FIRE Movement

[tbm5690]

As a millennial I hear from time to time interest from my peers in the "retire early" mentality. "Early" could mean age 35 or age 55, so I guess I'm thinking more along the lines of those wanting to hang the hat before age 40. I think it's great that they have a goal and save aggressively, especially since most of my generation goes the opposite way and is straddled with debt for years on end. How much is saved is dependent on the person and their income, expenses, etc. but I have always had 3 general objections to this "movement":

1. Cost of health care at the end of life: are these people really planning adequately for a longer lifespan and the cost of health care when they are 85, 90, and beyond?

2. Leaving a legacy for your family: this one is personal, but to me retiring early and having my money last me through the end of my life is not success but failure...I want to help my children, grand children, and ideally great grand children with buying homes, going to school, and be able to leave an inheritance when I die. IMO, it's selfish just to think about you and your life sitting on a beach rotting away for your last 30 years.

3. The value of work: another personal one, but I believe that honest work is good, not bad. I don't live to work, and you can definitely be on the wrong end of this spectrum, but I feel that so often simply having to work is seen as a negative thing, when it should be viewed from a perspective of thanksgiving for the ability to provide and earn a living. Cutting this short after only 10 years at it would be a moral quandary for me.

What are your thoughts? Am I grossly underestimating the amount of cash these people have saved up when they exit the workforce 15 years after college?

 

[skyactiv]

Where do you come up with these thoughts?

 

[henni]

Early Retirement

Early Retirement

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[Imp4]

1. Who knows? Probably some yes and and some no.

2. Why would you project your expectations onto others? Who cares what they do or think as long as they are not hurting others?

3. Again, why do you care about the choices and decisions others make?

If it's not right for you then it's not right for you.

I think you're fundamentally missing the point of the FIRE movement. It is not meant for a person to sit on a beach and rot for 30 years unless that is exactly what a person wants to do.

The intent is to position oneself so that financial obligations don't constrain a person to being a wage slave that is up to your eyebrows in debt. It's about the power to make choices independent of financial considerations because finances have been taken care of.

Want to work more? Then work more.
Want to play video games all day? Do it.
Want to travel the world? OK.

Financial independence is the power to do what you choose.

 

[wander2039]

1. Who knows? Probably some yes and and some no.

2. Why would you project your expectations onto others? Who cares what they do or think as long as they are not hurting others?

3. Again, why do you care about the choices and decisions others make?

If it's not right for you then it's not right for you.

I think you're fundamentally missing the point of the FIRE movement. It is not meant for a person to sit on a beach and rot for 30 years unless that is exactly what a person wants to do.

The intent is to position oneself so that financial obligations don't constrain a person to being a wage slave that is up to your eyebrows in debt. It's about the power to make choices independent of financial considerations because finances have been taken care of.

Want to work more? Then work more.
Want to play video games all day? Do it.
Want to travel the world? OK.

Financial independence is the power to do what you choose.

Well said and spot on!

Once we hit FIRE we're planning on hitting the road and working on occasion at parks etc.

 

[1978elcamino]

1. Cost of Health Care: Get proper insurance
2. Leaving a legacy: Careful estate planning
3: The value of work: Volunteer

The above are solutions to your concerns in which you question.

 

[JHZR2]

I mean, I guess I can see it working in theory... if people live a very lean lifestyle and don’t start with a ton of student debt. Imagine college sweethearts in good fields, high pay area with reasonable cost housing.

Household income year 1 could be say $150k, DINKs.
if they can keep a low enough lifestyle and minimize taxes, what could they put away? $75k? At 21-22 years old?

Now continue for 10 years, with hard work and income appreciation. Say they put $850k of their own money, and are now putting $100k+ away per year. Appreciation of the markets has provided growth of their $850k to $1.5M, and growing per year.

I dunno. Maybe?? In the scenario I made up, it could probably be assumed that they have $2M+ by 35. But they would still be living in a cheap apartment, eating ramen, and minimal moving on in life. Travel? Kids? Maybe not.

But if the median household income in the US is like $54k/yr, people can get by.

To me the wild card is the market. They would have a good account, but they would be in a constant risk scenario of taking major valuation hits snd needing to withdraw money for living, which could really affect the long term.

I remember being very young, had to be late 80s/early 90s, and my parents were listening to a radio show in the car… and the number back then to “retire early” was $5M (Iirc). Maybe it was $2M. Regardless, everything is much more expensive now, dollars don’t go as far. So while I see the theory, and think it’s likely very doable if things line up right to retire by 45-55, much earlier I think would be drought with risk.

