‘I’m a FIRE saver and plan to retire at 38’

FIRE savers save and invest their money aggressively with the aim of retiring long before the state pension age of 66.

The FIRE acronym stands for financial independence, retire early. Followers of the movement have different definitions of what constitutes retirement. But essentially FIRE means you live off income from savings and investments, reducing the need to work for an income. 

Jenny Graudenz, 34, is one of these aggressive savers. She’s hoping to retire in four years’ time.

The full-time medical writer lives in a house share in London. However, she plans to leave the capital when she retires. She’s spent the past four years documenting her FIRE journey on her blog My Money Yard.

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Jenny, who had completed a master’s degree in clinical research in 2016, began planning for early retirement not long after, in April 2019, when she started a full-time job that paid well enough for her to get saving.

“I’ve never been a big spender. My savings accumulated and I looked at what I could do with the money,” she said.

“After reading articles online, I heard about FIRE. It sounded like something I could do and I joined a few Facebook groups and read posts on Reddit to find out more.”

Initially, Jenny’s plan was to be financially independent aged 40. But now she’s ahead of target and on track to retire at 38, two years earlier than planned.

“My aim is to have saved £350,000 by the age of 38″

“For me, financial independence means freedom. It means not having to work for money, but to focus on what I want to do. My retirement will be funded from my investments, such as index funds, as well as a little additional income from my blog,” she explained.

“My aim is to have saved £350,000 by the age of 38. FIRE followers will probably say it is risky to retire with such a small fund. People not knowing FIRE might underestimate how much they need and what the risk is.

“In my case, I aim to own a property, have a separate cash pot of savings and will continue with my income-producing blog, which is not part of my retirement calculation.”

Many FIRE savers will max out their ISAs as much as possible, so they can receive an income until they can access their pensions.

“Around 75% of my savings are in ISAs, with the remaining 25% in pensions,” Jenny said.

“Having my savings in ISAs means I can withdraw the money at any age, unlike a private pension where I can only take money out from age 55.”

Once she retires, Jenny plans to follow the 4% rule – limiting herself to withdrawing 4% from her savings each year to ensure she doesn’t run out of money.

“This will give me £14,000 a year [4% of £350,000], meaning I can pay myself £1,000 to £1,200 a month. My expenditure is very low and I think I’ll be fine living off that amount. Because I’ll follow the 4% rule, the plan is I’ll never run out of money.”

Jenny also plans to leave London to reduce her living costs. “My rent is currently £850 a month. I plan to buy a small flat in my late 30s, perhaps with the help of a mortgage, although I don’t know yet where I’d like to live.

“I’m originally from Germany, which is where my family still are, but I haven’t decided whether to stay in the UK or move back to Germany. I like the idea of owning a place for security, and also because I can rent it out if I need extra income or want to move somewhere else.”

‘I save two thirds of my income and spend less than a third’

Jenny says she’s been able to save so much because of changing where she works. Every time she has changed employer she has increased her salary.

Blogging has also helped. “Because I blog about money, I get to try lots of money-saving apps and so I get to know the best ones,” she said. ”I particularly like the receipt scanning apps and cashback websites. Every little bit helps to save money.

“I save at least two-thirds of my income and spend less than a third,” Jenny added. “Public transport is very good in London, so I don’t own a car.

“After rent, my biggest biggest cost is food at around £250 a month.

“I’m gluten intolerant and vegetarian and I like to buy organic so I spend a lot on food. I’ll also maybe spend an extra £200 on clothes or personal expenses.

“I travel to Germany a couple of times a year too, and will try to do a summer holiday every other year with friends. I also travel for work a bit.

“Some of my savings are also invested in the Vanguard FTSE Global All Cap Index Fund (accumulation). I think stock markets have had a difficult few years, what with Covid and the Ukraine war. But over the next few years I personally believe the returns will improve and recover.

“Despite the turbulence, I’m still ahead of my original retirement plans,” she said.

“My plan is to build up a cash fund closer to retirement so I won’t have to worry about stock market performance just as I’m about to stop work.”

While she’s on track to give up work at 38, Jenny says she’s aware that it will ultimately all depend on her circumstances.

“I don’t plan to have children. But if I change my mind that would push back my retirement as I’d need to keep earning money to provide financial security,” she explained.

“People may wonder how I’ll fill my time retiring so early, but I plan to keep busy. I’d like to do volunteering and continue writing on my blog. I don’t think I’ll ever run out of things to do.”

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