Let’s be honest, because seeking the truth is not only the right thing to do, it is the surest path to success and effectiveness in life. FIRE (Financial Independence Retire Early) is an improbable dream for most. But it is essential that we pursue it if we stand a chance at a successful financial life.
The critics are out in full force with their knives and buckets of cold water to squash early retirement goals. And in many ways they are right. Saving a lot of money and retiring at the age of 30 is very risky and suspect. And such a decision should be analyzed and scrutinized closely.
If one wants to call it taking a sabbatical or transitioning to part time self employment, that is one thing, but to call it “retirement” is probably going too far. One aspect of life is managing risk and it takes very careful planning and lots of luck to project out risk over 60 plus years of “retirement” and just plain old living. Most people have at least one or two bad expensive things happen to them over 60 years of surviving on planet Earth.
Probably the most famous critic being our beloved financial guru Suze Orman, who says you can’t even think about early retirement until you have at least $5 million in assets. That is a tall order for 95% of us, but again, she may be right.
BUT, here is another more important truth:
Seeking FIRE is essential for success in this world we live in. I argue that the pursuit and the stretch goal is more important than the destination and results. In short, FIRE is essential no matter what the critics say. So we must go for it!
Are 30 years olds really “retiring”?
Those who follow Money Vikings regularly know that we are not big advocates of the whole retire at 30 concept. Not that I am against it, I just think the math and risk only adds up for a very small amount of folks. I also think folks may miss out on important development and social opportunities provided by a traditional work environment.
In order to achieve this level of early FIRE (Financial Independence Retire Early), one must make very large salaries for several years, save over half, be extremely frugal, not have children in many cases, etc. Then the person needs to be open to the risk of potential 60 years of living off that initial nest egg, relying on the affordable care act to provide insurance, and hoping nothing financially catastrophic happens in that time. There is a good chance that several things could go wrong.
Before you all dog pile us and start being critical, understand I am in no way judging other people’s choices. Those who pull off un traditional financial paths are heroes in my book and I love reading about their lives.
But 60 years is a long time for life to happen. I do not know about you, but a lot can go wrong in 60 plus years. It does not mean these are catastrophic things like cancer, but multiple other medium sized, yet powerful things could happen that will force someone back to traditional employment. And not everything in life can be covered by insurance unless your willing to pay a fortune each month.
In addition, most 30 year old FIRE folks are really still working. It used to be called self-employment when someone ran a small business consulting, running a blog (which is a ton of work by the way), writing books about early retirement, selling things on eBay and Etsy, driving for Lyft, renting out properties. All great stuff, but is that “retire early”. It is retire early from what we think of as traditional employment, which can be awesome!
Yes, these folks do not put on a dress shirt each morning and commute to a cubicle. But they are still working. In my grandfather’s day this was called self-employment.
FIRE is critically important
I am coming across initially here as a FIRE hater. I am not, I am a lover of the whole movement! Over the last 20 years of working, I have witnessed with my eyes the destruction of two massive downturns in the economy, the dot.com bust and the Great Recession. These were devastating events for millions, if not ultimately billions of people around the planet. I personally saw my net worth cut in half over night during the Great Recession. And what is to say this could not happen again? I have little faith in our elected “leaders” to put in place the system and measures to help us little guys in the future. We become collateral damage in a heartbeat.
I am further witnessing the destruction of benefits for those traditionally employed, unless you sign your life away at some cutting edge tech company and forgo family life. For better and worse technology is changing everything.
Now You Sound Like a Pessimist
I am not a pessimist either, I am actually quite hopeful and positive about the future on aggregate. But I am a realist and we need to try and see the world as it is, not how we wish it to be.
My main point is that for many reasons the pursuit of FIRE is more important than ever. For our life, for our family, for our planet and for our democracy. Yes, we are saving the world by pursuing FIRE. Hang in there with me to prove my point.
1. Strong Through Pursuit of FIRE
It is like lifting weights. When I lift weights I know I will not become the strongest man in the World Magnus VonMagnusson! But, I will be a stronger version of me. The same is true with our finances and pursuing FIRE.
As you pursue FIRE you gradually become a strong Money Viking! You start to gain more confidence as you eliminate debt and increase assets. You start to build passive income machines. You start to leverage financial and investment knowledge into power.
So what if you do not hit your magical number in a year or two. The time will clip by, and before you know it a decade will pass and you will be in a much stronger position. Let’s say you get laid off or you just hate your job. You will feel more confident pursuing other options because you will have something to fall back on.
2. Define Your Own Early Retirement
Pursuing FIRE does not mean you have to hit a magical age and retire. To me, retiring in your 50’s in America is early retirement. Many people will never be able to retire after a lifetime of low wages, no investments, no savings and perhaps some catastrophic setbacks. If you are able to retire comfortably in your 50’s or make a job change to something you are more passionate about is a huge win.
3. Strengthen Democracy
I believe seeking FIRE is an act of patriotism. We are strongest collectively when we are also strong individually. It is great to not have to rely on outside systems to live and thrive. I love our country and the great messy beautiful experiment called the USA!
4. Become A Creative Society, Vice A Consumer Society
It is vital that many of shift our behavior from pure consumers to creators. See, we are raised in an environment of hyper consumerism and throw away culture. We are bombarded daily with brainwashing and advertising that is sending a hard to resist buy signal to our primitive brains. The fact is that the creative and ownership classes will continue to thrive in the future economy. So much work is being automated, and not just blue collar work. All kinds of white collar work is also being automated and I see no end in sight.
Therefore we must shift from being workers/consumers to creators/investors. Pursuing FIRE is a set of practices and principals that help this transformation in life.
Overall I am a huge proponent of folks pursuing FIRE for the sake of the process and the amazing mental discipline it creates. Like many things in life, the journey can be more satisfying than the destination. Make sure to take in the view along the FIRE path! And no matter what age you “retire”, if ever, you will most likely be better off through the pursuit.