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Leaves Me Cold

Richard Quinn

ALTHOUGH IT’S ONLY been a few months since I first heard the term, I’m already tired of all the chatter about the financial independence/retire early (FIRE) movement. This so-called movement is so irrelevant that I don’t know why anybody, including me, writes about it—and yet my curmudgeonly instincts compel me to do so.

Don’t characterize me as a movement hater. To each his own. But consider a recent story in MarketWatch about a couple—he’s age 44, she’s 33, plus they have a small child—who plan to retire next year. My reaction: Simply being frugal for the next 45 years isn’t enough. There’s a lot more you need to think about. For instance, if you’re truly retired, what are you going to do, sit on a beach for eight hours a day?

I’m all for frugality. But then I read about FIRE devotees giving up luxury items and it all seems a bit pompous to me. Let me get this straight: You give up stuff to live on a tiny percentage of what you make—but that tiny percentage turns out to be pretty close to what the average American earns in total.

Then there’s the family thing. Are you thinking what I’m thinking? Those FIRE folks aren’t couples with three kids to schlep from soccer to dance class. Often, they aren’t funding 529 plans, because there are no children or they’re planning to make the kids take out loans.

I love the simplicity of FIRE thinking: Save 40% to 70% of your income for several years. The goal: Accumulate enough funds so that 4% of your nest egg equals what you spend each year. Bingo, you’re set for life. That 4% rule is supposed to keep 65-year-olds from running out of money during a 25- or 30-year retirement. But is it enough to keep up with the vicissitudes of life from age 40 onward? In addition, aren’t these dropouts effectively giving up much of their Social Security safety net, even if they do collect some modest benefit based on their relatively short earnings history?

Hey FIRE folks, have you been listening? There’s talk about a wealth tax, free tuition, baby bonds, free childcare and more. We have lots of government debt, that debt is growing rapidly and we still need to fix Social Security. Can you say, “higher taxes”? I’m thinking that might affect your plan to live off your nest egg for 40 or 50 years.

If you’re living on $40,000 in 2019, do you still want to live on the same inflation-adjusted amount when you’re 70? Is the goal to be mega-frugal forever? I don’t get it.

The FI part of FIRE is just fine. Who can argue against financial independence? Go for it. But dropping out—the RE, or retire early, part—to pursue a dream of leisure, travel and a stress-free life strikes me as childish. But in many cases, it seems retiring doesn’t really mean stopping work. It just means doing something that doesn’t sound like work. Writing a blog, perhaps?

Over half a million Social Security recipients live outside the U.S. Some of the FIRE folks look abroad for the good life, mostly seeking a lower cost of living. If you want to live outside the U.S. because that’s your dream, great. If you must live in a place because your budget dictates it, maybe not so much.

Richard Quinn blogs at QuinnsCommentary.com. Before retiring in 2010, Dick was a compensation and benefits executive. His previous articles include Sharing the WealthMatter of Degree and Lesson Unlearned. Follow Dick on Twitter @QuinnsComments.

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lakggk .
lakggk .
2 years ago

Fantastic article. Yes the fundamental ideas of FI movement good, but to drop out of work force crazy for so many reasons. The Two important ones that hit me are pride in doing something with your work life you can feel pride in. And if you have kids you are depriving them of so many things and experiences that allow them to make their own decisions when they are older on how they wan t to live their life. They may love sports or cars or things that do involve some money that you are not exposing them too. Living frugally when you are young is great idea but you don’t drop out of society. And you still want to enjoy all the things life has to offer just not before you can afford to.

wtfwjtd
wtfwjtd
2 years ago

Nice article Richard. All this “FIRE” talk leaves me scratching my head sometimes, wondering just what the heck it all means. I’m not crazy about the beach, I don’t even like to travel all that much, so I guess maybe that’s partly why the thought of sitting around eating bon bons, twiddling my thumbs all day, just doesn’t really appeal to me at all. But then again, maybe I could blog about it, and somehow make it sound appealing. Hmm, I could be on to something here…

I read somewhere recently, where the retirement “plan” of something like 25 percent of younger workers consisted of either winning the lottery, or getting a large inheritance. I wonder if the “FIRE” movement is part of this sort of wishful thinking.?

And when did “work” become such a dirty word anyway? Like you, I just don’t get it.

james mcglynn
james mcglynn
2 years ago

Yes the 35 years in Social Security to maximize it and the lack of medical care before 65 -medicare- are not minor considerations. Seems to me they really just need a career change.

medhat
medhat
2 years ago

Richard, I think it’s just the pendulum swinging in the other direction from a generation of “work til you drop” baby-boomers whose iconic aspirational movies were “Wall Street”. I think people are entitled to seek out their own idea of “fulfillment”, although I agree with you (we’re on similar sides of the age divide!) that the idea of an “endless vacation” devoid of responsibility or purpose sounds not like the future I want to live. I suspect there’s an acceptable middle ground there somewhere, I hope for them (heck, and for me too) that it’s a goal achievable in a near future where a vast middle class seems to be getting squeezed.

Thomas
Thomas
2 years ago

There are many different flavors of FIRE, with different devotees having distinct motivations for pursuing financial independence. Sure, there are those who aspire to the kind of leisure filled life you caricature, but the majority of those pursuing FIRE don’t necessarily want to stop working altogether. Rather, the aim for many is to achieve better work-life balance and pursue careers that may not be lucrative but are personally fulfilling.