1. Cost of Health Care: Get proper insurance
2. Leaving a legacy: Careful estate planning
3: The value of work: Volunteer

The above are solutions to your concerns in which you question.

Insurance premiums go up every year. Sometimes by large amounts. A young retiree would have to foot the bill entirely. Getting proper insurance for a very early retiree without gobs of money is a major risk.

Careful estate planning is great, but someone at 35 has no idea what will happen 35 years from now, when they still should have a long time to live. And they’ve been drawing principal or at least dividends the whole time.

Volunteering is great. But it doesn’t replace the need for income for someone with 65 more years to live, even if they have a decent nest egg.

 

[wpod]

I like you thoughts they are very introspective and your values are very high. Did your parents, relatives or Friends instill those great values?
1] Health care is costly Hopefully you [we] can afford insurance or are an illegal alien or on welfare.
2] Leaving a legacy is so un selfish. It is easier to buy the blo and hookers or the car or boat you can't really afford to bring instant pleasure.
3] The Value of work.. Most people work for money which is important but there is a value on work that took me a very long time to realize its value and is not appreciated,. For example there are a bunch of huge dairies around where I live and I speak to the owners and workers . one was at retirement age and was wondering whether he should retire early but he liked what he was doing. I responded you have an most important job, ,you grow food for people. My opinion after 68 years of life is everyone's work is really important.

 

[Passport1]

Heterodoxy from a millennial. Before getting too 'FIREd' up about this scheme. Better consult an oracle for a view of the future. The economic/social climate here might not permit real retirements.

 

[mark pruett]

What are your thoughts? Am I grossly underestimating the amount of cash these people have saved up when they exit the workforce 15 years after college?

Ultimately it's none of my business, but I'm somewhat skeptical of how these folks can save up that amount of money in such a short time. I'm not even entirely sure they can make that amount of money in that time frame, even if they didn't spend any. That would take a colossal amount of saving, and wouldn't exactly give them the wealthy retiree lifestyle.

Which is the FIRE movement in a nutshell, but most people I know would prefer to work another decade or so and live more comfortably on both ends of retirement.

 

[glock19]

I think a lot of people miss the point of the FIRE movement. It's more about financial independence than retiring early. A lot of people in the FIRE movement love working and won't ever retire. However, they want to work because they want to, not because they have to.

 

[javacontour]

Exactly, while I'm in my late 50's so I'm not so sure about EARLY retirement. But I'll probably be set at 62-63 give or take.

At that point, I'd only be working for insurance coverage.

oilBabe is 3 years away from her retirement. The educators pension she will get is available when she hits rule of 80 (age + years of service = 80)

Her father died in his 60s, so she doesn't want to be working until noon on the day of her funeral. She already has some health issues, so it weighs heavy on her.

She'll probably still work, but instead of in a school with a few hundred kids, it will be at a boutique or somewhere, where the only rule is she cannot spend more there than she makes

My plan may include summers in Italy. Get a home for three months and host bicycle tours. I just need to make enough to cover my costs living there. My retirement savings would be my grocery money.


Might start out organizing some tours for a few weeks to see how it goes and then I might make a summer job of it. Get paid to ride my bicycle in Tuscany, what a life!

 

[zzyzzx]

Unless you can retire in Caligulan splendor, what's the point?

 

[PandaBear]

I was active on TeamBlind and found that most of the post about FIRE is really just wanted to save up a nested egg, so they can choose to have a job they enjoy instead of a job they have to do for the cost of living reason. Does that mean they will do nothing after they achieve FIRE? Not really, most just want to have the so called "F**k You Money" so that they don't have to put up toxic workplace.

The right way to FIRE is to make enough to retire in low cost area, low cost doesn't means it is always in the US, it can be somewhere in Mexico or Thailand or Bulgaria too.

 

[dareo]

Being able to FIRE is great, but why stop working so soon if your able to add so much to your investments each year? FIRE plus another 5-10 years.

I could probably call it quits and live a very low income retirement for the next 40+ years but i dont mind my day job. It pays the bills so i dont have to tap investments yet.

