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Move Over FIRE, Welcome DIRE: Delay, Inherit, Retire, Expire

Updated: 06/01/2022 by Financial Samurai 150 Comments

The DIRE Movement: Delay, Inherit, Retire, Expire

Instead of embracing the FIRE movement for those seeking financial independence, it may be better to embrace the DIRE movement after such a massive bull run since 2009. For the millions of unemployed Americans thanks to the pandemic, the DIRE movement is real.

When I first started writing about achieving  financial independence early in 2009, I never thought the FIRE movement would reach such a huge level of interest a decade later. After all, only misfits decide to aggressively forgo material pleasures, save 50% or more of their incomes, and retire from well-paying jobs in their 30s and 40s.

Back in 2009, the “lifestyle design” movement was all the rage because people were getting blown out of their jobs left and right. Some people went back to graduate school to save face. Others decided to start lifestyle businesses after getting laid off. I figured there was a good chance my head would also roll, which is one reason why I started Financial Samurai that summer.

Thanks to a raging bull market that ensued, life turned out fine and the FIRE movement picked up steam. In 2022, we are at peak FIRE, as some folks try and retire early with less than $1 million to live a spartan life with no kids, no expectations for health setbacks, and no sense of duty to take care of their parents or other loved ones.

Unfortunately, when you’re at the peak, there’s usually nowhere to go but down.

Growing Angst Against Financial Independence

You know we’re at peak FIRE because not a day goes by where there isn’t a new story about someone leaving a job early and how they did it. Less than 5% of my posts are about early retirement since once you achieve FIRE, you don’t incessantly talk about FIRE. However, my FIRE posts are some of the most searched online.

As an investor, we know that by the time the news is in print, it’s often too late to invest. Rather, it’s likely a more opportune time to sell. Just think about Uber and Lyft finally filing to IPO in 2019. After all the easy money has been made as private companies, they cashed out to retail investors who are now down more than 30% if they invested on IPO day.

My job as an investor and as a personal finance writer is to do my best to forecast the future. Writing about what may happen is infinitely more interesting (and risky) than writing about the past. Forecasting the future challenges your mind and could make you a rich hero or a broke fool with egg on your face.

But as with everything in life, no risk, no reward. Today, my crystal ball is saying the FIRE movement is in for a rude awakening.

On the one hand, there is growing disdain against the FIRE movement from the majority of Americans who will never reach financial independence. With the median household income going nowhere over the past 10 years, it’s been hard for middle-class Americans to get ahead. Further, the average American has a pitiful amount saved in their retirement accounts.

When you’ve been spinning your wheels for so long, all this brouhaha about people retiring early to live fabulous lives while posting fake Instagram pictures about their amazing travels starts to get mighty annoying after a while. There are people who constantly brag about how much money they’ve made each month and how their net worth has gone up without working.

Annoyance turns into rage and a new movement is born.

On the other side are FIRE practitioners who are finding out that not all is sunshine and rainbows once they’ve quit a stable job with wonderful benefits.

The DIRE Movement Is Created

Thanks to another downturn in 2022, it’s an inevitability that some FIRE followers will be forced to go back to work and earn their retirements the old-fashioned way. Some might even say FIRE during a recession stands for Foolish Idealist Returns to Employer.

However, as long as we keep the FIRE acronym alive, we give hope to its original meaning. But when all is lost, false hope only gets people into further trouble. Therefore, let’s eliminate FIRE entirely from our vocabulary so that we can finally make a change!

Let me introduce the newest retirement movement to the world: DIRE. It stands for Delay, Inherit, Retire, Expire.

As a realist who sees the future, it is all but a certainty the DIRE movement will supplant the FIRE movement as the retirement path of choice. This is what DIRE in DIRE movement stands for.

D Is For Delay

For most people, delaying retirement due to the rapid rise in costs for housing, healthcare, and education is the only way to survive.

Given the median household income has stayed stagnant at around $61,000 for the past decade while the median house price in America has risen from $177,000 to $222,000 during the same period (26% increase), housing has become less affordable. In some cities, real estate prices have appreciated so quickly that most residents have no hope of ever owning.

Real median household income in America chart
Median household income has gone nowhere in awhile

Healthcare costs are out of control, especially if you plan to carry the entire monthly premium burden yourself. The average total healthcare cost is now almost $20,000 a year, subsidized mostly by the employer.

Once you’re out of a job, the entire $20,000 cost falls upon you unless you have a low enough income to qualify for subsidies. For my family of three four, I pay $1,760 $2,380 a month, or $21,120 $28,560 a year for a platinum plan in 2020. None of us are overweight or have any serious chronic illnesses either.

Granted, many FIRE folk try to take advantage of subsidized healthcare because their incomes are under 400% of the Federal Poverty Limit once they retire. But seriously, who wants to live near poverty-level incomes in retirement when you can find a more pleasant job and live a better life?

Education costs, specifically college tuition has grown unbearable with annual tuition increases averaging 5% – 7%, regardless of a recession or not. That’s a doubling of tuition every 10 – 15 years. Good luck retiring early if you’ve got to pay $50,000 – $100,000 a year for four or five years for even just a single child.

For parents with kids, retiring early will be all but a pipe dream. There will always be at least one parent working full-time to earn a steady income and have subsidized health care. The non-working parent can shout they are FIRE as loud as they want, but nobody will buy it.

Being a stay at home dad or mom is nothing to be ashamed about. It’s a damn hard full-time job! Yet for the man especially, he can’t seem to accept his new reality of living off his wife’s income.

But I have to admit, having kids is the best thing in the world. I would never trade kids for early retirement now that I know what I know.