The FIRE movement has matured a lot in recent years, and all of your criticisms have been anticipated and responded to. I would recommend checking out blogs such as “Our Next Life” and “Can I Retire Yet?” for a more nuanced perspective of FIRE.

TomK
TomK
2 years ago

It isn’t about being in a permanent vacation. It is about doing what you want, when you want to, instead of working 40+ hours a week for someone else.

I fire’d at 50 – four years ago. Some days, I’m more busy than I ever was at work. I could have had a much larger house, with a much nicer view, and driven a much fancier car – but I didn’t want or need those things. Now I have a condo in a city and a cabin in the mountains (the sum of the sq footage of the two is less than the house I had when my kids lived with me) and split my time between the two. No debt, no mortgage, sufficient funds to allow for a 2-3% increase in draw down for at least 50 years. And the amount I live on is pretty decent.

I think if people can do it – and want to do it – they should absolutely go for it. Not everyone can just pick up and switch jobs. There might not be too many alternatives for them. And if the thought of working for someone that doesn’t really care about you – has no real loyalty to you – for 45-50 years makes you ill, by all means do something to get out of it.

If you can get to a point where you don’t need to work to live, and can then do what you want – absolutely go for it. It doesn’t mean you have to stop working, you might do your side business (which doesn’t make enough to replace your job, so you kept your job till you hit FI). You might volunteer. You might take up a new hobby. When every day is Saturday and every night is Friday – your options are wide open.

Jiab Wasserman
Jiab Wasserman
2 years ago
Reply to  TomK

You said it well. To borrow a quote from Jonathan Clements, “When you discover you have more money than time, you should stop pursuing money and focus on getting the most out of your time.”
For me, retirement is the time to focus on what important and to do things I always want to do. Early retirement gave me the ability to spend 2 months with my father in Thailand early this year who is in the last stage of Parkinson’s disease. As you said, your options are wide open.

Jiab Wasserman
Jiab Wasserman
2 years ago

About your comment ” But dropping out—the RE, or retire early, part—to pursue a dream of leisure, travel and a stress-free life strikes me as childish” Where do you get this information that early retirees want to pursue a dream of leisure, travel and no stress life? Is there a survey that you can share? I am just curious about how you arrive at this conclusion.

Jim Wasserman
Jim Wasserman
2 years ago

Richard. Thoughtful article. Of course, as someone who just achieved FIR (the early part is debatable!) I have some thoughts. The two main criticisms of FIRE seem to be 1. not everyone can do it, and 2. It’s not for me. In answer to both, my response is that’s everyone can choose their own lifestyle. Traveling in a Winnebago around the US is not for me, nor is living in a retirement community, but who am I to say it’s wrong, silly, or childish? Isn’t that why we earn money, to have freedom of choice? As for not everyone can do it, that would eliminate a LOT of choices people make. Not everyone can afford Sam’s club to buy in bulk because they only earn enough to get from paycheck to paycheck, (not buy ahead and get a discount). That doesn’t mean it’s wrong.That some can shows it is do-able.

Of course, when you mentioned retiring overseas, that struck my newly Spanish heart. Why does motivation matter? I know a lot of northerners who retired to Arizona and Texas for the weather and to save money. If they move 50 miles further south to Mexico, it’s wrong?

100 years ago, people often worked till they dropped dead or were incapacitated. Francis Townsend was a physician who helped convince FDR to initiate Social Security in part to better quality of life for the elderly. Why not allow (for those who wish it) to extend that quality at a younger age? FIRE (Financial Independence, Retire Early) FIST (Financial Independence, Spend Thoroughly), FILA (Financial Independence, Lay Around) or even FIZZ (Financial Independence, follow ZZ Top around the country), if it ain’t hurtin’ nobody, different strokes!

Be well.

Jiab Wasserman
Jiab Wasserman
2 years ago
Reply to  Jim Wasserman

I like different varieties of FIRE you listed out here. How about FIRF (Financial Independence, follow Roger Federer)? That’s my kind of FI.

David Baese
David Baese
2 years ago

I like this whole conversation. I started getting Social Security credits when I was 16, and got them every year until I turned 70. I started liking work a lot more when we had enough assets that I wasn’t worried about loosing my job. That was the financial independence part. I did retire early, too, but I never told my employer. – Dave

Chris
Chris
2 years ago

I agree wholeheartedly! But the criticism doesn’t go far enough. Much of the FIRE strategy is shifting their costs onto the unwitting backs of others. Free or highly subsidized healthcare, income adjusted property taxes, ‘need based’ aid for any child’s college tuition, even food stamps. It’s really not financial independence, but rather societal parasitism.

Fire Downhill
Fire Downhill
2 years ago

This article shows ignorance about the majority of the FI movement. The basic principles are to maximize the margin between income and expenses and save the difference in low cost index funds in a tax efficient way. Generating income through a side hustle or real estate investment is also a key tool. This is sound advice for anyone at any income level and position in life. I’ve read many blogs and listened to numerous podcasts from FI leaders and am only aware of 1 guy who is sitting on a beach doing nothing. The majority have created side businesses or built real estate income through hard work. Also, giving back through volunteering and charitable donations is very prevalent – not possible if you’re living paycheck to paycheck.

I’m calling BS on hating the FIRE movement – these articles seem to come from jealousy or disbelief. The principles work – thousands have improved their financial positions based on taking action every day. Cherry-picking one extreme example of a selfish FIRE practitioner is completely unrepresentative of the movement as a whole. Talk to many of us who have benefited from applying these principles in our lives and you’ll see that this is a fantastic movement who’s time has come.

#thefireisspreading

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