When I first heard about the Financial Independence, Retire Early movement (aka FIRE), I was certainly intrigued. Afterall, the idea of retiring at 35 sounds like a dream! Then I crunched some numbers on how much money I'd need to save by 35 and began to feel a little overwhelmed. As someone recovering from frugal fatigue syndrome after my 3 year no-spend challenge, the idea of committing even more years to living on less in order to achieve early retirement felt extreme. As I dug deeper, I learned there were a lot more cons to the FIRE movement than the flashy headlines revealed. We'll be looking at those today as well as why I hate the FIRE movement.
Table of Contents
Why I Hate The FIRE Movement: 9 Cons To Early Retirement
- Unclear definition of FIRE
- Overwhelming options in how to achieve FIRE
- Lack of clarity on the finish line
- Frugal Fatigue Syndrome
- Trap for more burnout and feelings of failure
- Loss of purpose/identity
- Missing peak earning years
- False expectations
- How much money is enough to stop working?
- Is the FIRE movement overrated?
- Why I hate the FIRE movement:
First, this post is sponsored by Lexington Law, a trusted leader in credit repair. In fact, they are sponsoring the entire early retirement series. If you're new, I've been sharing everything from what the FIRE movement is to steps to achieve FIRE, and even what we can all learn from the FIRE movement. That's right, I'm not totally against it, I just have some serious issues with parts of it. At the end of the day, I believe we all need to make choices that support our life goals. Catch up on the entire series here!
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9 FIRE Movement Cons
Unclear definition of FIRE
You speak to five different people retiring at 50 or earlier and every single one of them will have a different definition of what that retirement looks like. In this post I talked about Lean FIRE, Semi FIRE, Seasonal FIRE, Fat FIRE and several other early retirement strategies. Every person has their own path of what will work for them; however that does make figuring out what will work for you a little confusing in my opinion.
Overwhelming options in how to achieve FIRE
If you plan to retire early, you'll have to think outside of the box as traditional retirement accounts/benefits won't be available to you until you're old enough. Here is a list of the type of retirement accounts/benefits I'm referring to from Lexington Law.
Now that doesn't mean early retirement is impossible. It just means you have a lot of options which can be overwhelming and hard to sift through. There are basic things you can do like reducing spending and increasing passive income (Lexington Law shares more specific tips on this here). But truthfully the options for growing your wealth are endless.
Lack of clarity on the finish line
Furthermore, the finish line is pretty confusing. I even received a comment the other week on this post about what it would like like for my family to live off $20k / year (so we could retire in 3 years, retiring at 35 for me) and $40k / year (retiring at 40 and 45 for my husband and I), where she essentially asked, “aren't you supposed to keep living off of $20k per year?” Which raises the questions:
How much money is enough to stop working?
That question is the easy one in my opinion. The formula for figuring out how much money you need to stop working is in this post. However, once that dollar amount is in the bank, then what? To the reader's question, do you keep living with extreme frugality to sustain your money? Where is the finish line truly? Do you move into semi-retirement? Go back to work? If you're looking for clear and clean cut guidelines for early retirement, the FIRE movement will not provide them.
Frugal Fatigue Syndrome
Frugal fatigue syndrome is when you've reached the point of exhaustion trying to save every penny. It's that point where you just want to order takeout because you're tired of hacking your grocery budget to cook dinner at home for $1.33 per serving. In fact, just like extreme dieting, extreme frugality may have the reverse effect one may hope for, in that it leads to extreme splurging. Which leads us back to the previous con of the FIRE movement on where the finish line really is.
Trap for more burnout and feelings of failure
I think there's an element of ego driving the FIRE movement. People get tunnel vision on a headline reading, “retire by 35 with $5 million in the bank” and it can feel like some sort of trophy.
For those attempting reFIREment with the goal to stop working forever, they may be deeply disappointed and feel like a failure if things don't go exactly to plan.
For instance, a lot of people attempt early retirement to get rid of feelings of burnout from a job they hate. Only the new extreme frugal living creates more burnout and then they throw in the towel and feel worse about themselves.
Or maybe things were going okay, but they didn't account for how risky FIRE is. For instance, what we've seen in 2020 with the global pandemic and recession. So their plans derail and they feel crummy that they're back to square one. Learn how to prepare yourself for the next recession here from Lexington Law.