I Is For Inherit

With no hope of retiring early, many Americans are counting on an inheritance as their retirement strategy. With 25 as the median age when parents had kids in 1970 and the median life expectancy currently hovering around 80, the average American will likely have to wait until around 55 to inherit anything.

Today, the average age when women start to have children is 28. The delay is due to the desire for more women to rightly pursue their careers and a couple’s need for more money. Therefore, future generations will likely have to wait even longer to inherit anything, especially as we’re all living longer and longer.

Not all is bad news on the inheritance front, however. With the average net worth in America rising to almost $700,000, parents are doing more than ever before to help their adult children thrive in adulthood. After all, Baby Boomers have benefitted the most from the longest bull market in history.

Every single one of my immediate neighbors in San Francisco has parents who either bought them their house or are letting them live in one of their multiple properties rent free. When I first moved into my house in 2014, I met my neighbor’s son who at the time was a 24-year-old senior at UC Davis. When he graduated in 2015, he returned home and still hasn’t left! Curse him and his noisy motorcycle.

Inheritance Is Not A Retirement Strategy

Can you imagine relying on an inheritance as a retirement strategy? You might never be able to start a family, create your own sense of independence, and make your great contribution to society. Clearly, one side effect of DIRE is a surge in depression.

R is for Retire

Age of retirement in America

Forget about retiring in your 30s, 40s, 50s, or even 60s. With DIRE, we’re talking nowadays about the majority retiring in our 70s or older, baby! We’re living longer. This means we’ve got to work longer to support ourselves. Once upon a time, people would retire at age 65 and die within five years. We are returning to the phenomena of that bygone era.

The earliest one can collect Social Security will rise from 62 to at least 65 if the government wants to make the program whole. After all, the government runs a massive budget deficit each year. With little-to-no social safety, achieving a comfortable retirement life will all depend on you. Thankfully, there are now free financial tools to help manage your finances.

With the trend towards retiring in our 70s or older, retirement life won’t be as fun. It’ll be much harder to play leisurely sports like golf or tennis when your back is always in pain. There’ll be no way to ever climb the stairs of Santorini when your knees don’t have cartilage. Donkey ride it is!

The only thing left you can do in this new world of retirement is watch tons of TV and surf the internet. At least with the popularity of food delivery apps, you will no longer have to go out of the house to eat a nice rubber chicken dinner. Staying glued to a lounge chair is what the new retirement reality will be like. Hence, the ideal retirement age to minimize regret and maximize happiness is closer to your mid-40s.

E is for Expire

Here is where the DIRE movement will be at its saddest. After a long life of working because you had to, not because you wanted to, reluctant DIRE followers will look back on their lives with regret. They will curse the day they ever heard about FIRE because otherwise they would never have taken the leap of faith at the top of the market and fallen splat on their faces.

Instead of being the hare, they would have won the race as the tortoise – steadily saving and investing their income during their highest income earning years with much less stress and worry.

They wouldn’t have had to embarrassingly gone back to work with their tails between their legs and watched old colleagues now become their bosses.

They wouldn’t have needed to go through multiple mental breakdowns and countless nights of self-doubt because they couldn’t replace their day job income with freelance income or entrepreneurial income to take care of their families.

Contrast reluctant DIRE followers with DIRE enthusiasts. DIRE enthusiasts see the FIRE movement is in trouble and decide to stay the course.

The DIRE Enthusiast Is Different

Instead of retiring in their 30s or 40s, the DIRE enthusiast decided to maximize their highest income earning years and retire with multi-millions in their 50s. Given everyone is living longer, retiring in your 50s is like retiring in your 40s of yesteryear.

Of course, they also don’t just stay miserable at their jobs. DIRE enthusiasts proactively search for better opportunities in order to keep on working.

A DIRE enthusiast doesn’t scoff at families who believe they need $5 million in an after-tax portfolio to retire early. DIRE enthusiasts understand that runaway inflation, globalization, and structurally lower investment returns in the future will wreak havoc on living the early retirement dream.

The DIRE movement believes the 4% Rule is outdated because interested rates started collapsing in 2019. It now takes a tremendous amount more capital to retire on a previous target retirement income. Following a safe withdrawal rate that was developed in the 1990s is foolish.

DIRE Movement believes in the 0.5% Rule

Therefore, instead of getting into a rage about why the world’s round peg doesn’t fit into their square hole, they simply adapt and work longer.

The DIRE Movement’s Future

Unless you’re willing to work more than 40 hours a week, build some side hustle income, generate some stable passive income, save aggressively, and continuously make shrewd investments for the long term, you have no chance of FIRE. And if you don’t do all these things and still decide to retire early, you will likely be screwed and join the reluctant DIRE camp.

Yes, some of you will decide to live like paupers and either delay or not have kids to keep expenses to a minimum to hold onto your FIRE dreams. However, for the majority who want to live more conventional lifestyles, it’s more important than ever to follow some key financial principles to increase your chances for financial independence.

If you are wise, you will embrace the realities of DIRE as it becomes more difficult to achieve financial independence. Giving priority to caring for your family and delaying a super early retirement is the responsible thing to do. Don’t let FIRE FOMO foster irrational decision making.

Yes, if the economy gets really bad, there will be more face-saving by folks who say they are FIRE instead of admitting they got laid off and are drowning in a sea of despair.

Just recognize not all is what it seems as people put on brave faces. If your passive income cannot comfortably cover your best life’s living expenses, you are not FIRE and only fooling yourself.

Thankfully, we’re back to bull markets. Just know that bad times will eventually return once more. And when they do, it will be time for the DIRE movement to rise up!

