The Financial Independence Retire Early (FIRE) movement is hot! With a bull market since 2009, many people in America and around the world have gotten wealthy by owning stocks, real estate, and other risk assets.
As a result of our massive increase in wealth during a relatively short period, many people are warming up to the FIRE movement where they retire in their 30s, 40s, or 50s to live the good life supported by their investments.
I define being financially independent as having enough investment income to cover your desired life’s living expenses.
Some people go the Lean FIRE route by living relatively frugally. While others strive to go the Fat FIRE route because of their desire to live it up. Only you can decide whether you’re truly comfortable with your finances.
For us, we’re still about $50,000 a year short in passive income to feel completely independent financially. That’s what happens when you have kids. Therefore, our FIRE journey continues.
Instead of glorifying financial independence and those who are financially independent, let’s have a more difficult conversation. I’m sure some of you find it nauseating to read about some FIRE folk’s fabulous lives.
Not all is sunshine and samurai swords in the land of FIRE. In fact, one could argue that most FIRE folks are maladjusted misfits who’ve never been able to fit in.
The Not So Obvious Reasons People Want To Achieve FIRE
Here are my 10 not so obvious reasons why people want to become financially independent. The truth hurts. But the truth also sets us free.
1) Can’t find the right job. Nobody quits a job they love. But only truly fortunate people can find such jobs. Most of us are not smart enough, talented enough, connected enough, or attractive enough to work at a dream job. Instead, we toil around doing something we dislike simply for the money, aching to escape reality.
2) An easier way out. Instead of grinding for decades at a job we hate, it’s easier to just give up and quit. Why keep on going as a cancer research scientist after not coming remotely close to finding a cure after 15 years? We might even love our jobs, but after working for years with no recognition, eventually the love wears out. Early retirement is like the coward’s solution to not having to try our best anymore.
3) The desire for instant gratification. Instead of putting in our dues to get to the corner office, we want to be the big boss now. The internet and social media have made us expect instant success when we all know that it can sometimes take 10 years and 10,000 hours to make true progress. When we don’t get our way, we quit, rather than acknowledge we lacked patience to reach our goals.
4) An excuse for being unemployed. During the last downturn, a large number of people began to write about location independent lifestyles that enabled one to break free from the 9-5 grind and do what you really want. In reality, we all know that what most of these people actually wanted was a good job and to be accepted by society because they got fired. Saying one is financially independent feels better than saying one is unemployed.
5) An inability to get along with others. When you have a difficult time conforming to the rules and being told what to do, it’s much harder to stay employed, let alone be happily employed. FIRE seekers tend not to be very good at collaboration. Most are introverts and very awkward socially. Those with excellent social skills derive energy from being a part of a group. The desire for independence simply isn’t top of mind.
6) Realization that time is precious. With the median lifespan hovering around 80 years old, you only have 15 years of retirement to enjoy your life if you retire at 65. People in this camp have a heightened awareness of time and therefore do everything possible to make sure they are financially stable sooner, rather than later. Nobody wants to the climb the steps of Santorini on a bum knee.
7) Tired of making other people richer. As the wealth gap continues to widen, more people are realizing their time spent in the office is making someone else rich, not so much themselves. It’s not very motivating to hear the CEO makes 1,000X more than the average employee’s wage.
8) Declining physical and mental health. Roughy one billion people in the world, or 15%, have some sort of disability. For some, their disability will get worse over time. As a result, more people are feeling the necessity to live their best lives now.
9) Young children. It’s bad enough if you already dislike your job. Life gets even worse if you have to leave the people you care about the most and must pay strangers to care for your kids so you can work at a place you despise. The desire to FIRE before kids is extremely selfish in comparison. Parental guilt grows internally, especially when you observe some households with a stay at home parent.
10) FIRE FOMO. The more people who have achieved FIRE and write about FIRE, the more people will become aware of this alternative lifestyle. Big media coverage about FIRE has also increased tremendously since Financial Samurai started talking about achieving financial independence sooner, rather than later in 2009. What was once thought possible only for the very rich now seems possible for any working soldier with the right financial framework and mindset.
The Risks Of FIRE
Now that we’ve discussed some of the real reasons why people want to achieve financial independence ASAP, here are some risks of FIRE once you get there.
1) You may look foolish if you change your mind. Imagine retiring at 40 after 18 years of work after college. You spend the next five years traveling the world, living a leisure lifestyle and experiencing new things. At age 45, you suddenly realize the reason why travel and play are so fun is because of work. You want to get back into the game, but who’s going to risk hiring a 45-year-old with a five-year employment gap? The employer logically chooses to hire someone who’s been continuously working.
2) You get sick and/or run out of money. No matter how conservative we are planning for our retirement needs, something unforeseen may happen. Maybe you have a medical disaster, or your house blows down. Maybe your investments tank due to a massive recession. Although I believe the risk of running out of money during FIRE is overblown, there is still the possibility of a negative sequence of events.
3) Friends and family fade away. It’s nice to have all the time in the world to do whatever you want. But, if your friends and loved ones are busy working all day, they can’t join you on your midday hike or adventure to Tahiti. They may also have a family to tend to during the evenings and on weekends. If you’ve ever taken a staycation by yourself, you’ll soon realize how lonely it is when others are busy leading their own lives.
4) It may be difficult to support a family. Unless you have a tremendous amount of after-tax retirement savings, raising children may be too expensive an endeavor to undertake as an early retiree. Loss of day job income plus the additional expense of child raising might simply be too much to bear. Parents regularly underestimate how much they want to provide the best for their kids.
5) You lose your own self-respect and the respect of others. Unless you’re out there saving the world, you might start getting depressed because you’re contributing very little to society. Others may stop respecting you because you may not be doing anything productive either. Traveling the world and writing about how great your life is on social media isn’t helping anybody.
Final Idiosyncrasy Of FIRE
As I strive to fulfill my goal of FIREing a second time around, I’ve come to the realization I’ve been constantly chasing a moving financial target.
In 2012 at age 34, my goal was to achieve $100,000 in retirement income within three years post work. After my wife left her job in 2015, I increased our retirement income goal to $200,000. Then, after our son was born in 2017, our retirement income goal jumped to $300,000.
Does this mean if we are blessed with a second child, our retirement income target would now jump to $400,000? If so, I’m never going to be able to relax and smell the roses because generating $400,000 in non-401(k) income is a Herculean task.
But I can’t even pick up my boy without feeling soreness in my back! Oh no.
This desire to build an ever greater financial buffer in FIRE is one of the biggest inconsistencies I’ve experienced since leaving corporate America.
Wanting more must be part of the human condition. Or perhaps I’m simply too afraid to let my family down.
Until I’m completely satisfied with my finances, I can’t claim to be financially independent. Let the grind continue!
Readers, what is your definition of financial independence? Have you noticed your retirement income goals have changed over the years? If so, how come? What are some other not so obvious reasons why people want to achieve financial independence?