Loss of purpose/identity
For many people, going to work everyday provides a sense of identity, purpose, and worthiness. People tend to value themselves based on the impact they are having in the world or how much money they are making. It's why so many people grieve or fall into a depression once they do retire: it's a loss of identity.
This isn't a guaranteed con, but a con that's not spoken about enough in my opinion. If you are going to focus on early retirement, focus on your mental health plan too.
How will you maintain a sense of purpose? What will allow you to feel good about yourself? Get clear on what your values and passions are and how can you continue to contribute towards bettering yourself, your life, your community, our planet, etc. once you've got your early retirement trophy locked away.
Is it even possible to achieve financial independence on a low income? The jury is still out. Honestly, the more I've read and people I've spoken with who are actually on track for retiring in their 40s or 50s, all have at least one of the following:
- high earning positions
- no kids if under 37
- a semi FIRE approach
- attempted FIRE after 40
While there is more diversity in the community than I once thought (I seriously only thought white men in tech were FIRE-ees), there is still little diversity in socio-economic status when starting this journey. I think it highlights a bigger issue we see in the personal finance space, which is that many people are carrying debt, underearning, and FIRE isn't even an option on the table.
Personally, I think it can be a little easier for some to attempt FIRE after 40. A lot are doing so with the goal to retire in 10 years at 50+ years old. In this situation, oftentimes, kids are becoming less financially dependent on them, college funds are taken care of, fewer years left on a mortgage and things generally seem a little more manageable. Those in this camp won't have to wait 20+ years to start collecting retirement benefits either. Making the early retirement journey a bit less extreme in my opinion than say a 25 year old without kids trying to retire by 35.
Missing peak earning years
According to compensation research, “Women reach their peak earnings at the age of 44… Men reach their peak earnings at the age of 55.” If you retire before then, you may miss out on your best earning years to live an even more comfortable and satisfying life.
When people hear they'll have something like, $3 million in savings by the time they are reaching retirement I think they end up with some false expectations especially when coupled with so many people touting their global citizen lifestyle.
Once you dive into FIRE you learn that many became global citizens because it was the only way they'd achieve FIRE (saving on taxes and more accessible health insurance).
Furthermore, when you calculate what it will actually look like to live off your target number, and factor in the average lifespan in the U.S. is about 78 years old, you may be surprised by how little it really comes out to be… which leads me back to: what exactly is the finish line? I want to live it up and go on more vacations the older I get, not keep things the status quo!
Is the FIRE movement overrated?
In my opinion, when you look at how the media hypes up the FIRE movement it is overrated.
I do LOVE parts of the FIRE movement. I think those who were already practicing it's principles are likely in a better position to weather coronavirus and a recession compared to those who weren't. Also love that it has people focusing on the future and getting excited about their money. Thinking about out of the box ways to make money; you can read more about how to make passive income from Lexington Law here. I love that there are so many stories people can self identify with and see what really is possible beyond the status quo.
However, as a mom who is the sole income for our family with a daughter under 2 and thinking about planning for future babies, I also think it has some limitations and is overrated.
Why I hate the FIRE movement:
If you read this post on alternative retirement strategies to FIRE, you saw that my husband and I focus on living our lives like we are already retired. We've taken non-traditional career paths that allow us to spend as much time with our daughter as possible and focus on doing things we enjoy.
Now don't get me wrong, that comes with its own set of issues. But we know that the first 6 years of a child's life are critical, so we are choosing to forgo an extreme early retirement plan in order to have balance and show up for our lives today.
Life isn't guaranteed. The idea of working really hard for the next 10 years to retire early, but missing out on our life in the present, just doesn't sound appealing to us.
That has meant cleaning up our credit scores, living frugally and finding new ways to save money, taking odd jobs and even working 3 jobs at times, and really being intentional about how/when/where we spend our money.
Regardless of what retirement path you choose, a strong financial foundation will be key. My friends at Lexington Law are here to help you repair your credit. Give them a call today here if you believe there are any inaccuracies on your credit profile. Those negative items can seriously cost you in so many areas of your life. From paying higher premiums, to even the job opportunities you have. You can read more about how credit impacts your life here.