Related posts on FIRE and DIRE:

The Negatives Of Early Retirement Nobody Likes Talking About

Why I Failed At Early Retirement: A Love Story

The Proper Safe Withdrawal Rate Makes FIRE Harder

FIRE Confessionals I: Surviving A Bear Market

FIRE Confessionals II: Flourishing In A Bull Market

Financial Independence Movement Thoughts Overall

As one of the pioneers of the modern-day FIRE movement since 2009, I’m proud to see what has developed. With so many different FIRE acronyms, like Coast FIRE and Lean FIRE, people are deciding to make labels conform to their current financial situation. It’s nice to create labels to make you feel better about your progress. After all, FIRE is a long journey.

However, I encourage you to recognize the true definition of FIRE. Attaining FIRE is when your passive investment income streams can cover your desired living expenses. Once this financial attainment is achieved, there is no longer a reason to have to ever work for money.

FIRE is also a moving target. Thanks to inflation, the need to earn more to pay for more expensive goods increase. Further, if your family grows, you will likely need and want more money as well. For more great reading about achieving FIRE, pick up a copy of my book, Buy This, Not That: How to Spend Your Way To Wealth And Freedom.

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Filed Under: Retirement

Author Bio: I started Financial Samurai in 2009 to help people achieve financial freedom sooner. Financial Samurai is now one of the largest independently run personal finance sites with about one million visitors a month.

I spent 13 years working at Goldman Sachs and Credit Suisse. In 1999, I earned my BA from William & Mary and in 2006, I received my MBA from UC Berkeley.

In 2012, I left banking after negotiating a severance package worth over five years of living expenses. Today, I enjoy being a stay-at-home dad to two young children, playing tennis, and writing.

Order a hardcopy of my new WSJ bestselling book, Buy This, Not That: How To Spend Your Way To Wealth And Freedom. Not only will you build more wealth by reading my book, you’ll also make better choices when faced with some of life’s biggest decisions.

Current Recommendations:

1) Check out Fundrise, my favorite real estate investing platform. I’ve personally invested $810,000 in private real estate to take advantage of lower valuations and higher cap rates in the Sunbelt. Roughly $160,000 of my annual passive income comes from real estate. And passive income is the key to being free.

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Comments

  1. Brian says

    December 25, 2018 at 8:24 am

    I am 65. I retired at 63. There was no FIRE movement when I started saving in 1988/1989. I’ve been through the ’89 recession, the 99/00 recession, the Great Recession, the 2011 “flash” recession, and I am fine. Just work your plan. I had to wait a year longer than I intended to retire, but I did it. I created a 3-year cash cushion when I retired (12%), so I would never have to worry about a pullback in stocks. In December and January I got a lot of flack for that because some bloggers were suggesting a 100% stock portfolio, but right now I have no worries for the next three years. In addition, I am shifting money from bonds (18%) to stocks as the market goes down. All is going according to plan. People. Just work your plan and relax. It will work out.

    Reply
  2. Leo says

    December 24, 2018 at 12:31 pm

    If one has been on the FIRE plan but is now being forced to reconsider due to a 20% market correction, it ought to be clear that this person had no business thinking they were remotely close to being ready to retire.

    Reply
  3. Ed says

    December 20, 2018 at 5:18 pm

    “Once you’re out of a job, the entire $20,000 cost falls upon you unless you have a low enough income to qualify for subsidies. For my family of three, I pay $1,760 a month, or $21,120 a year for a platinum plan.”

    You will soon be in for a surprise. About 280% of the ACA age-related rate hikes occur after age 43. Rates from age 21 to age 43 are nearly constant – then the age-based curve starts upward on an exponential trajectory.

    We live in one of the cheapest ACA markets in the country. In our late 50s, a bare bones, literally catastrophic Silver plan with huge deductibles for a married couple is almost $20,000 per year. That does not cover dental or vision, like the typical employer plan with a far smaller deductible. Adding in our youngest daughter in grad school – who we have to cover – our ACA costs would be nearly $24,000 per year for 2018. (I say would be because we ended up using a legal exemption to drop out of the unaffordable ACA markets.)

    For dental, we pay about $1,200 per year for the two of us for what is effectively a dental discount/volume purchase program even though it is officially a dental insurance program and regulated as insurance. It caps each covered person to $1,000 total claims, and except for routine exams, it pays only 50% – and we pay the remainder. But one is stuck – if you don’t have “insurance”, your dentist will charge you twice as much as what they settle for with the “insurer” (based on actual experience).

    We pay cash for all vision care.

    Elsewhere, a married 64 year old couple earning pre-tax income of $65k/year is above the subsidy cut off, meaning they receive no financial assistance. In most markets, their ACA rates are around $28,000 to $36,000/year for a bare bones Silver plan. In Laramie WY (and most of WY) in 2018, their rates were $49,000/year. In Charlottesville VA for 2018, their rates were $57,000/year. (Quotes are from healthcare . gov web site for 2018). Their combined premiums + deductibles generally exceed their pre-tax income – and oh, they still need to cover minor stuff like food, housing, taxes….

    (These bizarre situations happen because the subsidy cut off level is determined solely by the regional poverty income level. There is no connection to actual ACA prices – the poverty income level and your premium have no connection. Thus, the cut off is about $65,000/yr in income regardless of your actual premium.)

    Am amazed you have a “platinum” plan. First, very few markets have platinum plans. Most have Bronze and Silver only; some have Gold. In sampling ACA premiums nationwide, I didn’t find any market with platinum plans except in Washington DC. I won’t go through the details here (unless someone wants it) but for most, a platinum plan would not be the best financial value.

    Anyway, your price quote suggests you are going to be in for a surprise on future ACA premiums as you get older. Unless the government fixes the ACA or does some other random thing to health care.

