The FIRE movement, or, “Financial Independence, Retire Early,” has been gaining a lot of attention lately. It’s basically a way of life where you save as much money as possible, maximize investments, and aspire to retire as early in life as possible – preferably in your 20s, 30s, or 40s. While it sounds great if you can do it, you should question how realistic it would be for your life to check out of working for a living so early.
Can You Retire Young?
Retiring in your 20s or 30s may not be a realistic dream. Do you have a five-figure or six-figure salary? Can you save over 80% of your salary with every check? Do you have $1 million or $2 million (or more) saved for your early retirement plans? Will you have steady, reliable sources of income while retired? If you can answer yes to all of these questions, then you have what it takes to retire early.
Most adherents to the FIRE cherish the ability to assume agency over their own lives. To work on their own terms or to travel the world with the knowledge that they can do whatever they want. However, it is a fallacy to believe that any young person who wants to retire early can do so just because they love the idea of the FIRE movement. Life just isn’t that easy for everyone.
Unless you have millions of dollars saved already and can live on $44,000 a year or so to meet the standard of living expenses, then you won’t be retiring anytime soon. Retirement is all about managing your expenses down to the cent to maintain a preferred standard of living for decades. Retiring early isn’t even an easy thing to do for FIRE movement followers who can afford to do so.
Consequences and Repercussions of FIRE
It’s a point that I keep coming back to – how long can you travel the world and take it easy? Your 20s and 30s are irretrievable times of your life when you should be trying to figure out your place in the world. You might realize your true calling in life long after your youth, only to spend middle age making up for it. It’s too late to change your mind about wasted time in your 40s and 50s.
You also can’t be living check to check aspiring to retire in your 20s. If you don’t have millions of dollars saved up and a realistic budget plan, you may run out of money. It’s hard to reenter the workforce with gap years in your resume in this current work environment. Also, unless you have friends in similar situations, you won’t be able to relate to friends, family, and everyday people.
Most people work jobs they hate to pay their bills and take care of family. No one is going to want to hear, or will be able to relate to your life of doing nothing, traveling, and living off of millions you have saved. Also, unless you plan to volunteer, start a company, or work on your own terms, you are liable to get bored, depressed, or frustrated about life. Work is an identity. Its also about finding your place in society and how you can contribute to it.
There is More to Life Than This
If you have achievable plans to start a dream project or to volunteer, retiring early could be a great life move. If you can afford it. Otherwise, you stand socially alienating everyone in your life, sabotaging yourself if you run out of money, and perhaps miss out on your true calling in life so that you can identify as a young retiree.
Read More
- Why Most People Won’t Run Out of Money in Retirement
- When Should You Start Saving for Retirement?
- Retirement Savings: How Much Do You Really Need?
Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.