There was a time when retirement planning was something many people only began to think seriously about in their 40s or later. Today, the focus is increasingly on financial independence, with younger generations looking to build enough wealth to gain the freedom to choose when - or whether - they work. The Financial Independence, Retire Early (Fire) movement helped fuel this shift, inspiring millennials and Gen Z to building up enough net worth to make work a choice, rather than a necessity.
For followers of Fire, the starting point is to calculate how much money you will need to fund your ideal retirement, then save aggressively to reach that target. There are different categories depending on the lifestyle you wish to live.
'Lean Fire' involves embracing a frugal, minimalist lifestyle and requires a smaller nest egg, while 'Fat Fire' aims to support a more indulgent lifestyle and demands a substantially larger pot. 'Coast Fire' takes a different approach: building enough investments early on that you don't need to contribute anything more to the pot until you stop working – with the assumption that current income covers all expenses until that point.
However, it’s not all about the money, according to our expert Sam Instone. This week, he wrote about how getting ready to retire is also about "whether you've built something to step towards". Work for many is about routine, structure, connection and purpose.
Experts agree on one thing: start with what you envision your retirement life to look like and then calculate what you need based on that.
A couple based in Dubai, who we featured in our My Salary series, wrote to me last week about how they had successfully achieved financial independence in their 20s.
The couple were saving 60 per cent of their income of Dh40,000 every single month when we first spoke to them. Today, they’re living off their investment returns and business income.
An easy financial independence calculation to start with is the rule of 25. Multiply your current gross annual income by 25 and that’s the amount you need to have invested, assuming you’ll withdraw 4 per cent from returns during retirement without touching the principal.
What does retirement look like for you and how are you planning to get there? Email me at dcheriyan@thenationalnews.com.
Dona Cheriyan, Digital Platforms Editor
My Dubai Salary: 'I earn up to Dh45,000 a month coaching wellness to women in midlife’
Monika Singh arrived in Dubai 12 years ago with a dentistry degree from India and a plan to sit her Dubai Health Authority licensing exams to practise in the UAE.
In between her studies, she began attending group workout classes, discovered a love for dance fitness and never looked back.
Today, she runs Monika Sphere, a women's wellness coaching business specialising in women in midlife, a niche she arrived at through her own experience with perimenopause after having her son, now seven.
Find out how she made it happen here
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