20 Sep Financial Independence Retire Early (FIRE)
An article in the NZ Herald on 18 September 2018 caught my eye and I promptly emailed it to our three daughters. All in their 20’s, working, they have paid off their student loans and are now facing the daunting prospect of purchasing their first home. And the big question is, with massive mortgages, how do they achieve financial independence?
The FIRE formula (Financial Independence Retire Early) was a concept developed in the United States and now taking the UK by storm. Apparently, having a nest egg of 25 times your annual salary (comprised of savings and income from investments) allows the average person to retire early. “Super savers” who ferret away at least 50% of their annual salary can anticipate a comfortable retirement within 20 years. This may seem an impossible concept for the majority of people living in Auckland and certainly FIRE proponents acknowledge there will be sacrifice and compromise in order to achieve early retirement.
For a lot of New Zealanders, one way of achieving the dream may be to relocate – sell the central city home and head to the suburbs. In comparison, Stanmore Bay offers excellent value for money with a daily, regular ferry service into the city, Gulf Harbour has to be a prime target. Alternatively, if you already reside on the Hibiscus Coast, perhaps now is the time to consider the regions around New Zealand. Chasing the dream, one of our daughters has recently moved to Whangarei, acknowledging that property is much more affordable in Northland.
Check out the blogs “The Escape Artist” and “Mr Money Moustache”and when you are ready to discuss your next property transaction, call us first.