    Reply
  4. Vivian says

    December 18, 2018 at 3:25 pm

    DIRE is not the flip side of FIRE; it’s just regular life when people don’t save, particularly with an economy and culture dependent on spending. The basics of living under your means are not new so even missing fire but still having savings/investments is a good idea. As for Suze Orman’s recent statement of needing $5M to retire…where does the average American get that when they don’t even have $400 for an emergency? Pie in the sky either way.

    Reply
  5. Mr. Shirts says

    December 17, 2018 at 5:05 pm

    Thoughtful comments Sam. I don’t entirely agree with the conclusion, but expect we’re heading back towards more “lifestyle design” instead of everyone trudging on a death march into their 50s.

    I figure I’ll give up $4.5mil in earnings by leaving before my 37th birthday instead of working in corporate america until 50. Hobby entrepreneurship? Now I’m interested

    Reply
  6. Dave says

    December 17, 2018 at 8:52 am

    Probably not far off of what will actually happen in the next downturn. Unfortunately so many are bought into all you have to do is live a frugal life and save enough so you can live off 4% of your capital. I just saw yet another MMM article that espouses that once again, completely discounting all the risks associated with that. I kind of feel sorry for the rude awakening so many will feel. Thanks Sam for painting the picture of the other side of the FIRE coin.

    With that said, there is another perspective on FIRE/DIRE through a downturn. You can always delay the RE part of FIRE until after a downturn. If you are facing a market down 20-50% and have the capital for FIRE at that point, you’re in a much safer spot. Sure the market could decline more (catch a falling knife). But you are way better off than if you are sitting at the top of a market and FIRE. The ideal spot to FIRE is at the bottom of a bear market as you said in a previous article.

    Reply
    • Jose says

      December 19, 2018 at 6:30 pm

      Yeah, it’s been a rough year for MMM and his cult followers. First his divorce and now the stock market really taking it on the chin. His followers don’t realize MMM makes millions off his site and can withstand the financial hit. He spends more than he says and is laughing all the way to the bank.

      A bull market has made people lazy and stupid. They can’t think for themselves.

      Reply
    • Tom says

      January 26, 2019 at 9:32 pm

      I’m not a follower of MMM, but does he really say 4% for the Fire movement? That’s almost malpractice. 4% MAY be ok for the normal retiree with a 30-35 year time frame, but almost impossible for the 50 to 60 year time frame some of these FIRE types need to plan for. Stepping down a 1/2% for each additional decade of expected life, and plan to 100 years of age, and you probably can make it. People need to recognize that they’ll have a 20-40% bear market every decade, and they need to keep the percentage low enough to be able to recover after each.

      Reply
    • John says

      March 4, 2019 at 5:40 am

      You are ABSOLUTELY right on the timing. Never FIRE at the top of a bull market : that is financial suicide !

      Reply
  7. Anonymous says

    December 16, 2018 at 7:35 pm

    I prefer FINER: Financial Independent No Early Retirement.

    At work I simply stay away from those mortgage slaves and only socialize with like-minded people who know I don’t need the pay check. It gets a bit lonely but beats sitting at home.

    Reply
  8. Caroline at Costa Rica FIRE says

    December 16, 2018 at 1:23 pm

    I think how much the FIRE movement has jumped the shark depends on where you are. My circles are more NYC-based big corporate, or when entrepreneurs, the VC-funded kind, and FIRE isn’t as widespread an idea there. I actually think FIRE has much more room to emerge, and I think it’s still an important concept b/c jobs are so much more contingent now. You really should be aiming for FIRE just for the FI part and the ability to not rely on a job, whether or not you do the RE, Retire Early part or not.I say this as an HR consultant with 20+ years of recruiting and coaching experience, much of it with mid- to late-stage professionals (i.e., over 40). Someone who has reached FIRE, is close to FIRE, or is simply aware of that concept will have a stronger foundation from which to make good career choices in an increasingly uncertain job market.

    Reply
  9. methuselah's mother says

    December 16, 2018 at 9:02 am

    Your best post ever, Sam – and the comments just keep getting better too, all so helpful. This is just intended as a word of encouragement to allay any apprehension about going back into the world of work. Anyone who has achieved what you have, has the imagination, resiliance and discipline to succeed at whatever you try.
    Here in benighted Brexit Britain the FIRE movement has only quite recently become an identifiable trend. I’ve walked that path alone most of the way.
    We don’t earn what you earn, but we do have effectively free health care, and it’s clear that this gives us a head start, as does being child-free (by choice). Having supported my spouse through seven long postgrad years there was a brief respite, then an involuntary geoarbitrage when he went to work 12,000 miles away, literally the other side of the world, in a place where trailing spouses were not permitted employment. It was a very hard decision to take b/c I was by then well established in a career I loved, but there was a lot of free global travel and when I’d had enough and London drew me home, three further careers (related enough to use transferrable skills) followed, the last being running my own micro enterprise. Terrifying financially but immensely fulfilling and again with plenty of paid-for travel and exploration. Currently on my fourth retirement, I’m certain keeping on learning is the one vital skill which will provide motivation, and you have plenty of that. – yours is the most inquiring and open mind among the US FIRE bloggers, IMHO.
    When working the long hours it’s hard not to envy those with the freedom to spend their time as they choose, but also to make them understand that travel and expensive outings are not often possible for the non-retired. Once retired, it’s equally hard to imagine where the time came from to be able to go to work. Stepping back from childcare 24/7 will likely be harder than getting involved in a new venture b/c you’re doing it in the reverse direction from most – pioneering as ever!
    All best wishes as and when, hope you can keep us updated with observations from the front when you have the chance.

    Reply
  10. Randy says

    December 16, 2018 at 8:12 am

    Sam – Great column! At age 68 I am five years into my retirement following a rewarding 30 year career in hospital and academic medicine development. I, too, find the millennial based FIRE movement to be unrealistic in its thinking and personally disappointing in their values. They look at early retirement through rose colored glasses failing to consider the realities life can bring – often with significant financial impact: divorce, major recessions, health issues, parents in need of financial help, and poor investment choices. Also, I have found that many are so insular in achieving and maintaining their FIRE status (where independence and often travel are priorities) that, while perhaps sympathetic regarding the burdens of the underserved and marginalized, they generally are not at all philanthropic. Of course, my observations come from my 68 years of living life where hindsight can tend to be more 20/20. Thanks, Sam!

    Reply
  11. Philip says

    December 16, 2018 at 6:20 am

    I’m no following how a desire to retire early can be on the decline. Unless I’m reading it wrong, the only people in trouble are those who retired early when they had BARELY enough money and depending on STOCK income. If you have conservatively underwritten cash flowing real estate, I’m not sure how this applies

    Reply
  12. Freedom says

    December 15, 2018 at 7:59 pm

    Sam

    Great post

    I totally agree FIRE became very popular because many people saw their investment multiplied in past 9 years
    I would add that who was able to save and invest (and got rich) had the right mentality of saving no matter what and this should spare them from the impacts of next recession (I.e they will Keep the expenses under control and they can count on good saving in case they will
    Lose their job)

    Conversely the spenders will be more vulnerable because in case of recession will finish their saving in few weeks, bankrupt, foreclose etc…a movie we already saw in 2008-2009

    I think now it’s good time to order your house:
    == Selling individual stocks
    == Selling mutual funds with expensive fees you bought before discovering low/no cost index funds
    == Investing proceedings in CD or T-bills (or Robinhood Saving account at 3% if it’s not a scam)
    == Find some side job(s) as plan B in case you lose your job

    Thanks

    Out of curiosity: your premium insurance plan what covers and how it works?
    Can you compare it with Canada or European Universal health care or it’s a ol’ school USA plan that drops you the moment you need some serious coverage ?

    Thanks

    Reply
  13. john says

    December 14, 2018 at 3:20 pm

    SAM- Thanks, for this Post!! Being a mid 30’s FIRE fan I absolutely love DIRE from a PERSPECTIVE standpoint. A few reasons come to mind: Compound interest effect, FOMO of peak career success & earnings, etc. Specifically, I was delusional in my early 30’s based on my peer surroundings during my early/mid 20’s as I have several peers who were FIRE as multi millionaire’s (i.e. $3-5M+) prior to their late 20’s. I was never envious as I was worth maybe 1/4th (YES well above average) around the same age and utilized their success as my fuel.

    Shame on me, as I’ve had to recently recalibrate and realize that it was okay to be above average and not FIRE (worth $4M+) by mid 30’s in a non HCOL locale. With DIRE I can still compete with the thought that compound interest/time can catapult my worth and family wealth once in my late 40’s/early 50’s.

    Sam, you also touched on generational wealth “The BIG I” of DIRE!! I wish you’d expand more on its utility so that people can truly understand the topic. The more wealth I’ve obtained over the years, the more I’ve seen it handed to others (i.e. Adult Kids mortgages, etc.). I LOVE it because I think it’s remarkably Savvy, for example the high percentage (i.e. 30%+) of grandparents paying for grandkids (k-12) private school tuition at $25/30k+ a year by utilizing dividends, etc. Yes, it’s controversial for those with a poor upbringing and/or no generational wealth to view this imbalance (widening wealth gap)but better to be aware than not.

    This is why the internet (Free/Cheap Education) exists…Remove the secrecy of wealth and spread the knowledge to others in order for them to learn the game! Thanks SAM!!

    Reply
    • Financial Samurai says

      December 14, 2018 at 4:29 pm

      I’m glad you found this post useful. Here is a post on inheritance that you might enjoy:

      https://www.financialsamurai.com/a-massive-generational-wealth-transfer-is-why-everything-will-be-ok/

      Reply
  14. LJ Lyon says

    December 14, 2018 at 2:35 am

    “None of us are overweight or have any serious chronic illnesses either.” Ha! because insurance companies can no longer base premiums on preexisting conditions.We are subsidizing the fat and lazy. Doing the right thing, the responsible thing, the adult thing no longer is rewarded financially or socially.

    Reply
  15. siliconvalleyscrooge says

    December 13, 2018 at 12:25 pm

    For Inheritance, all I get is a collection of urns and a desert tortoise that will outlive us all.

    But I wonder, do studies that say people don’t save enough for retirement take into account people’s expected pensions & defined benefits, as well as expected inheritances?

    For example, I know too many people in Silicon Valley that work for the government and spend nearly all their disposable income, because they believe the county and state will fully fund their pensions — so they might report very little savings to retirement studies, but yet may survive retirement ,assuming California’s $1 trillion pension shortfall does not indeed crush them like Napa grapes.

    Reply
    • Bob says

      December 13, 2018 at 1:35 pm

      California will eventually decrease pensions, as it has openly discussed. Countys and Cities will follow.

      To count on a pension not covered by Federal government insurance is a serious error. NO public pensions are covered by Federal Government insurance.

      Reply
  16. A Millionaire Next Door says

    December 13, 2018 at 11:01 am

    FIRE seems like a reality for many during such a long bull market. We all know that bull markets are not infinite. The changes in the economy we are starting to feel including the stock market is a wake up call for many FIRE enthusiasts. I do think FIRE can be achieved but highly unlikely in 20s like I am seeing now (unless you are a pro athlete who is savvy with your finances). 30s is very difficult. 40s possible hinging on many factors including age of children. 50s realistic for many. The key to FIRE at any age is creating many stable sources of passive income that equate to at least your annual spending plus buffer. True passive income is not derived quickly based on my experience. You can either create it (via businesses) or via cash (buying income producing assets). When I read any FIRE enthusiasts story, I really focus on their passive income portfolio. Most seem to focus on net worth, which is great but to retire you must have cash flow – consistent, reliable, and most important, enough of it. Honestly, I feel most FIRE enthusiasts are simply people who are in jobs they don’t like so they dream of quitting them. Most of us who are FI continue to work because we enjoy what we do – reason we are FI.

