retire early with a 9-5 and a side-hustle: a walkthrough of how F.I.R.E actually works
mini-tutorial and case study of Financial Independence, Retire Early
Retiring early surprisingly doesn’t require a six-figure salary or a seven-figure inheritance, even if those do admittedly help.
You need a system, a strategy, and at least one extra income stream (or a high savings rate; i.e. you can save a large proportion of what you earn).
This mini-tutorial breaks down how F.I.R.E. works and shows you how one hypothetical person could go from a standard 9–5 to early retirement using the 4% rule and a relatively modest side hustle.
While this walkthrough shows how a small side hustle can speed up early retirement, it’s not the only route. You can get similar results by increasing your salary, cutting spending, or living with a higher savings rate.
P.S. I’m pushing the definition of mini-tutorial in this one, sorry not sorry. Let’s get into it!
What is F.I.R.E.?
F.I.R.E. stands for Financial Independence, Retire Early. The goal with this ‘method’ of achieving financial independence (i.e. you don’t need to physically work to fund your life) is to stop relying on a job and instead live off the returns from your investments.
Why the 4% Rule?
The 4% rule comes from a study called the Trinity Study in the US.
It looked at historical market data over decades, and found that if you withdraw 4% or less from your investment portfolio each year, your money is likely to last 30 years or more.
The rule assumes a balanced portfolio of stocks and bonds
It assumes average annual market returns of around 7%
It gives you a high chance of not running out of money
Example: if you want to spend £25,000 a year in retirement, you need this amount invested [in a balanced portfolio]: