The FIRE Movement might be a bunch of BS if you are a casual observer. There seems to be a lot of people who say they are FIRE, but then continue to make a bunch of money online, from books, from courses, and more. The doubters of the FIRE movement say FIRE bloggers have simply traded one job for another. And in reality, that is very tru.
If your investment income does not covered your desired living expenses, you are not Financial Independent Retire Early. In other words, if you have a $1 million portfolio spitting off $40,000 a year in income, you are not FIRE if your expenses are $60,000 a year.
Why The FIRE Movement Has Grown So Much
The FIRE (Financial Independence Retire Early) movement has gained tremendous momentum due to several reasons:
- We've experienced a bull market in stocks, bonds, and real estate since 2009. Therefore, many people are much wealthier and think they can't lose.
- There are now thousands of bloggers writing about their FIRE journey or FIRE lifestyles, just like how there were thousands of Digital Nomad bloggers writing about their lifestyles during the last recession because so many people lost their jobs.
- The mass media has latched on and finally started featuring sites like Financial Samurai that have been writing about FIRE since 2009.
Everybody wants to retire early, control their schedule, and be their own boss. It's not a surprise why the Financial Independence Retire Early movement has finally taken off. The internet makes it easy for everybody to observe or follow along.
Is The FIRE Movement Just Marketing Instead?
But what I've noticed is that instead of publishing numbers, many bloggers would rather publish selfies of their fabulous lifestyles instead.
A lot of FIRE bloggers will just write fluff posts about their opinions. It would be much better if FIRE bloggers wrote in-depth pieces about the cost of healthcare, the housing market, how to structure a defensive investment portfolio, how to manage an estate if you have children and so forth. At least it would be nice if FIRE people shared their actual net worth or retirement portfolio income. Otherwise, it just seems like a bunch of smoke and mirrors.
The occasional fluff piece about how you get to go skiing on a Wednesday is fine. But it doesn't really help anybody when you don't share any analytics to help people achieve financial independence as well.
Some FIRE bloggers have turned into those insufferable friends on Facebook who can't stop publishing photos of their vacations, their new wheels, their new hairdo, and how wonderful everything is. It's amazingly one-sided and Instagram curated how early retirement has become. It's off-putting.
Once you reach financial independence, there's no need to incessantly tell everybody how financially independent you are.
Why The FIRE Movement Is BS
Some believe the FIRE movement is bullshit for the following five reasons:
1) A lack of transparency.
If a blogger doesn't provide any information on how much income they made while working, how much they saved, how much investment income they are living off in retirement, and how much they make from their online income or activities, readers feel deceived.
There's one FIRE blogger who encourages everyone to write a “Transparency Post.” Yet when you read her Transparency Post, you will find zero numbers. She says she doesn't feel comfortable sharing the numbers and that it will detract from her message. Uh huh. talk about being a hypocrite.
Below is my estimated retirement income for 2021+ that pays for all of my family's living expenses in San Francisco. We still save at least 20% of our gross income a year, but that's becoming harder to do as our son grows older. Our ultimate goal is to generate about $300,000 a year in reoccurring passive income.
We currently live on around $200,000 a year for a family of four in San Francisco.
2) Working spouse.
A lot of male FIRE bloggers claim to be retired. Yet they have a working spouse who provides income, healthcare benefits, and so forth. Before the FIRE concept really took off in about 2012, most people who simply call this FIRE blogger a stay at home parent!
Alas, male FIRE bloggers have smartly rebranded themselves in order to feel better about their status in society. For some reason, men can't proudly say they stay at home dads yet. What a shame. We should be proud to be considered stay at home dads!
3) Always trying to sell something.
A lot of people feel the FIRE movement is a bunch of BS because so many FIRE bloggers are trying to sell something. For example, one FIRE blogger published a book about retiring early and has been aggressively working to promote her book by doing TV interviews, speaking at various corporations to promote her book and freelance writing on major news outlets.
Most people would call that work! And if you're that active in trying to sell your book, then it's natural for many people to believe that you don't really have enough passive retirement income to live a comfortable FIRE life.
Full disclaimer, I published a book in 2012 called, How To Engineer Your Layoff: Make A Small Fortune By Saying Goodbye. The book teaches people how to negotiate a severance and retire early or do whatever you wish. My severance provided for five plus years of living expenses, which was the key catalyst for having the courage to leave my job at age 34 in 2012.
After nine years and a new 5th edition for post-pandemic life my severance negotiation book now generates about $50,000 a year in passive income. This is unexpected retirement income that both my wife and I use to remain stay at home parents. That's the beauty of being FIRE. You can do whatever you want.
