Welcome to the “2-Minute Money Manager,” a short video feature answering money questions submitted by readers and viewers.
Today’s question is about early retirement; specifically, whether the FIRE (“Financial Independence, Retire Early”) movement is worth joining.
Watch the following video, and you’ll pick up some valuable info. Or, if you prefer, scroll down to read the full transcript and find out what I said.
You also can learn how to send in a question of your own below.
For more information, check out “18 Moves That Will Help You Retire Early and in Style” and “11 Expenses to Cut Now If You Want to Retire Early.” You can also go to the search at the top of this page, put in the word “retirement” and find plenty of information on just about everything relating to this topic.
Got a question of your own to ask? Scroll down past the transcript.
Don’t want to watch? Here’s what I said in the video
Hello, and welcome to your “2-Minute Money Manager.” I’m your host, Stacy Johnson, and this answer is brought to you by Money Talks News, serving up the best in personal finance news and advice since 1991.
Today’s question comes from Bruce:
“You should talk about the FIRE movement more often. Seems like retiring when you’re still young enough to enjoy it is much better than slaving away until you’re in your 60s or 70s. Isn’t it?”
What’s the FIRE movement?
The philosophy behind the FIRE movement is simple enough. In fact, it’s all in the title: “Financial Independence, Retire Early.”
So exactly how are you supposed to become financially independent and retire early? Investopedia describes the concept succinctly:
“(FIRE) is a movement dedicated to a program of extreme savings and investment that allows proponents to retire far earlier than traditional budgets and retirement plans would allow.”
And how does one succeed in a program of extreme saving? By ignoring our possession-obsession society and focusing instead on living a life of simplicity and meaning.
In short, FIRE is about saving and investing as much as possible as young as possible to become financially independent as soon as possible, and thus spend as little as possible of your life in a job you don’t love.
What a concept. I wish I’d thought of it!
Oh, wait, I did — about when the folks behind FIRE were in elementary school.
What’s old is new again
I’m one of a legion of personal finance writers who have preached “financial independence, retire early” since before the FIRE movement was a twinkle in any millennial’s eye.
It’s the foundation of my first book — “Life or Debt,” written nearly 20 years ago — as well as countless other books written by other authors before and since.
In fact, while I can’t prove it, I’d be willing to wager financial independence and early retirement were ideas hatched seconds after work was invented.
But like so many other radical “new” ideas, young adults often conflate packaging and practice.
Example: In 2018, the New York Times chronicled the achievements of FIRE adherent Carl Jensen, who managed to retire at 43 with $1.3 million in the bank after “firing.” A quote partially explaining how he did it:
“‘A lot of people think you’re a new-age hippie,’ said Mr. Jensen, who sold his four-bedroom, four-bathroom house, downsized to a more modest home and maxed-out retirement accounts while firing. ‘They can’t even wrap their minds around it.'”
Really? Mr. Jensen should read “Your Money or Your Life,” a book that promotes downsizing, as well as virtually everything else about the FIRE movement. It was first published in 1993. Or “The Millionaire Next Door,” an excellent read also promoting the FIRE philosophy, first published in 1996.
I acknowledge both of these books in my book, “Life or Debt,” first published in 2002.
The person who has garnered perhaps the most publicity for promoting FIRE would be Mr. Money Mustache, a blogger who retired at age 30 and now offers ideas and encouragement to other FIRE adherents. From an article from his blog explaining the philosophy:
“The bottom line is this: By focusing on happiness itself, you can lead a much better life than those who focus on convenience, luxury, and following the lead of the financially illiterate herd that is the TV-ad-absorbing Middle Class of the United States (and other rich countries) today.”
Now here’s a quote from “Life or Debt.” See if it sounds familiar:
“We’re like hamsters running on a wheel: a wheel that’s powered by the billions of dollars of advertising that we’ve been subjected to all our lives. It’s time, right now, to get off the treadmill. It’s time to decide to stop swapping our lives for meaningless things and start enriching our lives with the things we really crave instead. Things that are free for the taking.”
The bottom line
Mr. Money Mustache and others behind the FIRE movement are finding success by pasting a new label on an ancient concept: reprioritizing the present for a more rewarding future. Along the way, they’re stirring up controversy and getting media attention by implying that retirement at a young age is within anyone’s grasp.
Only a fool or charlatan would suggest that anyone can retire young based simply on fortitude and frugality. That being said, I don’t hate the FIRE movement. On the contrary, I like it. They’re promoting a critical concept for a new generation.
It’s better to be rich later than look rich now. Even if you won’t be retiring before your first child is born, that’s a great lesson to learn. Go for it, Bruce!
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The questions I’m likeliest to answer are those that will interest other readers. In other words, don’t ask for super-specific advice that applies only to you. And if I don’t get to your question, promise not to hate me. I do my best, but I get a lot more questions than I have time to answer.
I founded Money Talks News in 1991. I’m a CPA, and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.
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