the pandemic leading them to reassess their priorities.
Making money for old age without big savings
If you do not have the desire to save most of your earnings, and you are ready to retire in the usual way, but with substantial savings, then it can be worth getting started in investing. It can be a reasonable idea to start saving 10-15% of your monthly income and then investing it. But where to? As mentioned above, the largest index funds, whose tokens can be traded on crypto exchange Currency.com, using both cryptocurrencies and fiat currencies.
However, you should be aware that experts advise that pension savings should be as risk-free as possible, so you should not invest all your funds in cryptocurrency, hoping that you will have time to sell it at the peak of its value. In the long-term, it is worth considering only the largest cryptocurrencies which have solid fundamentals – bitcoin and etherium, which are also available on cryptoexchange Currency.com.
You can also use the “eternal portfolio” investment strategy, which was developed by the American investment consultant, Harry Brown in the early 1980s. Brown offered to invest evenly in stocks, short and long-term bonds, and gold. At the end of the year, the investor only has to bring the investment to its original performance so that each part of the portfolio is 25%.
Create the opportunity
It is a dream for most people to retire early, but our actions today will decide whether we can reach that goal. The Fire movement is ambitious and for some people, it can be viable, but whatever your retirement goals are, it can be worth looking at investing to ensure that you can have a sizable amount of income whenever you do decide to retire.
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