What if you love what you do? I find retirement to be not nearly so much fun and fulfilling as my work was.
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No comments on how stressful working in a regular job has become? If High earning, qualified people are ready to make serious lifestyle changes just to have a peaceful existence, then there is something seriously wrong with the current workplace.
Any ideas about how many of them were seriously sick of their job?
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If someone has a low income by choice, they usually ask others to subsidize them. They want discounts everywhere they go. I repeat, they have low income by their choice.
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As I recall from the article, many of these FIRE people were earning 6 figures practically right out of college, so with frugality it would be possible to save a lot.
But, what happens to their social security benefit when they go 30, 35, years without paying into the system? At a time (in their 60s) when their nest egg is dwindling, their "floor" will not be sufficiently strong enough to hold them up.
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I applaud the low consumption lifestyle these “retirees” are adopting and I appreciate that the original article made mention of the privilege that makes it possible for some of these families to create this opportunity for early retirement.
What I haven’t seen mentioned is how what is being described here is similar to the role stay-at-home parents (typically women) have been doing for ages - having the opportunity to choose other priorities over work, tightening their “belts,” etc.
However, recently, when a stay-at-home mom is the focus of the story it’s a cautionary tale about what she is giving up and risking as opposed to the success story of the blog-starting, cutting edge millennial. It seems like a fancy twist on something that has been happening for ages.
It would be interesting to learn more about the downside of these choices and how people find their way back into the workforce when it doesn’t work out they way they hoped and the workforce and/or financial landscape has changed.
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Good Afternoon: The health care conundrum is important; another possible solution lies in having a career in the public sector. Since many government jobs have union benefits, retirees *might* have access to low cost health plans (not to mention pensions). For example, my basic health care is free, while dental and optical cost less than $500/year with zero deductibles.
This explains why many savvy two-income families will have one member working in government; so the entire family can benefit from good health care coverage. Naturally, specific details will vary from union to union, depending upon local, state and federal contracts.
(Disclosure: FIRE with *much* less than one million in assets--pensions are a good thing, but zero debt is even better.)
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I'm sure I've missed key points to the whole plan, but it seems like a primarily selfish vision of ones needs. Oh well. Enjoy!
13
Health Care Health Care Health Care. "Medical tourism" for a serious event or cancer? I don't think so. Retiring early is nice, but how will you pay for that Health Care? And the comment about "not being obligated to pay for college" - why did you have kids again? Are you obligated for their care? well being? future? Spare me.
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@Ldraxx - If you're making enough to retire in your 30s, you probably have a college degree that was somehow provided for, or you would be hearing about their student loans. Yet they aren't planning to provide the same to their children. I do find that odd because without a high paying job, their children aren't going to be able to do the same as their parents. You aren't going to see McD workers making FIRE work.
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@Ldraxx I have three children, I paid nothing for their college. Florida paid a lot of it (tuition and books), they all worked to cover the rest. I did get my sons summer jobs at my employer for experience and more than minimum wage.
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@e Consider reading the book Flipping Burgers To Flipping Millions. It’s a book some kid wrote about achieving FIRE while working at McDs. :)
BTW There are high paying jobs out there that don’t require college degrees at all. I don’t have a degree, I’m 33, and will be retired soon. I like to think I went to the University of Life. It’s free.
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The main FIRE proponents seem to be largely male, white collar workers (often tech) who still blog/write/etc (i.e. have an income) and collect government subsidies or support in some way (see Mr Money Mustache response re: ACA, libraries for WiFi, etc). It also seems they got (over)paid while young rather than needing to take on educational debt or support a growing family.
Great idea to limit expenses and live frugally and thoughtfully, but somewhat disingenuous to sell the whole concept to the average soul.
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Instead of relying on the 4% rule, why not invest the money into an annuity? That way the money, in theory, is guaranteed at a fixed rate for the rest of your life, regardless of future recessions. Right? Or am I missing something?
I really like this FIRE idea overall. But it seems that a more rational approach would be to not fully retire, but to get a part time job or a low paying job that you really like (for me, it would be social work). That way you're not completely dependent on your retirement funds, but you're also not stuck in the rat race either. This way you're also not creating a large gap in your resume, which seems dangerous if you're ever forced back into the job market again.
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@timesreader The FI in FIRE stands for financial independence, so you don't need to do the RE (retire early) part. You can definitely be financially independent without retiring, and if you have a part-time job or other work you enjoy, it's nice insurance. The whole point is not being reliant on a job you don't like, so you do have the freedom to change jobs, take a sabbatical, or have time off to take care of an older parent (or whatever you need to do).
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@timesreader
Most FIRE people - like most people that are financially savvy avoid Annuities like the plague.
