How to Make Work Optional

Imagine having the power to leave a toxic workplace thanks to a nice chunk of “FU” money tucked away. Imagine having peace of mind when a financial emergency hits. Imagine having the freedom to choose more meaningful work while still funding your lifestyle.

What if I told you there is a surefire way to achieve any of these goals? It’s called the Financial Independence, Retire Early (FIRE) movement. FIRE has been around for a few decades and is only now starting to come into mainstream media. It’s based on the idea that the amount of money you can make during your lifetime is unlimited, however your time is not. Financial Independence is a way to buy back your time and help you live a more meaningful, enjoyable life.

What is FIRE?

FIRE consists of two parts: financial independence and retire early. You achieve financial independence when you accumulate enough financial assets (such as real estate, stocks, or bonds) for the investment returns to cover your living expenses. This gives you the choice of early retirement or continuing gainful employment in more enjoyable work. The objective is to have the freedom to choose how you spend your time. This could mean being there for loved ones, volunteering, or jumping into a career you’ve always wanted to try. The possibilities are endless and you don’t need millions of dollars to achieve it.

How do we get there?

To put it simply: live below your means and invest the difference. It’s simple math, yet it’s not necessarily easy. There are a few key concepts to focus on that make this strategy possible: the 25x rule, the 4% rule, and your savings rate.

25x Rule

Your FIRE number is the balance of investment assets you need to accumulate to theoretically live off for the rest of your life. Generally, this is equivalent to 25 times your annual spending, which is entirely unique from one person to the next. There are even different types of FIRE: Lean FIRE, Standard FIRE, Fat Fire, Barista FIRE, and Coast FIRE for instance! You can read more about these here.

Example: If your annual expenditure adds up to $40,000, your FIRE number will be 25 times $40,000, which is $1,000,000.

4% Rule

Once you reach your FIRE number using the 25x rule, you can then withdraw a safe rate of 4% per annum from the investment portfolio to cover your living expenses in perpetuity.

The 4% withdrawal rate originates from a research paper widely known as The Trinity Study, published in 1998. The authors used modelling and historical data to test the “success rate” of different investment portfolios over time. The portfolios ranged from 0% stocks (100% bonds) to 100% stocks (0% bonds), which were tested over periods of 15, 20, 25, and 30 years. Different withdrawal rates were also tested for longevity. They found that a 4% withdrawal rate for a portfolio of 75% stocks and 25% bonds had the highest overall success rate.

Example: 4% of your $1,000,000 FIRE number equals a $40,000 per year safe withdrawal rate.

Savings Rate

Your savings rate is the percentage of your take-home pay you don’t spend per year. This amount is contributed to an investment account, generally composed of low-cost index funds. And this investment portfolio generates returns over the long-term. The higher your savings rate, the faster you can reach your FIRE number. Many people have slashed unnecessary spending by following principles behind frugality and minimalism.

A famous article by Mr Money Mustache, called The Shockingly Simple Math Behind Early Retirement, dives deep into your savings rate and how much of an impact it can have on when you can retire. In a nutshell: the higher your savings rate, the fewer working years you will have before you can retire.

Australian FIRE

If you live in Australia like me, achieving FIRE takes a slightly different approach. We can pursue FIRE in two phases: pre-superannuation and when you reach preservation age. This strategy involves investing enough funds outside superannuation to last until your preservation age. Once you hit your preservation age, you will have access to a tax-free portfolio to live off until you die. You can read about your preservation age here.

As long as you contribute enough money into super before “retiring”, the account compounds investment returns until you reach preservation age. The funds from superannuation should then last you well into retirement, tax-free. Aussie Firebug has a great calculator which illustrates the two phases.


The investment portfolio itself is generally made up of low-cost index funds. We can trade them on the stock market as ETFs (Exchange Traded Funds) or invest directly via the fund manager. Index funds are passively managed investments that track a particular market index. This is different to actively managed funds, which attempt to out-perform the index, at a higher cost.

Passive investing has been repeatedly shown to provide better returns than the majority of actively managed funds. And the index funds’ higher long-term returns can be attributed to their low fees. When your investments have lower fees, you keep more of your returns. Broad index funds are a simple investment strategy for beginners (no financial adviser required).

I personally use Vanguard index fund ETFs, such as Vanguard Australian Shares Index Fund (VAS) and Vanguard US Total Market Shares Index (VTS). The funds are owned by the investors themselves, which means they have the investors’ best interests at heart. As a bonus, Vanguard is highly competitive on management fees compared to other index fund providers.


Many people think FIRE is only accessible to high-income individuals. This isn’t true. Anyone can increase their income or reduce their expenses if they pay attention to their spending habits.

However, I will emphasise that there is a degree of privilege involved, as saving money is almost impossible for those stuck in the poverty trap. On the other hand, there are plenty of high-income individuals who live paycheck to paycheck due to lifestyle inflation.

Pursuing FIRE also doesn’t inherently mean forced deprivation. Some people have taken it to the extreme – eating rice and beans to reach financial independence faster. This isn’t sustainable, because once you reach that savings goal, you have to continue with the same extreme lifestyle.

Dividing your life into separate phases, of which you can only start enjoying life after reaching FIRE, is missing the point entirely. It might take you decades to reach your number, so it’s much more sustainable to enjoy every day with your values to guide you.

Forcing yourself to work a job you hate to reach your FIRE number faster will waste precious years you’ll never get back. This value drives my career decisions, and it led me to take several pay cuts in the pursuit of a job I enjoy. Money isn’t everything; it’s a tool to assist you in achieving your goals.


Financial independence means different things to different people. It could mean having 6 months’ expenses saved in case of emergency, like losing your job during a global pandemic. Or it could mean getting out of compulsory work (the rat race) to watch your kids grow up.

It also makes you reevaluate your personal consumption and focus on what is most important. I like to achieve a balance between living a comfortable life and avoiding lifestyle creep (spending most of your income). It keeps me grounded while allowing me to let those special splurge moments into my life every so often.

The FIRE movement has the same objective as Universal Basic Income (UBI). A UBI has made a life-changing difference in the lives of the poorest individuals. But for those who don’t have access to a UBI, this kind of safety net can be achieved by being more intentional with how you spend your money.

Leaving compulsory work can be a game-changer. I first started reading about investing when I started studying at university. But I didn’t learn about the ethical power of investing and the FIRE movement until much later, and it shifted my mindset completely.

To summarise: live below your means, invest the difference, make work optional, and take back your time. Because life is too short to spend your limited hours on this beautiful planet as a wage slave.

Further Reading

Disclaimer: This article does not constitute financial advice. You should seek advice from a financial planner if your circumstances require it.



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    Liked by 1 person

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