FIRE: Is it right for you?

FIRE: Is it right for you?

Followers of FIRE – Financial Independence, Retire Early – subscribe to a regimen of aggressive savings and disciplined investing. Pursuing a path to seven-figure wealth by their 40s or even 30s, these super-savers live well below their means and stash up to 70% of their incomes.

The goal? Amassing enough wealth that you can retire years or decades before you’re eligible to collect Social Security or draw on your retirement accounts.

The strategy appeals to high earners who dislike their stressful jobs, or who simply want the freedom to not have to work, or both. FIRE has spurred a cultlike following among software engineers, corporate managers and others who are attracted to the ethos of slashing their spending and maximizing their savings.

Many who embrace “firing” say they were burned out by the corporate gauntlet of ladder-climbing, long work hours and grueling commutes. Compared to the stress of their jobs, the luxury cars and fancy vacations afforded by their paychecks don’t measure up.

FIRE isn’t for everyone, of course. Many workers derive purpose and enjoyment from their work. For them, ditching their jobs doesn’t hold much appeal. And if new cars, private schools and spa treatments are a priority for you, FIRE isn’t in the cards.

Realistically, FIRE is feasible for only a small slice of the population. A significant share of Americans simply lack the earning power to generate wealth. They live paycheck to paycheck, coping with the dread that an unexpected illness or an emergency car repair will push them into a debt spiral. If you’re supporting a family on the salary of a teacher or a nurse, FIRE probably won’t work for you.

On the other hand, perhaps you dislike everything about your job except the generous paycheck, and you don’t have expensive tastes. In that case, FIRE might be a realistic lifestyle. If so, check out some of the stars of the FIRE movement – they include the bloggers Mr. Money Mustache, Mr. 1500 and Early Retirement Dude, along with Vicki Robin, author of Your Money or Your Life, the book considered the bible of FIRE.

The flavors of FIRE

This concept has been around for long enough that FIRE followers have self-selected into a variety of niches. Among them:

  • Lean FIRE. These hardy folks cut their living costs to the bone, buying food in bulk, nursing old vehicles past 200,000 miles, and repairing their own cars and homes.
  • Fat FIRE. These super-savers enjoy a more conventionally comfortable lifestyle while also saving aggressively.
  • Barista FIRE. After hitting their goals, these FIRE fans retire from their full-time jobs but take part-time gigs at Starbucks or elsewhere to bring in some cash and, most importantly, get the employee health insurance.

As these approaches show, there’s no one-size-fits-all strategy for achieving financial freedom. An important caveat to keep in mind: You should enjoy life’s journey. If your corporate job is crushing your soul, then FIRE might hold the key to happiness. However, it’s also possible that you could find another position that uses your hard-won skills without making you miserable. And if obsessively minding your budget doesn’t sound like fun, then lean FIRE isn’t in your future.

It’s also worth remembering that your portfolio can decline in value in a bear market, a harsh reality that can sidetrack FIRE plans. What’s more, marketable employment skills erode quickly when you’re out of the work force.

Those words of caution aside, if nothing sounds better to you than retiring by 50, FIRE away!


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