In fact, Penguin Random House contacted me to write a traditional book. I wasn't that enthusiastic about doing so. But I figured, what the heck since it's a nice bucket list item. They decided to pay me as well. So I'll take it.
4) Taking advantage of subsidies.
Rightly or wrongly, many people find the FIRE movement to be BS because many early retirees take advantage of healthcare subsidies, even if they have plenty of assets.
One FIRE blogger has three children and a $2M+ net worth. Yet he pays little taxes and takes advantage of ACA because he earns less than $35K a year. Getting subsidies is completely legal, but it rubs some people the wrong way.
The other issue people have with FIRE enthusiasts is that they don't seem to pay as much in taxes and are deadweights in society. Not many people view leaving the workplace during your most productive years as a wise move.
5) Not a good representation of people.
Half the U.S. population lives in expensive coastal cities. Yet the large majority (95%+) of FIRE coverage by the media comes from people who live in non-coastal cities where the cost of living is much cheaper. It makes sense given living in Longmont, Colorado is much cheaper than living in New York City.
But what happens is that everybody starts looking alike in the FIRE community? The vast majority of FIRE people and FIRE bloggers and podcasters are white. They end up interviewing, linking to all their white friends. It's too bad how homogenous the FIRE community is.
Expensive coastal cities like SF, LA, D.C., and Boston are very diverse cities. But given the mass media covering FIRE is pretty homogenous, and FIRE bloggers are also pretty homogenous, there ends up being very homogenous coverage which turns off a large percentage of the US population who just can't relocate to the middle of nowhere because they will feel uncomfortable.
If you add up all five points, there's no wonder why a lot of people are getting sick and tired of hearing about the FIRE movement. Further, I'm disappointed Financial Samurai doesn't get the credit it deserves for helping jumpstart the FIRE movement. Is it because I'm Asian? Or maybe it's because I'm not a public figure always trying to promote myself. I'm not sure. But let it be known that I started writing about FIRE in 2009.
What The FIRE Movement Should Do
To help make the FIRE movement more real and relatable to more people, there are some things the FIRE movement should do:
1) Talk about the negatives of FIRE from time to time.
This makes you more real and relatable. Nobody lives a perfectly happy life, no matter how much they want to curate their success to the world. The mass media should highlight more stores of people who are struggling to achieve financial independence as well.
2) Be more transparent about income and wealth.
There's just so much fluff out there. Not even big media is willing to publish the numbers for some reason. The key to being able to retire early is to have enough passive income to pay for your lifestyle without having to work. If you're saying you're FIRE, but have no passive income, then you're going to lose a lot of credibility since people will simply say you switched careers to blogging.
Here's a chart about how much in after-tax investments you need to accumulate in order to generate various levels of passive income.
As you can see from the chart, if you want to live a middle class lifestyle in a non-coastal city, you'll need $1,000,000 in after-tax investments at a 4% rate of return to generate $40,000 in gross income. After tax, we're talking closer to $30,000.
I don't know about you, but I sure as heck need a lot more than $30,000 after tax to support a family in San Francisco. Health insurance alone costs our family $21,000+ a year in after-tax dollars since we don't have employer subsidies.
You're probably going to need more than $30,000 a year in after-tax income to support a family if you live in Austin, Longmont, or any other heartland city too.
3) Include more diverse people in the FIRE movement.
Big media and bloggers should not only highlight a white male from Texas who has achieved FIRE, they should also highlight the Asian family from LA, a Latino woman in Miami, and a Black family in D.C.
The more diversity by race, geography, and income you have in the FIRE movement, the more buy-in there will be. When there is more buy-in, less people will think the FIRE movement is BS and more people will start living below their means and seeking to achieve financial independence sooner rather than later.
I was just listening to this podcast about whether the FIRE movement has involved. The three guests were all white and so was the podcast host. And then they had a “deep discussion” on why the FIRE movement is so diverse. It was hilarious how clueless they were! It was like having an all-white diversity committee at work.
The FIRE Movement Should Improve Its Image
As one of the original modern day FIRE bloggers, I'm optimistic the FIRE movement will improve its image.
I look forward to the FIRE community writing more about their struggles. I'm also looking forward to bloggers publishing their actual after-tax investment amounts or how much passive income they are living on so readers can get a clearer idea of what it takes to leave a job so early.
I will do my part in telling my story as an Asian family trying to stay financially independence and out of work in San Francisco or Honolulu. I hope big media and other people of all walks of life will share their stories as well.
Various FIRE Conditions: