Some FIRE Thoughts

Financial Independence, Retire Early (FIRE) is a lifestyle centered around frugal living and aggressive saving. As the name suggests, the goal is to stop working as soon as possible, most aiming by their 30s. The movement has a lot of fanfare with millennials. And as with anything popular with Gen Y, criticism has been prominent.

The math is simple. Figure out your annual spend, divide it by your safe withdrawal rate (most use 4%) and you have your FIRE number - a portfolio balance big enough to generate returns that can cover your expenses. Say you spend $20K a year. With a 4% withdrawal rate, you'll need $500K to retire. Easy.

This is usually where the criticism kicks in. The math is fixed, too clean. Returns and expenses are not. The markets are a mystery and life even more so. An extended downturn or a large medical bill can easily throw off your plan.

The second tier of criticism is more personal. Why work a job you hate? Why deprive yourself? Why aim to sit around all day? Why not simply do something you enjoy?

These are valid questions, but I think they only apply in the extreme. Most in the FIRE pursuit don't hate their jobs, they just want more control of their time. Most aren't depriving themselves, they're just mindful with their spending. Most don't long for a couch potato life, they just want to do things that may not make as much money.

The math isn't perfect and the lifestyle isn't for everyone, but we can all learn from the principles of FIRE. Living below your means and building a margin of safety is powerful. Money doesn't buy happiness but it does buy options.

When financially stable, you're able to operate from a place of abundance. Being able work because you want to, not because you need to. I think that's what FIRE is really about. Not ruthlessly saving so you can one day do nothing. But getting to a place where you have the freedom to choose. Not all of us want to RE, but we all can benefit from a little FI.

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