The FIRE topic – necessary, but why the hurry!
Krishnakumar Ramanathan
Managing Director and Group CEO S & S Power | Acrastyle | Hamilton Research and Technology | At the intersection of Engineering and Management lie infinite possibilities!
I explore Management and Leadership based on my experiences, reading, and reflections. Views are personal. Sources are cited. Feedback is welcome!
The FIRE topic – necessary, but why the hurry! 137, 02 Nov 2024
What’s your FIRE number, a friend asked me, many years ago. I looked blank and waited for more. When do you want to retire, he probed further. I blurted that my official retirement age was sixty. He understood that I was genuinely clueless, and then took the time to explain the FIRE topic, which we will explore today. ?
In an earlier generation, working people generally retired only after attaining a specified age, early retirement wasn’t an option. Today’s generation can afford to retire at an early date (RE) of their choice but provided they have built up the financial independence (FI) to do so.
First, we look at the FI part. Basically, one must develop a source of passive income (not salary). This could be through interest from FDs, rentals, dividends, retirement corpus like PF, NPS, etc. which can comfortably meet monthly expenses, with some surplus for leisure and emergencies. As a rule of thumb, passive income of about 70% of your active income from salary can get us to the threshold of Financial Independence or FI. The assumption here is that you will not have any major financial commitments at this stage – and that you will have adequate health cover. Get a professional financial advisor’s help as needed.
Next, we look at the RE part. In the natural world, there is no concept of retirement. It is only us working professionals who think of a fixed working life – on the other hand, we see artistes, politicians, business leaders, farmers, all working well into their eighties with great enthusiasm. The reason is simple, they all love their jobs, and it provides sustenance to others! So, what could be the reasons for working professionals to want to retire early (RE)?
A. Feeling unhappy at work: over years, dissatisfaction, or accumulated work stress, can become a burning desire to get out of the routine. Early retirement (RE) is a clear way out of this situation.
B. Do something of our own: many of us develop an aspiration to do something different – own venture, late-stage education, etc. Here, RE can be a launch for a ‘second innings’ career. ??
C.?Focus on passion projects: some of us nurture hobbies that can scale up, or want to teach, or give back to society in some ways, etc. The RE decision can keep us connected to our domain and share knowledge.
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Whatever our motivation for RE, it should not be taken in a hurry. We should plan for it diligently over time to secure the FI first, and then prepare ourselves for the RE activities! I emphasise this because I believe RE should not be limited to only leisure.
It is important to remain physically and intellectually active and engaged and contribute in some way to society. Even our retired cricketing legend Sunil Gavaskar, now well into his seventies, keeps us entertained with his insightful commentary on the game. That’s possibly an ideal FIRE situation!
I hope you enjoyed reading this one and look forward to your feedback and thoughts as we build a conversation around this topic. Do let me know what you think!
Warmest regards, Krishnakumar.
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Head of Sales - Winergy Business India
2 周Very informative KK.Thanks for sharing your thoughts on RE .
Great article KK & of significant relevance in today’s times, hope u r doing great ??
Founder Member - Global Brandings KEY FOODS
2 周Insightful! Krishnakumar Ramanathan
CTO at Nagarro, Accelerating Organizational Digital Transformation with Strategic Technology Catalysts.
2 周Great article, Krishnakumar Ramanathan ! A very balanced and thoughtful perspectives, questioning the rush without dismissing importance of FI . Thanks for sharing!
LinkedIn Top Voice |Project Manager -EPC Projects Management Experienced Professional with expertise in Project Management, Stake Holder Management, Order Management and Engineering with Customer Centric focus.
2 周This post brilliantly simplifies the FIRE concept and emphasizes that early retirement isn’t just about leisure but purposeful engagement. I appreciate the balance of financial planning advice with meaningful motivations for RE. Inspiring and thought-provoking—thanks for sharing! Krishnakumar Ramanathan