The Stupidity of the FIRE Movement
By Ryan Goldsman, CFP®, PAIP®
In the financial world, the term “FIRE” stands for Financial Independence, Retire Early, and I’m not a fan!
When we earn money, we have a simple choice to make: spend it or save it. As has always been the case, our country is made up of a number of responsible savers with money in the bank, and others who spend everything they earn, but it’s actually more complicated than that.
If we consulted the economists, it would make perfect sense; for every borrower there has to be a saver, and for every saver there has to be a borrower, but in the last decade, there’s been a segment of the population which has taken one side a little too far.
To be part of the FIRE movement, a person or couple must save a minimum of half their income, and can retire once they have 30 times their annual expenses saved. In other words, they’re super-savers, but at what cost?
As a person who believes that life is meant to be lived, I’ve been fortunate enough to be able to own a motorcycle, play golf for the better part of my adult life, and enjoy some fantastic wines with many wonderful people.
Had I not spent the money on many of these activities, I would be much wealthier, financially, but I also wouldn’t have developed the relationships or the skills that I have from those experiences. Having ridden a motorcycle made me a better driver and allowed me to feel a sense of freedom that I never thought possible. The time spent on the golf course and at the wine club allowed me to expand my network of friends and business acquaintances. Having met so many different people, my horizons greatly expanded over time. Now, I’m able to share experiences with others in the hopes that they’ll take something away from my experiences as well.
The difference between me and those practicing the FIRE movement is the ability to enjoy one’s life in a progressive way vs. trying to escape it.
Having been employed by many large organizations, I understand why some people are not always happy and want to make a drastic change in their life, but for what reason?
In North America, the expectation has traditionally been to work hard during one’s adult years, and then enjoy retirement. For those who don’t want to work, then what are they doing with their time? With their lives?
Where’s their sense of accomplishment?
To make this a little more interesting, if someone does not have the ability to handle emergencies, may it be financial or otherwise, then what would be their outcome if an unexpected event would occur? Insurance is costly, and without an employer or a source of income, then how can those who retire at age 40 or earlier afford it? Or are they flying without a net?
I hate to make this comparison, but I learned to wear a helmet a long time ago – and protection when the moment calls for it. Why take unnecessary risks?
The second big question of the FIRE movement is if it’s really “FIRE” if one spouse or both work part-time. They’re not retired, so I guess they’re just FI’d… Or are they, if they’re still working part-time?
Clearly the term “second career” is not as exciting as “FIRE”, but it would seem that most adults who save a very high proportion of their earnings are the ones most ready to identify themselves as participants in the FIRE movement, but then again, they don’t have to save half their income or more to be considered responsible savers.