Photo by Nik Shuliahin on Unsplash

Taking Aim at FIRE

Dude, the future is the future.

There has been quite a lot of noise lately in the world of FIRE (Financial Independence, Retire Early) as a result of Suze Orman’s comment on the Afford Anything podcast that a couple would need $5 million or even $10 million saved to retire at age 35. This is more than many FIRE folks attempt to save; more like $1–2 million. Her point was you would have to live so frugally on $1 million to make not working, not worth it.

The kicker though, was she said the reason you’d need more is everyone should fly first class on a vacation at least once. The FIRE community, predominantly frugal and minimalists, lost its collective shit apparently. Then Jared Dillian, former head of ETF trading at Lehman Brothers, poured oil on the FIRE by agreeing with Suze and now things are ablaze.

I know who Suze Orman is. I’ve never heard of Mr. Dillian, but if he’s the guy who brought the financial system down at Lehman in 2008, maybe we all should know his name. People screaming about money into Twitter and Reddit gets articles written about them. What I don’t get is — where’s the big take away worth screaming about? This is like Captain Obvious arguing with himself.

Pundits Abound

The number of “experts” and companies telling you what to do with your money and investments is astounding. There are lots. Some yell at you through the TV. Many ask you to pay money to join their exclusive club of stock pickers. Ask 100 of these guys a financial/stock market question, you’ll get 95 different answers. A large percentage predict the market — which no one can do — in their articles and commentator spots on CNBC.

Suze and Jared are some of these people who, I guess, can predict the future. Or at least predict the future is the future. Their argument is, $1–2 million isn’t enough to retire at age 35 because things in the market could change. They are condemning the FIRE community for assuming a 6% — 12% return on their investments with a 4% consumption rate to get them through retirement. This is the SAME advice MOST retirees or near-retirees get from their financial advisers. How can it be simultaneously common wisdom and dangerous advice?

FACT: No one knows the future. You have to make some kind of plan, for whatever future including college, career or retirement. Can things go wrong? Um, yes. The argument that you can’t know the future so therefore FIRE is dangerous, is craziness.

MORE IMPORTANT FACT: 31% of Americans have only 0-$5,000 saved and 40% of Americans can’t manage a $400 emergency with cash. Let that sink in a minute.

“I’ll have to work until I’m dead,” is also not a plan.

What’s FIRE Anyway?

Just like there are all kinds of people, there are all kinds of FIRE. LeanFire, FATFire, BaristaFire, are all variations on a theme; take control of your financial life so you can do what you want. There isn’t a program you sign up for, so if you can’t handle living on less than half your income, you’re not screwed, nor are you kicked out. The underlying philosophy of FIRE is rejecting the status quo, but the math is still math. I’ll also say the FIRE community is dedicated, educated and share their knowledge. The idea that they haven’t done the math is preposterous and insulting.

Work Till Your Dead

FIRE fundamentally rejects the notion we all must work at a job or jobs until we’re 67 or older to afford to stop working and retire. In order to reject that notion, you have to reject other financial and societal givens including living beyond your means, not saving, demanding a level of material comfort (e.g. flying first class), maybe consumerism in general.

It’s not that these actions are radical; common sense financial advice says to do at least the first two. What’s radical is questioning the underlying assumption that you will have to work until you’re dead. Questioning how you live your life and why, then doing something about it — is what makes FIRE, in all its forms, a disruptive idea.

“We buy things we don’t need, to impress people we don’t like.” ~ Tyler Durden

The FIRE movement is taking the wisdom of Fight Club and executing on it (except for the fighting part).

Math is Still Math

Anyone planning for retirement has to follow the same fundamentals:

1. Figure out how much money you’re going to need
2. Figure out how you’re going to get/save it

Whether you save your target amount by age 70, 40 or 25 doesn’t change those two steps.

Is there guessing involved? Yes. No one knows how long they will live. Do people put off things that scare them or make them uncomfortable? Also, yes. Americans don’t like to think about or talk about death. Also, that’s a long way away. Right?

But Something Could Happen…

No matter how well you plan, things change, life/shit happens. There are people who have a hard time with change or even thinking about it, so their solution is to just not plan. That’s not a solution. Neither is hope. I’m sure you noticed the pattern of denial and avoidance taking place in the last two paragraphs.

It’s Plan vs. No Plan

The underlying issue is not that the FIRE community will not have saved enough for their 40 year-long retirements, or that something in the future could go wrong and mess up the plan, it’s the majority of the country hasn’t seriously thought about retirement at all, has no hope of saving $100,000 let alone argue about saving two or ten million, or is relying on the delusion of luck, loyalty and social security to feed and shelter them for the rest of their Lipitor-extended lives. “I’ll have to work until I’m dead,” is also not a plan*.

I would rather plan to save $2 million and tweak that plan on the fly, than have no plan and therefore no savings. And if I can swing it, I’d rather save $2 million dollars as soon as I can and truly, passionately live the rest of my days, than sit at this desk making money for the man till I die. Telling people they can’t because there’s a future… (um, what?) is irresponsible, intellectually dishonest and missing the point.

*As of 2017, half of US households (163 million people) make less than $62,372 per year. One-third of citizens are either in poverty or near-poverty.