FIRE "Financial Independence, Retire Early"

[dado potato]

The "Sunday Styles" section of The New York Times edition of 9/2/18 includes a story, Retiring at 43? You're on FIRE by Steven Kurutz.


It is about the "growing movement of young professionals who are intently focused on quitting their jobs forever". … Millennials see FIRE "as a way out of soul-sucking, time-stealing work and an economy fueled by consumerism."


The article gives a hat-tip Vicki Robin and Joe Dominguez, authors of Your Money or Your Life. Robin contrasts the voluntary simplicity movement originating in the 1990s with the current FIRE moment.
Our aim was not just to have a whole bunch of people quit their jobs. Our aim was to lower consumption to save the planet. We attracted longtime simple-living people, religious people, environmentalists.
By contrast, FIRE adherents are "very numbers oriented, fascinated by the minutiae of taxes and accounting." They are also benefiting from the lengthy bull market in stocks, and in some cases, the privilege of class, race, gender, and background. While FIRE adherents "don't have the aspirational part" of earlier generations, they feel determined to leave the paid workforce out of their needs for "...agency. The worker in this economy has very little sense of control over their existence. People are expendable. You are a young person, and you look ahead, and you say: 'What's there for me?'"


The article observes that FIRE retirees often blog about their experiences. Examples:

Early Retirement Dude
Our Next Life
The Frugalwoods

[rosarugosa]

I'm surprised Mr. Money Mustache wasn't mentioned.

[LDAHL]

I came away from the article with the impression that we seem to be transitioning to a blog-based economy.

I also wondered whether a portfolio in the low seven figures would be sufficient to weather the vicissitudes of the markets and the hard knocks of life and still reliably support a family over the required sixty years or so. I would be interested in hearing if any of these guys have a Plan B.

[catherine]

The first time I heard the term "FIRE" was through Jacob Lund Fisker's Early Retirement Extreme. Actually, lhamo had recommended that book years ago and I read it then, I've sporadically followed his blog and I reread it when I need a boost of the dense writing of the engineer/philosopher/financial minimalist.

I also wondered whether a portfolio in the low seven figures would be sufficient to weather the vicissitudes of the markets and the hard knocks of life and still reliably support a family over the required sixty years or so. I would be interested in hearing if any of these guys have a Plan B.

I think the idea is if you strip your living expenses to the bare minimum and save a certain amount of money you can live on it officially "retired." But that doesn't always mean you never generate an income of some kind. This way of living in effect unlocks the golden handcuffs of conventional labor. If you can live very inexpensively you have the freedom to pick up freelance jobs or occasional gigs, or whatever it is your heart desires. Very much along the YMOYL model.

I do think having a family complicates dreams of FIRE big time, but I think it's achievable. Having "only" a low seven figures portfolio doesn't seem very risky to me, but then again, I have a very high tolerance for living on the edge. In fact, I had read your comment as "low SIX figures" and I didn't bat an eye.

Mr. Money Mustache is very inspirational in this regard. He still lives on under $30k with a wife and a child, I think. He always publishes his budget/expenses for the year.

[Williamsmith]

I have to laugh. Some reports I read say America has 110 million recipients of welfare or government assistance programs. And it is possible to receive more in assistance including food stamps, health care and energy subsidies than one can make in common entry level positions with very successful corporations thus, providing strong incentive for people not to work. So I’m laughing at these FIRE adherents who work their ass off to generate a marginal nest egg at an early age so they can “retire” while millions of other people have beaten them to that lifestyle.

You can find lots of these early “retirees” in flyover country rural America where the cost of living is fractional compared to urban centers. Most are boyfriend /girlfriend living together to share the costs of housing, yet report individual income and both qualify for subsidies and assistance. Most have a health concern that is covered by government programs as long as their income doesn’t rise above a certain level so they never marry and if they work at all, turn down raises so their subsidy doesn’t get cut off. Those healthcare coverages can be worth tens of thousands of dollars a year.

They take vacations, enjoy adult beverages, read, feed the birds, hunt, fish and recreate in the local parks and if they want....sit and watch the fan turn around.

I dont see much difference.

[dado potato]

Mr. Money Moustache was mentioned in the article.

[LDAHL]

I think that a million or two invested is a pretty good bet for a thirty or forty year period. At least I hope it will be for me. But when you look at the better part of a century, I would be a lot less confident and want a fallback plan. Fisker wound up going back to work. That might not always be possible 20-30 years into retirement. And I suppose you could always go with the government dependency career option. Reusing dryer sheets will only get you so far on the expense management side.

Don’t get me wrong. A million bucks provides a lot of options. But I think it would be very wise for a thirty year old anxious to flee the horrors of work to plan for contingencies and maybe preserve a few extra income streams if possible.

[catherine]

Reusing dryer sheets will only get you so far on the expense management side.

I don't use dryer sheets: unnecessary expense and bad for the environment

I agree with you in general. It probably looks like a dream for a 30-something to think about "retiring" but, yes, there has to be a Plan B. What appeals to me is the idea of greater freedom to choose the paying job you want without being constrained by a high minimum income required.