    Reply
  17. John M says

    December 13, 2018 at 7:01 am

    Why not discuss how best to allocate the portfolio with the impending downturn at hand? Given the run over the last several years the feeling I have had is that the next opportunity for me is actually being well situatated for the next downturn and likely slow slow slow recovery. Wealth is all relative afterall? And there is so much credit/debt sloshing around out there that when this thing shakes out if you are well positioned, FIREd or not, you will be doing crazy well relativly.

    Alternativly, if we really are to be concerned with the downturn enough to run from FIRE to DIRE then we should also probably be looking at the largest elephant in the room – climate change. I do get a chuckle out of people talking about multigenerational wealth given where the globe is headed. Where do we account for global warming, or any other secular risks in our monte carlo or descriptive review of market performance? We don’t…

    In reality, if you are at a 3% draw or near to it, there is probably enough exogenic risk not being accounted for that you are way better off FIREing and taking your chances with the road ahead. If any of the big secular risks hit (environment, health, war, etc.) one is going to look back and wish to have gotten some ride off their efforts before the new world presents itself.

    If one wants to return to work for enjoyment or whatever clearly they should do that.

    Reply
    • Financial Samurai says

      December 13, 2018 at 7:23 am

      Sure. Feel free to share your background and what you would recommend doing in a downturn. Thanks

      Related:

      The Proper Asset Allocation Of Stocks And Bonds By Age

      Suggested Stock Allocation By Bond Yield For Logical Investors

      Reply
      • john m says

        December 13, 2018 at 7:35 am

        Nothing earth shattering.

        35% cash (CDs and money market)
        17% bonds
        30% S&P
        10% Foreign
        8% alternatives

        Reply
        • Financial Samurai says

          December 13, 2018 at 8:06 am

          Looks pretty conservative. What percentage of these investments is your net worth?

          I think it’s important to differentiate between total net worth asset allocation and public investment allocation.

          Reply
          • David says

            December 14, 2018 at 9:32 am

            I’m even more conservative with 25% cash, 29% bonds, 2% gold, 1% prop fund, 43% equities
            That is about 1.3mn out of 1.8mn net worth

            To be fair I have FS to thank so far given equity performance up to today. We are obviously facing a major slowdown in earnings and the only market I am looking at that I think presents compelling value is the FTSE 100 and FTSE All Share currently yielding 4.44% and 4.05% respectively due to the Brexit crisis. I don’t plan to buy back in until the Value Line Geometric index makes a significant and sustained 4% reversal

            Am I risking too much, ie sudden agreement with China and slowdown in Fed hikes that might push the market in the opposite direction?

            Reply
    • Jim C says

      December 13, 2018 at 10:13 am

      Great comment- totally agree. The biggest risks we face are likely to wipe out your employment prospects in addition to your wealth. If you can generate enough cash flow now using a 3% or less withdrawal rate from a diversified (multiple asset class) portfolio, go for it. I don’t really see the point in trying to time the market and adjust allocations based on whether valuations seem high or low– the majority of us won’t get that right anyway. The prospect of a cyclical downturn shouldn’t deter someone from FIRE- that’s just expected behavior. Like you said, might as well just enjoy it now (assuming reasonable known costs are covered).

      Reply
  18. Jon says

    December 12, 2018 at 4:38 am

    Wow, Sam. I read this last evening…processed it overnight…and must say you are onto something here. It’s shades of The Big Short with many of FIRE folk the equivalent of buying retirement on “stated income”. I have FIRE Koolaid stains on the sides of my mouth if not the carpet. This article was the exact level setting I needed. Thanks for writing this in the face of “popularity” with potential hurt feelings forthcoming. Very well done, Sir.

    Reply
    • Financial Samurai says

      December 12, 2018 at 7:52 am

      Hi Jon – Glad you found value out of the post. I don’t think any feelings were hurt by rational people who are willing to look at both sides of the equation.

      The thing with FIRE is that if you make a wrong move, it is your life you’re screwing with. Choose the wrong TV, oh well. Buy another. Truncate your career too early or leave with too little before a financial downturn, then you might be screwed for 10 years.

      Prudence is underrated.

      Reply
      • Jon says

        December 12, 2018 at 9:50 am

        Thanks for the reply, Sam. I think the 2nd part of the “1-2 punch” was hearing about MMM’s divorce for the first time. It’s very unfortunate with a kiddo involved…and let’s be honest…he’s a bit of the “Christopher Columbus” of the so called FIRE movement. “Camelot” is no longer what it once appeared to be. Sad and sobering stuff…

        Reply
        • David says

          December 12, 2018 at 11:59 am

          Sam
          I echo most of the comments
          One question though: how doesn’t it marry up with your views on equity/bond/cash allocation?
          I am sitting on about 30% cash earning 3% in a high interest savings account, 30% bonds with avg maturity about 5-6 years, 40% equities through VGRO
          To be honest I’m only 32 with two kids and about $1.85mn including house. Wife might continue working to 50+ in a stable medical job.
          This article and a lot of what I’m seeing makes me want to be even less invested. What are your thoughts to going more high interest cash as fundamentals re assert themselves (which seems painfully obvious in 2019 and 2020)?

          Reply
          • Financial Samurai says

            December 12, 2018 at 12:53 pm

            Without knowing your goals and your current occupation and your expenses, I cannot say. But I can say for certainty that getting your wife to work over a couple more decades sounds like a great plan! Many husbands I know have successfully figured out how to make their spouses work longer so they can retire earlier.

