The FIRE movement seems to be growing faster than California wildfires, especially in the high paying tech crowd.
I write a lot about finance and investing. It’s partly because I find it interesting. I also would like to manage my money so that I can retire early. But I specifically do not refer to it as the FIRE movement because I think it is causing a lot of harm to its most fervent followers.
The FIRE movement at first sounds reasonable enough. Save a large portion of your income early in life, learn to live frugally, and retire once you have just enough to live off of the savings. Sounds like a great plan!
But I think there’s a real danger with the FIRE movement beneath the surface that becomes more obvious as you get further into it or closely observe those who follow it. FIRE encourages you to give up everything in pursuit of this one goal to retire. It’s always pushing you to take the movement to new extremes. It starts with giving up the luxuries, but quickly asks you to give up the normal. Can we live in an RV? How few calories do we need each day? Vacations are off the table. Can’t visit family. Don’t get too many lattes. Any cost or pain is worth it for some future self.
I saw an article about a couple that had purposely decided not to have kids because it would slow down their retirement timeline. What a tragedy that they will miss out on being parents because they wanted a few extra years of freedom. Now, I’m not slamming on someone’s decision to not have kids. I just wonder if that is really what they wanted, or if their desire for FIRE has clouded their judgment and they might regret it later in life. After all, what exactly are you going to do with this freedom if you don’t have family around to enjoy it?
Plenty of people have a problem with living in the moment and never giving a thought to the future. This can obviously wreck your finances and other areas of life. But FIRE advocates can fall into a trap on the other side: Always thinking about the future and never really enjoying life. They build up a fantasy about a perfect future self and they are willing to give up everything in the present in hopes they will get there someday. And while they’re being miserable, life really does pass by them. You can’t get more time in life, but you can get more money. If you really are miserable for many years, that’s truly wasted time that isn’t worth the sacrifice.
When the day finally comes for FIRErs to retire, I wonder if it doesn’t always bring about the happiness they had hoped for. For some people, FIRE is more than escaping corporate life. It becomes a desire to escape reality. To escape the pain and hard work that is part of life. It tends to view work itself as a fundamental problem in life. But the great secret to work is that although it can be difficult, it gives meaning to our lives and brings us satisfaction. This is why so many billionaires continue to work. It’s not about the money. We are hard-wired to work. And I wonder if FIRE gets this completely backwards.
Many FIRErs can’t even seem to give a solid answer to what they will do in retirement. I mostly hear vague ideas about traveling. Traveling is great, but it only lasts so long before most people desire a home and community. Then what? If you don’t have a hunger for some kind of work, it can easily lead to boredom and depression.
To be clear, I think it’s great to escape the corporate wheel. But you have to have the right motivation. If your motivation is merely running away from something, you will find yourself on the couch with nothing to do. It’s much better to run toward something else.
Other Practical Reasons
There are also several more practical reasons to avoid FIRE. FIRE is roughly based on the 4% rule – that you need enough money saved so that you can live off of 4% of it per year, making the assumption that you can earn 4% a year without much risk. Even if that assumption is true, there are still a lot of unknowns in the future. What if inflation increases far more than you anticipated? What if health insurance skyrockets past your projections? What if you experience a catastrophe that hits your finances in an unexpected way? This isn’t just general worrying. Your retirement will likely be 50+ years. That’s a LOT of time for something to go sideways. And it will. I promise.
If you’ve been out of work for say, 20 years, and suddenly you need more income, it could be daunting to try to get back into an industry that has dramatically changed in that time. Since you haven’t been focused on building income, it’s going to be very difficult to spin that up out of nowhere.
The Good Parts of FIRE
Despite the dangers of the FIRE movement, there are some good parts to take from it. The best part is learning to live frugally. It’s not just about spending less, though that’s a good start. It’s about learning to be content with less. We’re surrounded in a culture of consumption and materialism that is just out of control. Instead of satisfying us, owning more things than we need adds stress and clutter to our lives. There’s value in limiting our consumption and lifestyle without becoming a minimalist or living on the street.
When we learn to be content with less, it also has a nice compounding effect. We will naturally save more (since we’re spending less). And since we can live off of less income, it reduces how much we need to generate in income to retire, either through business or investments.
The key is all of this is balance. Balance is more important in life than people give it credit for. We so often talk about working hard, going all in on something, or pursuing something with passion. Those can be good things, but you can also do those with balance. Taking time to rest, go outdoors, spend time with family or friends – the things that make life worth living. Ignore those for even a short time, and you are missing out on life. FIRE tells you that balance is a weakness and life can’t be enjoyed unless you sacrifice for many years to retire.
To be fair, a lot of my criticisms of FIRE are directed at the more extreme side of it and certainly won’t apply to everyone that wears the FIRE badge. But because the movement seems to always be asking more of you, I think it’s worth pointing out some of the dangers.
Take the good parts of FIRE and throw away the rest. And maybe drop the label as well.