Don’t Get Burned

Mike Zaccardi

WANT TO RUFFLE SOME feathers? All you have to do is utter “FIRE movement” on social media or in a crowded room of financial advisors. FIRE—short for financial independence/retire early—has grown ever more controversial as rising stock prices have fattened the portfolios of super-savers and brought their early retirement dreams closer to reality.

I fit the mold of the super-saver. I’ve saved 90% or more of my after-tax income over the past few years. Below, I’ll explain how. That sky-high savings rate is on top of the solid financial foundation I built early in my working life, beginning in high school when I bagged groceries at Publix Super Markets. Still, I’m not a vocal advocate for the FIRE movement.

For background, those who buy into the movement look to accumulate a portfolio equal to 25 times their annual spending or more. Based on a 4% withdrawal rate, that should be enough to cover your retirement living expenses.

To retire in their 40s or even their 30s, FIRE aficionados aim to save much more than they spend. They usually invest those savings in index funds, primarily U.S. total stock market funds. According to the stereotype, once these folks hit their target, they relax on a beach, put out a podcast, write a blog or do whatever else they please. In reality, many continue to work in some capacity to keep busy and healthy.

That’s the idea. Again, I don’t proclaim all this works as promised, nor do I subscribe to every FIRE movement nuance. But yes, at age 33, I am FI—financially independent—which is a nice thing. But I’m not about to spend my remaining days relaxing on a beach.

I need to stay active and social. No two ways about it. I also see being FI as more of a dimmer switch than some magical moment. There are so many risks out there—from a market crash to a health event to (God forbid) me finding that special someone. Certainly my “single dude” lifestyle would be far more expensive if I added a spouse, kids, a house and health issues.

So much can change over a retirement that, for the FIRE folks, might last six decades. Uncertainty is high. Right now, I’m financially independent according to all the metrics, having saved about 100 times my annual expenses. But I also know that could change quickly. I might go from 100 times to 50 times if my lifestyle changed. And then I might go from 50 times to 25 times if the stock market crashed.

Even with all that, maybe you’re a little jealous. “It must be nice,” you might say. How did I get here? Part luck, part intention. I was fortunate to hold a high-paying job in energy trading for six years, while keeping my annual expenses near $10,000. That allowed me to shovel massive amounts of money into the stock market every paycheck, much of it into tax-advantaged accounts. Matching 401(k) contributions from my employer were a handsome addition.

I also regularly maxed out my Roth IRA starting in 2005, when I was age 18 and working minimum wage jobs at a local golf course and at the grocery store. I took advantage of employer tuition reimbursement to help pay for college, and also when I got my MBA and Chartered Financial Analyst designation. My car has always been a beat-up, utilitarian but generally reliable set of wheels that gets good gas mileage. I have lived with roommates, renting a room to keep my housing expenses low. Health is another important factor. I’ve had no big health scares, though I did spend $3,000 on Lasik surgery a few years ago.

So now I’m FI and could RE—the retire early part. Big whoop. The work-from-home trend opened my eyes to the fact that I need to be around people. The past few months since I left fulltime work—and with the pandemic still raging—has left me feeling kind of, “Is this it?” Humans are tribal. We also need purpose. I could find that by serving at my church or once again bagging groceries at Publix. But I’m too greedy for that.

My focus now is finding purpose, while still making a decent chunk of change. It’s way too early for me to start drawing on my savings, considering a lot can—and likely will—change in my life in the years ahead. The FIRE movement doesn’t appreciate all of the risks, in my opinion.

Stuffing your IRAs and brokerage accounts with total market index funds, and then riding the stock market gravy train, works great in bull markets and when your life is on track. But a bear market can strike at any time, as can costly life events.

It’s one thing to retire early at age 50. At that juncture, you have 12 to 20 years until you start Social Security and 15 years until Medicare kicks in. Over that sort of timespan, there’s less variability in future outcomes. By contrast, retiring in your early 30s is a huge gamble. So much can happen. You’re also forgoing your best earnings years. The opportunity cost is significant. In addition, by exiting the workforce so early, you contribute far less to Social Security and your eventual monthly check will reflect that.

To retire early, you’ll obviously need more money if you’re a couple and even more if you have small mouths to feed. True, there are benefits to being married and pursuing FI. You can take advantage of the working spouse’s health insurance if just one of you retires early, plus the early retiree can later collect Social Security spousal benefits.

But even as a couple, you may feel compelled to skip one of life’s most meaningful experiences. Ask those who retired in their 30s or 40s if they have kids. Probably 90% will answer “no.” I’m not sure I want to be among that 90%.

What’s my point? FIRE devotees should carefully consider the costs and risks. On top of that, you may not enjoy some great ah-ha moment when you’re suddenly free from the nine-to-five rat race. Chasing FIRE? My advice: Be careful you don’t get burned.

Mike Zaccardi is an adjunct finance instructor at the University of North Florida, as well as an investment writer for financial advisors and investment firms. He’s a CFA® charterholder and Chartered Market Technician®, and has passed the coursework for the Certified Financial Planner program. Follow Mike on Twitter @MikeZaccardi, connect with him via LinkedIn, email him at and check out his earlier articles.

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