Do you know what a FIRE seeker is? No, it is not somebody that tries to track down flames!
It stands for Financial Independence and Retire Early. Very few people, as hard as they try, are ever able to achieve this. This is because they do not really plan. Last week I mentioned my goal of becoming financially independent by the next 20 years. I’m 25 now so I would be shooting for 45.
It’s a hefty goal but I’ve already been brainstorming about how I’ll be able to pull it off.
My Plan For FIRE
For starters, I want to see if I want to grow my current income. I used to be a really low-earner and often struggled to make ends meet. Now that I’m earning more, I know I have a better chance at becoming financially independent early if I want to. I’d just like to make sure my income is high enough that it allows me to live comfortable and be able to save aggressively.
Having a higher income will also help my pay off the remaining debt I have faster so I can focus more on saving and investing.
Next, I want to diversify my income streams and start building more passive income. Passive income is when you do the work upfront and you don’t want to trade hours of your time for money in order to make money. I’ve already started diversifying my income by monetizing my blog and freelancing but I’d also like to invest in 1-2 rental properties so I can earn some more passive income.
Finally, I know I need to save and invest like crazy. I want to invest in tax-advantaged accounts that I can withdraw from in my 40s without a penalty. Plus, I want to invest in traditional retirement accounts that I can rely on when I get older.
I know I’ll need to save and invest a lot more than the average person, but by practicing extreme frugality (by my own standards), I believe I can pull it off.
As you can see, while I have a solid plan in place to help me save for FIRE, I also need to put a specific plan in place for my money and run some calculations to make sure it’s fiscally possible.
Saying I need to earn more money and invest is not enough even though it’s a good step. If you’re planning for FIRE as well, it’s important to make sure your current retirement plan checks out when you run the numbers and that it’s giving you the best value for your money and time. This is where cFiresim comes into play.
What the CFiresim Calculator Does
The purpose of cFiresim is to allow you to quickly compare different retirements plans.
Using the simple calculator, you will be able to see how even the simplest of changes in your plan can drastically change the amount of money that you could potentially get from your retirement plan.
Simple to Use
One of the things that we loved about cFiresim is the fact that it is simple to use. You are going to be asked some basic information about your retirement plan.
This should be information that you must hand. You then click a couple of buttons and voila, the tool will simulate how it expects how much value your retirement plan has. It will not just ‘guess’ here. It will use accurate past market data. So, it is going to be one of the most accurate tools that you can get.
Uses Accurate Historical Data
This tool is unique in the way in which it works. As I mentioned already, it is going to look at past historical data for investments. It goes all the way back to 1871. The tool takes the idea that future performance is not going to be worse than how it is going to perform in the future. If your portfolio could survive the past, it is going to generate you money in the future.
When you use the tool, you will be asked to simulate the length of retirement that you want to simulate. Let’s say, for instance, 40 years. It will then calculate every 40 years from 1871 and give you a readout. You will be able to see how your portfolio would have performed over time. If it survives every period, you are probably going to be able to survive on it on your own.
Why Is It Useful For Planning An Early Retirement?
Because the tool will allow you to determine exactly whether you have a retirement plan in place that will allow you to retire early. It tells you if your portfolio is going to be able to give you the cash that you need to continue living your life. It is only going to be an informed estimate, but it is going to be one of the most informed estimates you have ever enjoyed.
Final Word
Why not check out cFiresim now? The best part is that the tool is completely free to use. This means that you have no excuse but to boot it up and start playing around with it! Be forewarned, however, this tool is going to be incredibly addictive.
Have you thought about retirement and started preparing yet? Have you ever used a retirement calculator before?
Chonce is a freelance writer who’s obsessed with frugality and passionate about helping others increase their savings rate, eliminate debt, and work toward financial stability. She chronicles her journey to becoming debt-free on her blog, mydebtepiphany.com.
