FIRE 2.0: How Financial Independence Can Help You Redesign Work — Not Just Retire
Financial Independence, Retire Early Recreational Employment
Many will have come across the FIRE movement – Financial Independence, Retire Early.
Popularised by the 1992 book Your Money or Your Life by Vicki Robin and Joe Dominguez, the core idea is as follows: save aggressively (often 50–70% of your post-tax income), spend frugally, and you could retire in your 30s or 40s – long before the State Pension kicks in.
It’s a powerful concept in theory, but in reality, how many people want to spend their 20s and 30s ‘counting the pennies’ just to escape work as soon as possible? Moreover, it frames work as something to be escaped. Yet for many, work is a source of purpose, identity, and fulfilment – not just a financial necessity.
Enter FIRE 2.0.
Rather than seeing early retirement as the end goal, FIRE 2.0 reframes the concept: Financial Independence, Retire Early Recreational Employment.
The idea is not to stop working altogether, but to gain the freedom to work on your own terms. That might mean launching a new business, switching to a more flexible or creative role, or reducing hours to make space for other priorities. It's about designing a working life that fits around you — not the other way around.
The Power of Cashflow Modelling
This is where proper financial planning — and especially cashflow modelling — becomes so valuable.
With the right tools, we can model an entirely new career path, even one involving a significant drop in income, and stress test whether it’s financially sustainable.
This is best demonstrated through a worked example:
Case Study: Libby
Libby is 45. She’s a partner at her firm, earning £300,000 a year.
Her ‘lifestyle spending’ is around £5,500 a month (£66,000 p.a.), including £15,000 a year on holidays. She expects this to reduce to £5,000 a month in retirement as commuting and other work-related costs fall away.
Additionally, her mortgage payments are currently £1,574 per month. This relates to £250,000 outstanding debt on a £1 million property. Her plan is to downsize at retirement (target: £600,000 home) and clear any remaining debt.
Her current assets include:
£25,000 in cash
£50,000 in Premium Bonds (emergency fund)
£200,000 in a Stocks & Shares ISA
£300,000 in a General Investment Account (GIA)
£600,000 in pensions
She’s using surplus income to maximise ISA and pension contributions (£20,000 and £10,000 p.a. respectively), with the rest flowing into her GIA. Until now, she’s never had a formal plan — just a sense that she was doing well financially.
But after 20 years in a high-pressure role, Libby is considering a change. She’s described feeling “pretty close to burnout” and wants to explore when she could realistically pivot into something more fulfilling, even if it means earning less.
What is Cashflow Modelling?
Cashflow modelling projects your future financial position by combining your current assets and income with assumptions around investment returns, inflation, spending, and life events. It helps answer the big question: “Are you on track to have enough (income and accessible capital) to maintain your lifestyle to the end of your days?”
We begin with a baseline (‘no change’) scenario:
Libby continues in her current role until age 60 (her current planned retirement age)
Spending rises with inflation (3.5%)
Investments grow at 5.25% net (based on a Risk Profile 8)
Surplus income continues to be invested as it is today
When investing, your capital is at risk. The value of your investment (and any income from them) can go down as well as up, and you may get back less than you invested. These figures are for illustrative purposes only and do not reflect actual investment returns, which can fluctuate and are not guaranteed.
The chart below shows her projected liquid capital (all assets except property) under these assumptions:
As you can see:
Libby’s liquid assets — currently around £1.18 million — are set to grow sharply over the next 15 years.
At 60, she downsizes, providing a further injection of capital.
In retirement, she draws £5,000 per month from her investments, adjusted for inflation.
Even after doing this, at age 100, she’s forecast to still have £2.6 million left (in today’s prices).
More broadly, Libby is in a very strong financial position — more than capable of sustaining her lifestyle throughout retirement. In fact, our cashflow modelling shows she could afford to bring forward full retirement by seven years, stepping away at age 53 instead of 60.
That’s traditional FIRE: a few more high-earning years, followed by full retirement. But it still means spending another eight years in a demanding role she’s no longer excited about — a cost that is non-quantifiable.
FIRE 2.0: A New Path
We now consider a more flexible scenario. We ask:
“When can Libby afford to pivot to a new career that is more aligned with her values and goals, even if it pays less?”
After doing some research, Libby identifies a potential role that would pay around £60,000 a year — an 80% reduction from her current income. However, it offers remote work, fewer hours, a lower stress load, and the prospect of greater fulfillment.
We re-run the cashflow model with this in mind and find that Libby could afford to make the switch as early as age 47 — just two years from now — and still maintain long-term financial security, assuming she stays in this new role until age 70.
That’s the essence of FIRE 2.0: not full retirement, but the freedom to choose a different path — and in this case, six years earlier than traditional FIRE would allow.
The real question becomes: “What value does Libby place on those six extra years of autonomy and wellbeing?”
Or put another way — what are the potential costs, both emotional and physical, of staying in a role she’s no longer energised by, for another five to six years.
Conclusion: The Case for FIRE 2.0
Your Money or Your Life made a powerful point — that prolonged, high-intensity work can take a serious toll on our health and happiness.
FIRE 2.0 offers a modern alternative. It’s not about quitting work entirely, but reshaping it—pivoting towards a new role that more closely aligns with your values, energy, and long-term goals.
In conversations with retirees, a recurring theme emerges: people often stay too long in roles they’ve outgrown or become burnt out in, only to retire fully — and sometimes prematurely. In retrospect, what many needed wasn’t an all-or-nothing choice between ‘work’ and ‘no work’, but a more flexible, intentional middle ground.
That’s precisely what FIRE 2.0 offers — the freedom to recalibrate your working life before it costs you more than just time.
Happy Thursday!
Kind regards,
George
Important Disclaimer
This blog is for general information only and is intended for retail clients. It does not constitute financial or tax advice, nor is it an offer to buy or sell any specific investment. Since I don’t know your personal financial situation, you should not rely on this content as tailored advice. While we aim to provide accurate and up-to-date information, we cannot guarantee that all details remain correct over time. We are not responsible for any losses resulting from actions taken based on this blog’s content.
