FIRE (Financial Independence, Retire Early) came up a bunch of times in another about people not working, but I don’t want to hijack that thread by focusing on FIRE.
The theory goes that if you aggressively save as much money as you can, invest it wisely, with a little luck and discipline you can achieve financial independence and retire at a relatively young age (ideally your 30s or 40s).
To me this seems like an extreme perversion of some good common sense concepts like living within your means, saving for retirement, Scaled up to a significant portion of society, I believe it also introduces some concepts that are actually pretty harmful.
Instead of encouraging people to pursue sustainable lifestyles where they might work on long term careers, maybe get married and raise a family, it feels like trying to win a marathon by sprinting the first few miles.
I believe this sort of mentality also contributes to an already ageist mentality, particularly in the tech world where people can make the sort of incomes that empower a FIRE lifestyle and where they tend to glom onto weird cultural trends. I’m sure many of these companies would love nothing better than to have their 20 and 30 something employees have nothing in their lives besides work.
So what do you think? For people who have adopted this lifestyle, how has it worked out?
My ex had such a plan. Work for the government for 20 years, gain full retirement, move to Montana and work part time as a ski resort liftie. Well I’m not sure about that last part but she did accomplish her goal of retirement benefits as a relatively young age and move to Montana in at least semi retirement. I do know she has volunteered with animal shelters, and seems to be doing so today due to the stray call I get (her phone number is 1 digit off from mine and I get the very rare occasional call for her from misdials - mostly people of a vet leaving messages about some pet), so she is doing what she wants to do, but I don’t talk with her so really don’t know how she likes it, but it appears she has done it.
Well, living entirely for the future by living a totally frugal life now is not for me. I might not have a future, or something in the future might happen that could change the whole narrative. Also, I like my job. Sitting around retired at my age would bore me to no end.
However, I say, “Each to his own.” If it’s something you want, go for it.
I’m not sure why companies would want the average worker to have a 15-year career instead of a 40-year career. If a lot of workers do this, then it just means the market for labor becomes tighter, since there are fewer person-years of labor available each year.
The above assumes FIRE-minded workers aren’t working stupid-long hours, or working multiple jobs. But even if they are, there’s just not enough time in the work day to compensate for shortening your career by 63%; nobody can work 107 hours a week for 15 years.
Meh. It’s one more option on the table for people trying to figure out how they want to live their lives. If you’re thinking of “career” as a sequence of job changes and/or promotions that move you to positions of greater responsibility and status, well, not everybody wants that. Some folks just want a job that pays the bills (retirement being one of said bills), and find their raison d’etre outside the workplace.
FIRE also doesn’t preclude getting married. In fact, to the extent that getting married means that you and your spouse live together, it presents an opportunity for saving money without having to take on roommate(s).
Wife and I are planning to retire a little early (late 50s instead of 65), but I don’t think I’d call us FIRE adherents. I’m also not particularly an advocate for it.
If you like your job enough that you prefer it to being retired, then I think you’re in a very fortunate minority. I think a lot of folks are doing work that they don’t particularly enjoy, and/or are working for people whose company they don’t particularly enjoy. I think one variation on the “Retire Early” part of the FIRE movement is the idea that once you’ve achieved financial independence, you can choose a job that you actually like instead of having to choose one that pays a lot. @kanicbird’s ex fits this description.
I don’t have too many complaints about my job, but I certainly wouldn’t classify it as an engrossing retirement hobby.
I was briefly fascinated by the “retire early” idea, but I’m too risk-averse; if I retired early and my investments unexpectedly tanked after 15 or 20 years of early retirement, I wouldn’t want to have to leap back into the labour market with a 15+ year gap in my resume.
Lean FIRE refers to the ability to retire early on a smaller accumulation of retirement income and limited living expenses which will require a frugal lifestyle during retirement. On the other end of this is Fat FIRE, which refers to the ability to retire early due to a large amount of accumulated wealth and passive income with no concerns about living expenses during retirement. A hybrid of these two is known as Barista FIRE, which refers to a semi-retired lifestyle of working part-time for some supplemental income, or retiring fully but with a partner who continues to work.
Obviously, for someone in the US, the need to acquire health insurance before Medicare is available is a complication that those in many other countries would not have. And I wonder how you would calculate how much is enough? What if you retire early, go ten or fifteen years living on investments and then find that you’re drawing them down too quickly? Perhaps there is a downturn in the stock market that changes the numbers. At that point your job skills may be ten or fifteen years out of date. Are you going to be able to get a good job?