            I personally would be happy with a 4% – 5% net worth return a year for the next five years.

            Related: Recommended Net Worth Allocation By Age And Experience

            Reply
            • David says

              December 12, 2018 at 1:47 pm

              I still want to retire at 40 and focus on writing as a side hustle (my true passion). Work as a management consultant and wife is a nurse combined income 200-225/year saving about 100/yr. nearly paid off mortgage. Costs are 106,000 per year to live very comfortably .
              I suspect the “dire” reality that is the subject of this article means I need to work longer. But what if I took the risk of going massively defensive for 1-2 years? Surely earning 3% for a year or two but then having the potential to return to 8-10% yearly returns in a bear market with a 60-70% equity weighting would be a risk worth taking?
              I think the yield curve will invert, and the sell off in US equities will take steam when corporate earnings decrease.

              Reply
  19. Max says

    December 11, 2018 at 2:12 pm

    Most of you reading this will never truly obtain FI or FIRE. I don’t want to argue the point, but let’s say you do meet FIRE in your own mind. Well, eventually there will be an unexpected worldwide event that rhymes with one of the many that history has recorded. Maybe even a new one and when it does, almost all of you will not transfer generational wealth. It is extremely rare the longer the timeline. Gold and diamonds were exchanged for loaves of bread and soup at end of WW2 or taken at gun point. So good luck with that. Enjoy your life and some of you should even consider welfare. When is the last time one of you received an inheritance from a great, great grandparent? How about you start investing $5 a month for your great, great, great, grandchildren and stop all this nonsense.

    Reply
    • Lewis says

      December 11, 2018 at 8:53 pm

      Yes, the lizard people are coming for our soup very soon. The FIREs shall light their way.

      Reply
    • Dire walk with me says

      December 12, 2018 at 4:54 am

      The tax plantations are designed so that any tall poppies are sure to be cut.

      After all were nothing but free range animals under the illusion of freedom but destined to be sheared at the end.

      Why does every generation have to buy a house over and over? Can’t these assets be passed along with more ease?

      Reply
      • Nigel says

        December 12, 2018 at 7:21 am

        Our society doesn’t do very much multi-generational living so passing houses down to the next generation isn’t all that common.

        Plus, only one descendent gets the property unless you have a large manor or farm or something. I knew one family that still held a decent amount of land which was the remainder of a large family plantation but the land seemed to me to be pretty sub-divided now. The mansion itself was sold off in the 30s because of the Great Depression.

        Around here it seems like most of the descendants sell off inherited farms to developers and split the proceeds. We then get a new sub-development and more traffic.

        Reply
        • Dire walk with me says

          December 12, 2018 at 8:37 am

          We really never own our homes unless it’s an allodial title.

          Reply
  20. Tawnya says

    December 11, 2018 at 11:47 am

    I appreciate this post greatly. I’m all for people seeking financial independence, but I think people greatly underestimate how difficult it will be to remain retired for 30 or 40 years. There are so many things that have to break right for it to work well. I also appreciate how you brought up people who claim they’re FIRE but still have working spouses, or people who have an income from another source (usually a blog). I’ve always thought FIRE was a misleading acronym because most who claim to be FIRE aren’t retired in the way that most think of as retired. It will be interesting to see what happens in the next couple of years.

    Reply
  21. Dan says

    December 11, 2018 at 8:23 am

    Sam,

    Why retire at all? Warren Buffet is 88, Charlie Munger is 94, George Soros is 88, Carl Icahn is 82, the Koch brothers are 83 and 78! Michael Bloomberg is 76, and Donald Trump is 71. I’ll bet all of them also enjoy life.

    Reply
    • Max says

      December 11, 2018 at 1:40 pm

      A rare accomplishment is to never peak. These guys have never peaked, that’s a significant reason why they keep working. That and they’re not mining coal.

      Close friend of mine grew up in a jungle with a dirt floor, she now makes six figures US$ in an emerging market, most of us can never compete with her. She’ll never be a billionaire, but she’ll never peak.

      If you aren’t climbing, you’re more likely to embrace the false religion of FIRE.

      Reply
      • Dan says

        December 11, 2018 at 10:35 pm

        BTW … “There’ll be no way to ever climb the stairs of Santorini when your knees don’t have cartilage” assumes that those that never peak also never travel. That’s ridiculous logic. Many 21st century white collar working professionals have plenty of PAID TIME OFF or flexible time to travel wherever they want.

        Reply
  22. Fred says

    December 11, 2018 at 6:32 am

    Nothing new under the sun. Life has always had winners and losers. DIRE will be common but some will still obtain FIRE.

    We have a massive trade imbalance with China. It gets worse every year that we delay the inevitable trade war. It’s an unpleasant but we need to stand up to them while we still can.

    Reply
    • Dire walk with me says

      December 11, 2018 at 7:06 am

      Those who are long gold miners will be FIRE many times over.

      Reply
  23. Bob says

    December 11, 2018 at 6:27 am

    You know, Sam, I like you. You show respect to your father and things were not always financially good for you. However, you are a typical millennial, trapped in your own world, except for your very, very unusual ability to earn money. You think it is OK for the United States to enable the rest of the world and don’t acknowledge the trading disadvantage we have with China, which negotiates as a company while we negotiate as a committee.

    Except for a very select few, FIRE is not even a dream, and I am confident that at some point in time you will have a change of heart. You will be able to recover, but the feckless who embraced this approach unprepared will be – I believe the technical term is — “screwed” with no hope of recovery.

    Ms. Orman has many things right — particularly when she notes that there are “highways into poverty but just paths out.” I can tell that many readers of this blog are not financial high achievers, and for those, in fact for all but less than a few percent of American families reaching DIRE will take a lot of work.

