Setting Your Retirement on FIRE with a Self-Directed IRA

Published on April 18, 2019

A recent article by Mark Miller on wealth management.com talked about a movement that’s growing in popularity called FIRE, which stands for Financial Independence, Retire Early. This concept is NOT about working for most of one’s adult life, saving a small portion of income, and retiring later. Rather, it proposes living modestly and saving as much as possible for a shorter time frame (about 20 years) in order to retire in one’s 40s. For this group, it’s about what will make them happy when they’re older—not how much they’ll need.

The author cites concerns that this strategy is strictly for those of high-income households who can afford to put away a lot of money more quickly than other workers. However, he adds that many FIRE folks are adopting the strategy by not fully retiring in their 40s. Instead, they are turning their energies towards entrepreneurial pursuits, leaving the corporate hamster wheel for part-time employment (while living off savings), or earning income through investments in alternative assets such as real estate.

Spending less and living more modestly while working seems to be a good way for many people to save for the future. Syndicated radio host and author, Jill Schlesinger, says that the FIRE conversation is positive because it gets people to think about how to save more and reach goals. She also says that, “Most people in the FIRE movement are just saying they want options—they want to get rid of their debt; they want a financially secure life and to do something they feel really good about.”

Given that every individual’s work and financial situations are different, planning your retirement goals within the FIRE model is highly subjective. Alternatively, if you’re someone who wants to take control of your future, you can adopt a self-directed investment strategy to support your lifestyle throughout retirement.

Fuel your retirement savings through self-direction

You can ignite a more diverse retirement strategy with a self-directed IRA, which allows for a broad array of nontraditional investments. If you’re on track to save enough during your working years to enjoy full or semi-retirement on the early side—and you already know and understand certain nontraditional investments—you could spend your free time investing in real estate, precious metals, private equity, or one of the many other asset types that can be self-directed.

Self-direction is a powerful way to save for retirement, and ideal for individuals who are comfortable making their own investment decisions or want to diversify their portfolios. For younger workers in their 20s and 30s who are looking to kick back earlier in life than their parents did, opening a self-directed IRA could be a great way to reach your goals.

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