But overall, I think the majority of people overestimate what you need to live on. ("I NEED dryer sheets! I NEED 3 bedrooms with a bathroom in each one!"). These perceived needs inflate those retirement figures.

Here's what MMM says on the subject:

I find that when people earn their freedom from money constraints, they usually don’t stop working. Instead they start doing their best work. Looking at many of society’s highest achievers right now, the world leaders and founders of the most productive companies, I see mostly people who have already made it. And yet are still working because it means something to them.

Early retirement, according to this new definition, does not mean quitting work, even while it may well mean quitting your job. It means opting out of the bullshit portion of your work. The commuting, the politics, the production of inferior products just because your boss has found a profitable niche to exploit. When used correctly, a sizeable ‘stash can help you become a more ethical person.

Early-retired Doctors might set up smaller practices which operate without any pressure for profit optimization, and without patience for insurance company shenanigans. They might treat their medical staff better than the larger operations do.

Early-retired Attorneys might refuse all cases that are based on questionable ethics, and do only work that actually helps somebody.

Google engineers who retire early might still work or contract part-time, or feel compelled to create completely new inventions with their newly freed minds. If some of these inventions grow big and end up being acquired right back into Google, it’s just another dividend of early retirement and the cycle will begin anew.

How would you run your own life, with a continuing desire to create but no immediate need to make the next mortgage payment?

[Tenngal]

I have to laugh. Some reports I read say America has 110 million recipients of welfare or government assistance programs. And it is possible to receive more in assistance including food stamps, health care and energy subsidies than one can make in common entry level positions with very successful corporations thus, providing strong incentive for people not to work. So I’m laughing at these FIRE adherents who work their ass off to generate a marginal nest egg at an early age so they can “retire” while millions of other people have beaten them to that lifestyle.

You can find lots of these early “retirees” in flyover country rural America where the cost of living is fractional compared to urban centers. Most are boyfriend /girlfriend living together to share the costs of housing, yet report individual income and both qualify for subsidies and assistance. Most have a health concern that is covered by government programs as long as their income doesn’t rise above a certain level so they never marry and if they work at all, turn down raises so their subsidy doesn’t get cut off. Those healthcare coverages can be worth tens of thousands of dollars a year.

They take vacations, enjoy adult beverages, read, feed the birds, hunt, fish and recreate in the local parks and if they want....sit and watch the fan turn around.

I dont see much difference.

You hit the nail on the head. Exactly what I see in my area all the time. They live together and take advantage of gov payouts. They have kids and still do not marry to take advantage of the payouts.

[LDAHL]

I don't use dryer sheets: unnecessary expense and bad for the environment

I agree with you in general. It probably looks like a dream for a 30-something to think about "retiring" but, yes, there has to be a Plan B. What appeals to me is the idea of greater freedom to choose the paying job you want without being constrained by a high minimum income required.

But overall, I think the majority of people overestimate what you need to live on. ("I NEED dryer sheets! I NEED 3 bedrooms with a bathroom in each one!"). These perceived needs inflate those retirement figures.

Here's what MMM says on the subject:

I find that when people earn their freedom from money constraints, they usually don’t stop working. Instead they start doing their best work. Looking at many of society’s highest achievers right now, the world leaders and founders of the most productive companies, I see mostly people who have already made it. And yet are still working because it means something to them.

Early retirement, according to this new definition, does not mean quitting work, even while it may well mean quitting your job. It means opting out of the bullshit portion of your work. The commuting, the politics, the production of inferior products just because your boss has found a profitable niche to exploit. When used correctly, a sizeable ‘stash can help you become a more ethical person.

Early-retired Doctors might set up smaller practices which operate without any pressure for profit optimization, and without patience for insurance company shenanigans. They might treat their medical staff better than the larger operations do.

Early-retired Attorneys might refuse all cases that are based on questionable ethics, and do only work that actually helps somebody.

Google engineers who retire early might still work or contract part-time, or feel compelled to create completely new inventions with their newly freed minds. If some of these inventions grow big and end up being acquired right back into Google, it’s just another dividend of early retirement and the cycle will begin anew.

How would you run your own life, with a continuing desire to create but no immediate need to make the next mortgage payment?

I think there is much to be said for being in a position where you can do almost anything you want even if you don’t have the option of doing nothing at all. “Retirement” doesn’t seem to be a good word for that.

I’m in the process right now of transitioning to something like that, and trying to phase in a number of what I hope will be fairly resilient income streams and overhead reductions. Moving to a smaller house in a lower cost of living area. Eliminating debt and setting up a pool of funds to serve as a sort of homemade line of credit. A pension. A couple of social security checks. A downscoped job for awhile. A small, cheaply managed investment portfolio. My wife wants to invest in an income property or two, but I have my doubts about that one. An insurance strategy on a number of fronts. Even if some of them don’t perform we should basically be ok.

I do think a lot of people neglect the risk management aspect of personal finance even when they get a lot of other things right.