Financial Independence Retire Early with Burgernomics
If I said financial independence retire early (FIRE) starts with some flame grilled burgernomics what would you think? I’m talking about a kind of mix between hamburgers and economics being the key to your financial independence early retirement plans!
It sounds a bit pie in the sky to say burgernomics might just have more of an impact on your financial independence than just about anything else out there, but the more you get into it the more you realise that might just be the case.
Of course, financial advisors, the amount you save on a regular basis, the age you start investing, and the extent to which you are mean (economical) with your money, will all help you in your quest, but if you really have your heart set on retiring as early as you possibly can, you will do well to get your knowledge bolstered in the burger department.
Burger-fi your life
The day when you can celebrate that special occasion some time in the future when work ceases to be a necessity (i.e. your very own financial independence retire early date) depends on a lot of factors. Some of which we’ve already touched on above.
However, the length of time it takes you to save enough money for your retirement (or financial independence) is paramount. How long it takes to save, corresponds precisely, to how much money you need to retire early.
So how much do you need then? Various sources I’ve come across (including the Guardian) suggest aiming for £250,000 to enable Mr or Mrs UK average to have an adequate retirement.
Now, there are groups of people out there that won’t have a problem saving that amount. I’m thinking along the lines of CFO’s, Directors, Surgeons and footballers to name but a few.
But, for the rest of us saving up £250,000 would be struggle for a late retirement, never mind an early retirement!
It’s kind of ironic really, because all those guys who could save £250,000 effortlessly will be earning so much money that they probably don’t want to retire………ever!
It’s the ones with the dreary jobs that don’t pay well that want out……a.s.a.p!
So something’s got to give. The question is what?
Doing a Snowden
And here’s where burgernomics comes into play. That’s because even a basic grasp of hamburger mathematics starts to shed a little light on the issue.
Let me explain by quoting a past Director of the CIA, whose name I forget, but who coined the phrase: “Doing a Snowden.”
He was talking about Edward Joseph Snowden here. The guy who copied and leaked highly classified information from the National Security Agency (NSA).
But for now, let’s forget that part, and concentrate on the other thing Mr Snowden did.
He defected. He gave up his allegiance to the US in exchange for Russia. In other words, he left one country for the benefits of another.
For our purposes “doing a Snowden,” essentially means relocate. You up sticks from somewhere less accommodating to somewhere more accommodating.
Put bluntly, you leave an expensive place (like the UK) for a cheaper place and you do this so that your money will go a further.
Relocation, Relocation, Relocation
This is a powerful move to make because the extent to which the place you live is low cost directly impacts the amount of money you need. This in turn totally and utterly governs the length of time you need to save up that money. And here in lies the key to early retirement.
Let’s face it, you don’t need to have taken too many holidays to realise there are places out there where your money will go further than it does at home. Pick the right one, and watch that retirement date leap forward.
The question then becomes, where do you start? After all there are hundreds of places to choose from.
To find a place where your money will go further you need to compare prices between the place you live and other possible places that you might like to go.
The Big Mac Index
There are many ways of comparing prices in different areas, but one of the better ones gaining popularity daily is the Big Mac Index.
Invented by the Economist in 1986, the Big Mac Index quickly went from a lighthearted currency valuation guide to a global standard, the subject of multiple academic studies and it has even been included in various economic textbooks.
It is based on the theory of purchasing power parity (PPP) and that differences in local prices can provide an indication of what the exchange rate should be.
It turns out that Big Macs can be used to see the extent to which one currency is under or over valued relative to another.
But more importantly for us, these burgers can also be used more simply, to get an idea of price differences between two countries.
Ingredients for Success
Think about it this way. A solitary Big Mac contains bread, cheese, sauce, beef, pickles, lettuce and onions. Not only do these things cost money, but somebody needs to be paid to make them. Somebody else needs paying to deliver the ingredients. The premises where they are sold needs paying for and that’s not to mention all the other stuff behind the scenes that costs money like management, admin and marketing for example.
In short, a Big Mac isn’t the worst choice of product to make our comparison.
The chart below shows the prices of Big Macs in different countries around the world at some point in 2020 (These prices regularly fluctuate).