They are expensive - subject to bizarre taxes - impossible to get out of and typically underperform a 'self-constructed' annuity by a wide margin.
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Just to clarify: some annuities can be part of an appropriate investment plan.
Single-premium immediate annuities are the easiest to evaluate, and offer a good combination of income and security. A "self-constructed" annuity won't have the "mortality credits" that a genuine annuity would bring, and therefore will need to take more risks to achieve returns.
Annuities aren't appropriate for really wealthy folks (who spend a low percentage of their assets each year, and therefore don't need to take any investment risks), or really poor ones (who don't have enough assets to gain from annuitization). People in the middle may benefit from them.
4
Well, you answered some of the questions in my letter to the editor (always a mystery to me which articles do,or do not, get comment sections). Anyway, I congratulate those who will successfully live low consumption lives. The world needs more of them. But when divorce hits, as it will to many of these couples, good luck on living on half the marital assets-,especially the one with custody of the children.
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@Linda Jean
I don't think anyone should structure their life in anticipation of a divorce
11
@SteveRR So no prenups for you?
@vulcanalex
One is an understanding of what will occur if a divorce actually happens and the other is the abandonment of a life-path because of what might happen - so no - they are not the same.
3
The responses to how they will support their children’s education are sickeningly smug. The kids will not qualify for financial aid or subsidized loans and part time work will be a drop in the bucket. Unless the children take out huge amounts in private loans they will be unable to attend traditional college and subsequently be unable to ever retire because of the debt.
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@Nicole Engelbert Sure they will probably pell grants as their parents have little income. Here in TN college is free, in Florida it is as well.
12
The parents here who live frugally and don't feel "obligated" to pay for their kid's education but they will let their kids go into debt for their education is a bit of pretzel logic.
I decided to become a parent and I believe that college is part of my responsibility because it is a requirement to succeed at life.
I live frugally and I pay for almost all college costs with the kids working and helping as they go along. No debt at graduation is the goal.
The rule for our family: no debt.
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@Susie Green
How did you pay for your first car - your first house without debt.
Debt in and of itself is not the enemy - senseless debt beyond what we can support is the bad debt any family should be concerned about.
If kids go to a good public school in state and work before during and after then they will be fine. If you don't want your kids to ever have a job before graduating then that is more scary to me than 'no debt'
18
I hope it works out for these people, and the lesson of savings more and lowering your standard of living is one everyone should heed.
That said, I wonder if this is like reading stories about day traders in the dot-com era. It's working now, but we are living thru a record-setting bull market. Let's take someone with the advertised $1 million and drawing 4% a year that covers their expenses. Then rerun the decade starting from Sept 1968. The inflation adjusted return on the S&P500 was -21% meaning the $1 million would have dropped to abou 800K. The 4% rule says increase your draw by inflation (which occured during that decade) but lets hold the draw constant at 40K. That's another 400K out so the remaining portfolio would be down to 400K after a decade. Maybe things turn around, but maybe they don't.
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@Mike T.
That is not how the 4% works.
And anyone can cherry-pick a period with poor returns - why not choose the past decade.
As well - you would never carry a portfolio of only stocks. Typically you would be 60/40 stock bond.
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@SteveRR My portfolio is almost 100% stocks, all that pay dividends, and those dividends are tax free at the federal level because I don't make that much money. Bonds today are a very bad idea unless you own them directly and hold them to maturity.
1
@vulcanalex
And you made a fine - if fortunate - decision over the past decade - most risk neutral folks will want a balanced portfolio of bonds and stocks.
No registered or knowledgeable financial professional would recommend a portfolio of 100% equities for a retired person.
3
So folks are retiring in their 30's and then asking their kids to work throughout high school to pay for their own college? And here I have assumed that I was supposed to be a responsible adult caring for my minor children!
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@Sandra
Kids have worked after school since the dark ages.
They learn life skills and that stuff is not free.
I would rather my kids work then play video games for three hours after school and all week-end.
Your mileage may vary but my experience with kids that have worked in high school is that they are grounded, polite, and well-prepared for real life after college
34
@Sandra the FIRE people now have time to go support their kids with time (which is what we're taking for with money).
They can help with home work, volunteer at school, attend games and be coaches, be an ultimate stay at home parent.
This probably in turn pays dividends for their relationship with their kids and society.
26
@SteveRR... Don't forget we live in the age of parachute parents and entitled, always get a reward kids. So, of course there's a lot of parents here saying they'll fully take care of the kids throughout their lives... They might have 30+ year old kids in their basements still living off of parental wellfare.
Anyhow, I think moderation is the key, and help as much as you can... but you shouldn't just give an unconditional hand out, or detriment your own retirement. I'm Pro kids working part time jobs as it gives them responsibility, sense of worth, and financial management.
6