 

[ArrestMeRedZ]

FIRE is just another way of living an economical lifestyle, saving the max, making knowledgeable investments and putting yourself in a position of being a master of your own destiny. It emphasizes self reliance (something the BITOG crowd will appreciate, at least in regards to auto maintenance) to a point - taking handouts from Uncle Sam is usually encouraged.
You can be an adherent of FIRE principles and retire on a lean family income of $30k a year. You can also fat FIRE on $150k a year income if you choose. There is a lot of forum discussion on carefully managing income (often using IRAs/401ks/Roth accounts) to qualify for Government subsidized health care. Point of fact, you can be a millionaire and get a lot of Government assistance as long as your taxable income is low.
I appreciate a lot of principles of the FIRE movement. I do diverge when it provides no flexibility for "black swan" events that could destroy a families finances, or when it relies on other taxpayers having to cover a portion of your medical insurance or other costs.

 

[Wolf359]

To answer some basic questions, you basically save enough so that your income in retirement is at a 4% annual draw of net worth and in theory that should last the rest of the your life if you invest conservatively. If you just leave it in an S&P 500 index fund, the last 10 years it has averaged 16.33% and since 1988, it has averaged 11%

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Medicare kicks in at 65 and there's talks of lower that age number. Social security you can get at 62-70, the longer you wait the more you get. You do need to work enough years to get a decent amount though so if you retire too early, you won't get that much. They use the highest 35 years of earnings you had. If you have assets, you can do estate planning to put it in trusts so that if you end up in a nursing home, your wealth isn't spent on the nursing home.

Ultimately it's none of my business, but I'm somewhat skeptical of how these folks can save up that amount of money in such a short time. I'm not even entirely sure they can make that amount of money in that time frame, even if they didn't spend any. That would take a colossal amount of saving, and wouldn't exactly give them the wealthy retiree lifestyle.

Which is the FIRE movement in a nutshell, but most people I know would prefer to work another decade or so and live more comfortably on both ends of retirement.

You're missing the compounded growth effect from saving money earlier. As mentioned in another thread, 16k saved in 1996 would be worth 266k if invested in the S&P 500. Just in the last 3 years we've had about a 90% return. Those are outstanding though and not normal. We also had the lost decade where the market was sideways for about 10 years. That's why they tout the 4% in case that happens and may likely happen.

S&P 500 Periodic Reinvestment Calculator, With Dividends– DQYDJ

What if you invested in the S&P 500 periodically over the years... how would your ETF or mutual fund have performed? We guess at fees and taxes too.

dqydj.com

 

[Wolf359]

I was active on TeamBlind and found that most of the post about FIRE is really just wanted to save up a nested egg, so they can choose to have a job they enjoy instead of a job they have to do for the cost of living reason. Does that mean they will do nothing after they achieve FIRE? Not really, most just want to have the so called "F**k You Money" so that they don't have to put up toxic workplace.

The right way to FIRE is to make enough to retire in low cost area, low cost doesn't means it is always in the US, it can be somewhere in Mexico or Thailand or Bulgaria too.

You don't need money to do that. Early in my career I enjoyed quitting once, I didn't see the job going anywhere for a while and jumped ship for another paying 25% more. Another time I had a crazy boss who wanted to cancel my vacation so he could do a project that could have waited another week which I had scheduled weeks in advance. He gave me the ultimatum and I went to the head of the department to resign and it was all forgiven. Of course I was one of the first to get laid off when they eliminated half the department a few years later. I was totally fine at the time with quitting if I had to. But I knew I could get another job easily if I had to resign.

 

[JWC86]

I think a lot of people miss the point of the FIRE movement. It's more about financial independence than retiring early. A lot of people in the FIRE movement love working and won't ever retire. However, they want to work because they want to, not because they have to.

^This right here. For most in the FIRE movement its about the FI more than the RE.

Having financial independence means people are free to pursue the work they want with out the pressure.

 

[PandaBear]

You don't need money to do that. Early in my career I enjoyed quitting once, I didn't see the job going anywhere for a while and jumped ship for another paying 25% more. Another time I had a crazy boss who wanted to cancel my vacation so he could do a project that could have waited another week which I had scheduled weeks in advance. He gave me the ultimatum and I went to the head of the department to resign and it was all forgiven. Of course I was one of the first to get laid off when they eliminated half the department a few years later. I was totally fine at the time with quitting if I had to. But I knew I could get another job easily if I had to resign.

It really depends on your expectation. If you have high housing cost and you want to stay where you are, etc, you may want a huge XXXX you money before you are mentally ready for that.