I think the idea is that if you are going to work crazy hours and save as much as you can in your 20s and 30s so that you can retire by your 40s, that’s not a lifestyle that’s conducive to getting married and having children. At least not if you haven’t gotten together with your eventual partner pretty young - if a pair of 22 year olds decide to live the FIRE lifestyle they can probably get married and possibly have kids while doing so. It’s a lot harder if you are still single at 35 or 40 because you work crazy hours.
Seems like it’s a bit early to know if this sort of thing will work out, long-term, as people are expecting. It’s certainly possible if someone does it right and manages things appropriately - essentially their job becomes managing their investments - actively managing their “passive” income. I can see people being attracted to this as opposed to looking down the barrel of 20-30 years as a faceless, cubicle-dwelling drone in a soul-crushing corporate machine. But what are they going to do with all the free time? I would hope people would aspire to be more than just a simple tube that food gets shoved thru.
They are - but even if someone doesn’t want kids or to get married and just wants a relationship working crazy hours so they can retire in their 40s is going to make it difficult.
Sure, it would be great to have that sort of job security.
But I think the reality for a lot of companies is more like “how little can we pay this person and do we really need them at all?”
When I think “career”, I’m thinking in the sense of a person just out of college with no experience other than maybe a couple internships is not going to be earning a ton of money. They will have to work their way up to a level where they are actually earning enough money to save for their retirement, all while avoiding the pitfalls of lifestyle creep.
Like I wasn’t born earning a six figure salary. I had to do a major career change, get an MBA, work my way up over the years, change jobs a few times (sometimes not by choice), deal with the collapse of the dot com industry and my office blowing up on 9/11, Also these jobs were in New York and Boston, which aren’t cheap cities.
The point being is that while I adopted a practice of saving and managing my expenses from the beginning, it really took more than a few years to get to a level where I made enough money to save a significant amount for retirement.
That’s why FIRE seems a bit odd to me. It’s like you spend years building a career and then quit right when you would be presumably earning peak income and taking advantage of decades of experience.
Back in the 90’s I handed out copies of “Your Money or Your Life” to my direct reports at work. It encouraged folks to become financially independent, not necessarily as quickly as possible but as surely as possible, so they could spend their time doing what they chose to do instead of work that they “had to” do. (I also encouraged them to regularly look at employment opportunities elsewhere and always be sure they were at the best job available to them).
Still a good book, I see it has been updated a few times.
A younger person can much more easily get a part-time job to supplement income if need be.
But if somebody is content living quietly and simply after busting ass to make it feasible, so what? There’s no inherent virtue in working for somebody else. We’ve created a mythology of industriousness that primarily benefits employers, not employees.
But that’s also why I think the FIRE mentality feeds into that mythology. A person’s career is a marathon, not a sprint. Is it better to work jobs that afford you a balanced and sustainable life over your entire career or have to bust your ass in hopes to accumulate enough to eventually live your life, hopefully while still young enough to enjoy it?
I was partial to “The Millionaire Next Door”. It’s been awhile since I’ve read it, but I’ve always been partial to the message of it’s better to be a millionaire then go bankrupt trying to look like one.
There are many paths under the “FIRE” umbrella, as @Machine_Elf pointed out in the Wiki link.
I think the most important part about it is the FI part. Once you have achieved financial independence, whenever that is, you have choices. One of those choices could be to retire early. One could be to switch speeds at your job without chasing the next promotion. In my case it was “retiring” to become a stay-at-home parent while my wife continued to work.
The key is to consider what financial independence means for you, and actively plan to get there. So many folks just blindly plug away at their career, spending every dollar they earn (minus perhaps some token 401k deferral) without actually making a plan.
I get this, but there isn’t really much of a historical example of it happening. If you truly have a safe mount (say, 25x your yearly expenses) it’s very unlikely you will have a big enough market correction to force you to get a full-time job - certainly not one that paid you what you were earning during the accumulation stage. You also would move to a much more conservative allocation in your investments during retirement, so you would be (in theory) a bit more insulated from big market swings.
Generally people assume 3-4% withdrawal from assets is “safe”. Obviously if you have some passive income from real estate or some income from a “hobby job” that helps too.
As you point out, health insurance is the big one. It’s doable if you use the ACA plans and stay under the various income limits. But I can see why someone might not want to do that.
Generally it’s not about working crazy hours as much as it is not spending more than 1/3 of the money you earn. For young folks straight out of college that’s not actually that difficult. My wife and I bought a very small house, but it was plenty big to be a young couple in and have our first child in. Housing is such a huge part of most people’s fixed costs that minimizing that while earning two professional salaries can get you pretty far down the financial independence path.