The DIRE Movement Rises For Early Retirement Seekers

The DIRE Movement RisesThe DIRE Movement has replaced the FIRE Movement for early retirement seekers after the economy peaked in 2018.

With droves of young adults finding it difficult to live off their meager investments while freelance work opportunities dry up, the DIRE movement is only going to increase in popularity over the next decade.

While the desire to be financially independent and retire early from jobs they hate will continue, people will wisen up to the foolishness of leaving work in their 20s and 30s. Building a great wealth and achieving financial freedom is all about allowing your investments to compound for a long enough time in order to live off your passive income.

If your passive income cannot cover your best lifestyle expenses, you are not financially independent, no matter how loud you claim to be. Let's look at DIRE in more detail.

The DIRE Movement Rises

On the one side, there is a 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.

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. With a slowdown in the economy on the horizon, things are not looking good. 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!

Here is the DIRE movement in detail.

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, I pay $1,760 a month, or $21,120 a year for a platinum plan. None of us are overweight or have any serious chronic illnesses either.

Education costs, specifically college tuition has grown ridiculous 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.

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 65 to inherit anything.

Today, the average age when women start to have children is 28. Therefore, future generations will likely have to wait even longer to inherit anything, all else being equal.

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.

Average Inheritance Amounts By Country Chart

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

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.

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.

E is for Expire

The DIRE Movement Rises 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. Instead of retiring in their 30s or 40s, they decide 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.

Embrace The DIRE Movement

The good thing about the DIRE Movement is that it will save lives. By making people more humble and prudent about their finances, the DIRE Movement increases the chance for everyone to achieve real financial freedom.

Quitting your job with just several hundred thousand dollars will really create A LOT of self doubt. Even one or two million might not be enough if you have a family to support.

You will always be wondering whether you have enough and whether you did the right thing. Trust me, I did just that at 34 years old, even with a net worth of over $2 million back then. It wasn't until I turned 40 in 2017 that I finally calmed down and was able to really kick back and live the early retirement dream lifestyle.

That said, once my son was born in 2017, my worry to provide increased again, despite having grown my net worth 5X greater since I first left work in 2012. Things are better in 2019, but if the stock market and real estate market indeed tank, things are going to be DIRE again.

May I suggest everyone boost their savings rate, invest in more balanced risk assets, build better relationships at work, and develop new income streams beyond your day job income. You'll be glad you did when you look back on your life.

Best of luck on your financial journey!

Recommendation To Build Wealth

Manage Your Money In One Place: Sign up for Personal Capital, the web’s #1 free wealth management tool to get a better handle on your finances. In addition to better money oversight, run your investments through their award-winning Investment Checkup tool to see exactly how much you are paying in fees. I was paying $1,700 a year in fees I had no idea I was paying.

After you link all your accounts, use their Retirement Planning calculator that pulls your real data to give you as pure an estimation of your financial future as possible using Monte Carlo simulation algorithms. Definitely run your numbers to see how you’re doing. I’ve been using Personal Capital since 2012 and have seen my net worth skyrocket during this time thanks to better money management.

Personal Capital Retirement Planner Tool