The Financial Independence “movement” is a relatively new concept. It’s exploded in popularity in recent years, particularly since the Great Recession in 2008-2009. With a bull run as long and intense as we’ve had, it’s not surprising.
The internet, too, has helped make stories like this popular. It seems that every week you can tune into a major news outlet and see a story about someone who retired early. They offer up tips and just general life advice to others looking to achieve the same thing.
What’s interesting to me is that without fail, these articles will always elicit negative reactions from people. Trolls abound in the online world, and the FIRE community is no exception.
Why FIRE Is Stupid – According To Trolls
The comments always are around a few themes. If it’s not impossible to save enough money, it’s stupid to do so. Leaving work will universally leave people bored and unfulfilled in life. Those who do are selfish and dumb.
Obviously these are undeniable truths.
Ask anyone who has achieved financial independence and left their day jobs to pursue their passions and they will tell you they are miserable. Why, oh why, would anyone wish to follow this path?
These are the main reasons I see come up over and over as to why pursuing FIRE is a stupid idea:
It’s impossible to save enough.
I will say this – it’s a lot easier to save money if your income is high relative to your expenses. For many people, though, this isn’t the case. With the median household income just shy of $60k and a typical retirement ‘budget’ of $40k, it’s a pretty big stretch to save up the money to support that life indefinitely.
But it’s not impossible. The folks who pursue FIRE – or secure their retirement in any way – are hard workers. We put in a lot of time and hard work, make sure we live below our means, and save diligently.
It’s not impossible, but it’s certainly not normal, either.
Your expenses will always go way up
This one’s interesting to me. There’s this assumption that expenses go up in retirement. After all, there’s way more stuff you have time to do!
But I think what people forget is that people who pursue FIRE also probably make a budget. I’m sure most of us know roughly what our regular expenses are, and have some contingencies for unknowns. Health care is a big one, and honestly it’s so chaotic and unpredictable in the long-term that the best we can do is work with the information we have now.
I also think some expenses will go down. My long commute eats a bunch of gas – an expense I’d no longer have. For some, leaving work means not having to buy clothes specifically for work each year. Maybe it means eating at restaurants less and cooking at home more.
There are tons of ways to actually make your expenses go down if you absolutely have to, particularly when you’ve got a lot of time to do it.
You will have kids and won’t be able to afford them
Where to even begin with this one…
There’s an assumption that everyone will have kids. That assumption is wrong.
And for those folks who do decide to have kids…well, pretty sure if they’re smart enough to plan for FIRE, they’re smart enough to plan for the added expense of kids.
Your investments will go down in value
Yes. And they’ll go up in value. That’s the joy of the markets.
Life without work at a normal job is meaningless
For some, sure. If you value your contributions at work to such a full extent that leaving them behind would strip al meaning from your life, then by all means, continue to work. FIRE (actually I prefer FIOR – Financial Independence; Optional Retirement) doesn’t mean quitting your job just because you’ve hit some magic number.
It means having the ability to do what you want, how you want, with money not being a force behind your decisions. If that means you still work because you love to, great.
But a lot of the people on the FIRE track derive meaning from their lives outside of their 9-5. Whether it’s volunteering, coaching, teaching, tutoring, writing…everyone has something to offer, and most can probably find ways to bring that to people without sitting in a cube all day.
People who FIRE are selfish idiots
See above. Many volunteer and give back to their communities, both with time and money. Far from selfish, and far from dumb.
It’s possible to save enough to retire early. Perhaps it’s not necessarily easy, but it’s definitely possible.
“Succeeding” at Normality
Let’s contrast a failed FIRE plan with a life of normality.
A typical person saves less than 5% of their income, and works for let’s say 45 years – retiring around 65-67. With a 5% savings rate and average inflation and returns, you literally cannot afford to retire at that age.
But people do, and then they rely on social security. The scary thing is how social security has been poised for the past few decades. As boomers get older and exit the workforce, the strain on social security will be felt. By 2035 – less than 20 years – it’ll only pay out about 75% of its current amounts.
In order to keep benefit levels the same by the time most millennials and Gen Z kids are hitting typical retirement age, there will need to be reforms. That means either higher taxes, lower payouts, older age requirements, or some combination of all of them.
Call me crazy, but I don’t want to rely on a system that’s failing. I’d prefer to take matters into my own hands.
And if I fail in trying to get there, so what. I’ll at least be better off than the folks with a piddly 5% savings rate.
Why It’s Better To Fail At FIRE
Nobody really likes to fail. Sure, it’s where you learn, but let’s be honest – if you could succeed at 100% of the things you try, wouldn’t you prefer that? I know I would.
Unfortunately that’s not reality. It also means some FIRE plans will fail. Some people will fall short of their savings goals.
The market will decline and people’s nest eggs will go down in value, perhaps at the worst time. Those who are ill-prepared may even need to go back to work. Backing out of early retirement would be humbling.
But it’s still better to fail at FIRE.
Let’s suppose your goal is $1,000,000 by age 40 so you can quit your job – using the 4% rule, if you spend $40k or less you’d be fine. If you don’t make it to your goal, but you work diligently toward it and hit $800k, is it still a failure? Technically yes, but by any other comparison, no.
What if you pulled the trigger on early retirement and then need to go back to work in the future? Maybe a bad market downturn negatively impacted your portfolio, or you were caught off guard with something.
Going back to work isn’t the worst thing in the world. It’s exactly what you were doing before, anyway. And most people who FIRE probably are smart and creative enough to do something to get them by in the short-term.
Most probably don’t need to go back to a regular soul-sucking job. They could pursue something part-time to make ends meet until the market rebounds.
Those who pursue FIRE are pursuing something challenging. They’re recognizing the downfalls in typical retirement planning. They don’t want to live 45 years behind the walls of a cube.
We aren’t happy with the “American Dream” that was sold to us, so we’re doing something about it – and for some reason, getting flak for it.
We don’t have pensions anymore (generally speaking). Social security may be around, but not how it is today.
Why is taking things into your own hands and pushing yourself to succeed in something a little different such a bad thing? It makes no sense.
Thing is, even if you try to FIRE and fail, you’ll be in a much better spot.
I’d rather fail at FIRE than succeed at normality.
Why do you pursue FIRE (or at least financial independence)?