    Reply
    • Financial Samurai says

      December 11, 2018 at 7:02 am

      Thanks for your wisdom Bob. I hyperlinked your view on Ms. Orman to my post that you might find interesting. It ended up doing very well on MarketWatch.

      Given your wisdom, what kind of things do you recommend we whipper snappers do to help get our finances right? Some background about yourself would be helpful.

      And thanks for categorizing me as a Millennial! It feels great to get younger, and not older :)

      Related: Sweet Dreams Of Becoming A Millionaire Again

      Best,

      Sam, Millennial

      Reply
      • Bob says

        December 11, 2018 at 6:01 pm

        First, I will say that giving constructive advice is a sure sign you like someone. And whipper-snapper — that’s not you. You are a little taken with yourself but a good person with sold values. No phony you.

        You castigate American “Alpha Males” but you don’t have the same reaction to the Chinese variety – the variety that is more powerful and subject to much, much less scrutiny. I do not think this is ethnic favoritism. I see this as an actual error in thinking, a learned and a systemic error — there is a kind of blind spot that likely generalizes to other areas of your thought process.

        It is worth thinking about.

        And think about all those folks caught in FIRE land vainly searching for the very narrow inaccessible path out.

        Reply
  24. Wealthy Content says

    December 11, 2018 at 2:19 am

    I just want to confirm, there will be a camp DIRE right? We can host it here in South Africa.

    Reply
  25. Laura says

    December 10, 2018 at 6:27 pm

    A-freakin’-men.

    Reply
  26. Frogdancer Jones says

    December 10, 2018 at 5:49 pm

    Speaking as someone in their mid-50’s, if I could retire now I’d be happy as a pig in muck.
    It’s still early retirement – you can’t get the Aged pension in Australia until your late 60’s.
    I like DIRE – enjoyed this post.
    :)

    Reply
  27. David says

    December 10, 2018 at 5:40 pm

    I never want to retire, work is the only thing I find interesting. I’m in my early 50’s and just starting to hit my stride. I would like to start my own business tho, I’d be a great boss! Some type of subscription business where customers remain loyal as the future unfolds…. open to suggestions from there.

    Reply
  28. Liz@ChiefMomOfficer says

    December 10, 2018 at 2:46 pm

    There goes my plan to declare my husband retired-would be so much better for branding. Oh well, I guess we’ll stick with stay at home dad.

    I like to plan to reach FI away before I would retire. I would be so bored in a “do nothing” style retirement. Pretty much my entire adult life has been spent doing something else on top of full time employment-going to school full time, getting my MBA, running my site. My father was similar, and he eventually turned his side hustle into a full time business when he was laid off from corporate America in his mid 40’s.

    Reply
  29. Dick Chan says

    December 10, 2018 at 2:27 pm

    DIRE Straits – Deja Vu 2008! Very painful times again!

    Reply
  30. Adam and Jane says

    December 10, 2018 at 1:56 pm

    “DIRE”, I didn’t know if you were kidding when you wrote this post since it was funny.

    In 1994 at age 30, I always wanted to retire at age 43. At 43, I failed to retire because I didn’t even know how much we spent each year and didn’t know the cost of medical. I always knew that the backup plan was to stay in our company for over 30 years until we reach 55 to get a 72K plus pension and money for retiree medical.

    In 2009 at age 45, I heard rumours of layoffs and had to build passive income from ground zero. I was banking on 5% CDs but they were paying less than 0.5%. My financial mentor suggested NY individual municipal bonds. Starting in 2010, we used almost our life’s savings to build a 3.5% to 5% bond portfolio.

    In 2014 at age 49, we became FI when our muni bonds generated 66K (46K for expenses and 20K for medical coverage).

    In 2015 at age 50, my financial mentor said we can retire at this age w/o waiting until we were 55 for our pensions to double to 72K. We would not get any money for company retiree medical if we left before 55. I told him that I wanted to work until 55 to get at least 8K for company medical since I estimated medical cost starting with 20K for 2 people and in 15 years with 8% yearly increases, medical coverage will be over 56K. He said 56K for medical insurance would be impossible since most people can’t afford it. He thought I was crazy for projecting medical that high. I rather be over prepared.

    In 2016, my wife was laid off with a 52K pension and 8K yearly for company retiree medical. Her medical was $11,064 in 2016. In 2017, it increased 13.51% to $12,558. In 2018, it increased 0.93% to $12,675. In 2019, it increased 8.34% to $13,733. It averaged about 8% per year. By the time my wife is 65, her medical coverage may be over 32K! This doesn’t include the $1,600 deductable! Let’s hope that medical doesn’t increase 8% yearly until we reach 55 since I can’t imagine paying 60K plus for us by age 65.

    In 2018, our bonds generated 89K tax free this year. Although we have passive incomes from munis, pensions and 401Ks which will cover 3x expenses, I am still working for another 9.5 months to reach age 55 so that I can increase my pension and get at least 8K yearly for retiree company medical.

    I am happy for the people that reached FIRE in their 30’s and 40’s. Our incomes were never that high so it took us a bit longer reach retirement by working 30 plus years in the same company. We don’t feel comfortable with lean fire and I am working until 55 to reach your definition of fat fire for financial security.

    Our pensions and retiree medical insurance are our golden handcuffs.

    Adam

    Reply
    • Financial Samurai says

      December 12, 2018 at 7:54 am

      9.5 more months can’t come soon enough! Like reading the last several pages of the best book on earth. Don’t want something to happen beforehand!

      Working until you can get max pension and health is such a no brainer. ENJOY the remaining months. Take all your sick days allotted to you and all your non carry over vacation days!

      Reply
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