The Big Mac Index (Some time in 2020) – Financial Independence Retire Early with Burgernomics
| Country | Price $ | Country | Price $ | Country | Price $ |
| Turkey | 1.57 | Nicaragua | 3.41 | France | 4.83 |
| Russia | 1.78 | Japan | 3.52 | Germany | 4.83 |
| Argentina | 1.86 | Brazil | 3.53 | Greece | 4.83 |
| Romania | 2.26 | Honduras | 3.62 | Ireland | 4.83 |
| Indonesia | 2.27 | Chile | 3.66 | Italy | 4.83 |
| Malaysia | 2.29 | Thailand | 3.68 | Latvia | 4.83 |
| Axerbaijan | 2.32 | Czech Republic | 3.81 | Lithuania | 4.83 |
| Mexico | 2.45 | Costa Rica | 3.83 | Montenegro | 4.83 |
| Taiwan | 2.54 | South Korea | 3.99 | Netherlands | 4.83 |
| India | 2.57 | UAE | 4.02 | Portugal | 4.83 |
| Hong Kong | 2.64 | Uruguay | 4.03 | Slovakia | 4.83 |
| Poland | 2.78 | Lebanon | 4.31 | Slovenia | 4.83 |
| Vietnam | 2.86 | Singapore | 4.39 | Spain | 4.83 |
| Hungary | 2.91 | New Zealand | 4.54 | Austrialia | 4.9 |
| Philippines | 2.93 | Britain | 4.67 | Belgium | 4.93 |
| Oman | 3.02 | Scotland | 4.67 | Israel | 5.09 |
| Peru | 3.18 | Denmark | 4.73 | Canada | 5.39 |
| Guatemala | 3.24 | Austria | 4.83 | USA | 5.67 |
| Jordan | 3.24 | Cyprus | 4.83 | Sweden | 5.9 |
| Colombia | 3.25 | Estonia | 4.83 | Norway | 6.2 |
| China | 3.28 | Finland | 4.83 | Switzerland | 6.89 |
| Croatia | 3.41 |
Prices range from as high as $6.89 in Switzerland to as low as $1.57 in Turkey. In Britain a Big Mac will set you back $4.67 or about £3.40 depending on exchange rates at the time you are looking.
We can use these prices to form a basis for some simple but informative number crunching. In fact, these simple calcs can be used to make a guesstimate of how expensive one country is compared to another.
In other words, we can use these prices to see how much cheaper than the UK a retirement destination could be.
Number Crunching
If we divide the price of a Big Mac in Britain by the price of a Big Mac elsewhere we can figure out how many times more expensive or cheap Britain is compares to the place in question.
Take Turkey for example. Not only is it the cheapest Big Mac country but it is also a popular holiday destination. On the face of it, certainly not the worst place to retire.
The price of a UK Big Mac ($4.67) divided by the price of a Turkish Big Mac ($1.57) is 2.94.
So a Turkish big mac is nearly 3 times cheaper than its British equivalent. And if a Big Mac is 2.94 times cheaper, the chances are a whole host of other stuff is too.
And if a whole host of stuff in a county is 2.94 times cheaper, then logic suggests you need 2.94 times less money.
Is this an exact science? No, but is this something we can work with that will give us some kind of idea of the lay of the land? Yes.
And if you agree with that premise then this number 2.94 becomes very useful indeed. It means our £250,000 that we need in the UK suddenly becomes about £85,000 for early retirement in Turkey. And even better, if you need 20 years to save up for retirement in the UK based on that figure of £250,000 then your 20 becomes 7 for £85,000 in Turkey.
Financial Independence Retire Early with Burgernomics – The Bottom Line
Look at this way. You’ve got two choices right there. One: stay stuck in a job for 20 years waiting for that day when you can enjoy a pork pie in the rain. Two: leave in 7 years for sun sand and the odd kebab!
OK, that’s a bit unfair on the British Isles but you get the gist. There is a world out there, and most of it is cheaper than the UK. I picked Turkey as an example, but you can pick wherever you want. The world’s your oyster.
If the speed to retirement is important to you then it just maybe a good idea get your calculator out and start doing some number crunching with the Big Mac Index.
And though I’m sure it goes without saying that your early retirement plans shouldn’t be entirely based on burgernomics, as far as I am concerned, there’s no convincing argument for not at least incorporating them into your initial early retirement planning.
Used alongside some more in-depth analysis at a site like Numbeo, burgernomics could be the key to a financial independence and an early retirement in your idea of paradise.
It’s all starts with relocation, relocation, relocation!
