SIMON BROWN: All fired up about saving for retirement

The FIRE movement (financial independence, retire early) has faded a fair bit since the pandemic and even more so since high inflation and high interest rates pretty much trashed everybody’s finances.

At its core, the idea was to invest like crazy from as early as possible, with some people I knew investing more than half of their total pay package. With this huge investment rate you could potentially get to a point where you could retire by about 40.

Everybody’s dream, right?

But even as FIRE has faded, there are some very important lessons that are worth remembering and implementing where possible.

The first is that many FIRE adherents didn’t retire at 40; they just quit a job they hated but that paid well. They then got one they loved with potentially lower pay, but they were happy as they had a ton of retirement money to supplement their lower income.

One person I met quit their high-stress, long-hours — albeit high-paying — job as a lawyer a few years before turning 50, moved to the coast and bought a stable yard, and now spends their days surrounded by their passion, horses.

This is important: retiring could just be about a better lifestyle. Far too often our jobs take over our lives, and while some are lucky to love their work, for many it’s just a means to an end — or, more bluntly, a means to be able to afford to live and go to work.

The other important point is that by saving a large chunk of your salary every month you automatically reduce your expenses and so need less to retire on. Thus you’re able to get to your retirement goal amount much sooner than most.

Say we have two people each earning R100,000 a month. One invests a respectable R15,000 while the other saves a huge R50,000 every month.

The second person is by default living off only R50,000 a month and needs less money to retire on. Further, they’re obviously also investing markedly more every month, meaning they’ll get to their investment goal much sooner.

You’re essentially working two levers in your favour, investing more and needing less.

The key point is that even when FIRE was all the rage, there was no single way to do it. Some just wanted to get on a boat and sail around the world, while others want to be with horses.

But in all cases it was about discipline. Discipline to know what you want and the discipline to make the changes to your spending habits.

I often see people saying that if they could just get an extra amount of money every month they’d be fine.

The reality is that more money seldom sets us free if we lack a plan and the discipline to stick to that plan. More money just means more spending and more debt, not more freedom without effort from yourself.