Retirement planning: ‘We never bought expensive bags or watches or any branded shirts’, say couple who chose FIRE

Retirement planning: Yogesh S. and Seema Devgan embraced the Financial Independence, Retire Early (FIRE) concept to avoid working into their later years. Their goal was to retire by age 55, beginning their financial journey with a focus on creating passive income.

The FIRE movement centers on achieving financial independence through disciplined budgeting and aggressive investing. FIRE advocates seek to retire before the traditional age bracket of 65 to 70, prioritizing enhanced financial flexibility. Some early retirees rely on investment portfolio withdrawals, while others incorporate part-time work into their retirement strategy.

Dedicated followers of this prudent lifestyle often continue working for several years, saving up to 75% of their yearly earnings. When their savings reach their predetermined FIRE number – typically 25 times their annual expenses – they may opt to exit the workforce and retire early.

Sharing his experience as a FIRed couple, Yogesh shared that as a couple aiming to retire early and have enough financial backing they made conscious financial decision like not buying luxury items like branded bags, watches or even shirts or clothes for that matter. 

“When we were on this fire Journey we realized that subconsciously that we started changing our lifestyle so we were very much diligently saving we were diligently investing and we never actually had the lifestyle of buying expensive bags or expensive watches or just for the sake of buying any branded shirts or clothes, so what it does is that when you are in the retirement stage, it is easier for you. You end up paying a lot for the materialistic things. We need to understand that we spend a lot on travel experiences dinners, but you can’t do that on a daily basis just for health reasons. One should understand that you want some homecooked food and just some relaxed moments. There are lots of experiences that we are doing now during our retirement stage we realize that
doesn’t cost money or very little money,” Yogesh said in a video on his YouTube channel.

How they started planning for FIRE

Initially with limited financial knowledge, Yogesh and Seema followed a simple rule: saving a minimum of 30% of their monthly income, regardless of their situation. They began their investment journey with traditional Indian savings tools such as National Savings Certificates and the Public Provident Fund (PPF).

As time passed, their investment approach changed. After relocating to a foreign country, they focused on real estate investments, which eventually started providing them with significant passive income. This enabled them to save nearly all of their income in the final years leading up to their retirement.

Yogesh and Seema pursued financial independence by striving to reach a “Fire Number” – a savings milestone that would sustain their annual expenses through passive income. Their original goal was to retire between the ages of 45 and 55. Through careful planning and strategic investments, they not only surpassed their targets but now possess assets valued at 35 times their yearly budget.

Sharing his plan, Yogesh said they calculated their post retirement expenses and found that they saved more than what they actually calculated. 

“You can calculate your expenses in two ways. One is that you do a bottom-up calculation that you estimate this is your actual expenses as of today and based on that you budget for future. The second is your top down calculation that you say hey this is my total net worth and based on this net worth if I apply a certain percentage of withdrawal rate 3.5% 3% whatever number that you have in your mind and based on that you come up with your expense budget now in the early stag years or early years we did our calculations based on our bottom of expenses and then as we were closing o closer towards retirement uh we started doing our calculation or budgeting top down and we see there is a gap,” Yogesh said.

He added that one of his decisions that supported his FIRE journey was choosing Thailand as his present location over European countries or even India as cost of living plays a big role in the golden years. 

Yogesh and Seema have built a diversified investment portfolio with a focus on generating multiple income streams. Their portfolio includes the following:

Real Estate: A significant portion of their passive income comes from rental yields.
Equities: They have investments in high-dividend stocks and mutual funds.
Interest Income: They earn consistent returns from fixed deposits and bonds.

In addition to these income streams, Yogesh and Seema have implemented a three-bucket strategy for managing their investments:

Bucket 1: Cash equivalents are set aside for immediate needs.Bucket 2: Medium-risk investments are allocated for semi-long-term needs.
Bucket 3: Long-term assets like real estate and high-volatility investments, such as cryptocurrencies, are included in this bucket.