Financial Independence, Retire Early (FIRE) is a movement of people devoted to a program of extreme savings and investment that aims to allow them to retire far earlier than traditional budgets and retirement plans would permit. Indeed, anecdotal evidence suggests that “FIRE” is a financial goal that’s rising in popularity – particularly among millennials – with many people in their early to mid-thirties aiming to retire as early as 45. 

Perhaps, having spent the bulk of their working lives in the layoff ridden, uncertainty laden post-2008 aftermath has led a large number of young professionals to firmly decide that the traditional retirement age of 60 just isn’t for them. But whatever the reason may be, retiring by 45 is no easy task, especially with lifespans going up year on year! Here are five things that could help.

Prepare for huge sacrifices

If you want to retire early, you’ll need to live well below your means for anything from ten to fifteen high-earning years (the catch being “high earning”) of your career if you’re to achieve your goal of retiring by 45. As a thumb rule, you need to be prepared to put away up to 70 per cent of your post tax income for a period of 15 years, in order to achieve a sizeable enough corpus – and this will mean making drastic cuts to your lifestyle for anything from one to two decades.

Don’t avoid risk

The biggest mistake you can make during your accumulation phase is to get stuck into low risk/ low return products such as FD’s, Life Insurance and PPF. Make sure your monthly savings flow not just into equity oriented mutual funds, but into the most aggressive small/midcap variety through SIP’s. Don’t worry, ten to fifteen years is long enough to average risks out.