More Mainstream Criticism of FIRE

There are a lot of legitimate criticisms of the Financial Independence, Retire Early (FIRE) movement. As I’ve written in the past Suze Orman has some very legitimate criticisms of the FIRE movement.

  • Many people pursuing financial independence do not properly budget for future medical expenses. Something I have also written about here.
  • By living off your investments at an early age you forgo decades of wealth building through compounded returns.

These are legitimate criticisms that must be factored in by anyone pursuing FIRE.

Then there are criticisms like this article published on Market Watch last week that suggests the FIRE movement is stupid and will leave people worse off than before they started.

I hate this article for three primary reasons;

  1. The author makes huge generalizations, blanket statements, and analogies that don’t make much sense.
  2. The author displays very little understanding of the FIRE movement, specifically why people are pursuing it and what happens after they achieve financial independence.
  3. Reading this article, I get the sense the primary reason this article exists is to stir up controversy and clicks.

People Pursuing FIRE are not your Average Savers

The math used in this article to trash the FIRE movement uses the average 401(k) balances of people in their 40’s to demonstrate how nobody would be able to retire with this amount of wealth.

Specifically, he points out the average 401(k) balance for investors aged 35–44 is $68,935. Using the 4% rule (Which the author refers to with some level of disdain) that would leave a person with $2,757 per year to live off. Which, as the article points out is not enough.

Anyone who truly understands and is perusing FIRE in a meaningful way will realize that $68,935 is not nearly enough money to retire in your 40’s. People pushing FIRE are NOT your average savers.

There are people saving upwards of 50% of their income. Whereas the average person might not even contribute enough money to their 401(k) to get the full employer match.

Apart from that 401(k)’s is not the only wealth that people pursuing FIRE accumulate.

  • Some people like Joel or Chad have used real estate to build wealth and achieve financial independence.
  • Other’s like Jillian has made significant sacrifices early in their life to build up enough wealth to retire at 32
  • While yes, some have used their 401(k) to retire by 40.

Not Everyone Will Achieve FIRE

The part of the article that makes my blood boil is the message that most people will not save enough money to retire by 40 so they are better off not even trying.

No, not everybody will be able to retire by 40.

Yes, it is still worth trying.

Those who save as much money as possible in their 20’s and 30’s with the goal of retiring at 40 might not achieve that goal. But they will be much wealthier and much better off than the people who saved next to nothing by the time they are 40.

Yeah, maybe you can’t retire by 40. But maybe your pursuit of FIRE allows you to retire at 55 rather than 75. If you go into your pursuit of FIRe with your eyes wide open that it may take longer than anticipated, I see no downside of encouraging people to save as much as they can early in life.

Financial Independence is not about sitting on a beach somewhere for 45 years. It is about empowering yourself to take hold of your finances, no matter how bleak your current circumstances might appear.

The central message behind FIRE (to me) is that building wealth is not something reserved only for the “1 percenter”. We all have the ability to build wealth and chart our own financial destiny.

No, we won’t all be millionaires or retired by 40. However, the more people who pursue FIRE and fall short the better. It will mean we have more people in society with less debt, higher savings, and more financial stability.

I think that is something we can all get behind.

This article is for informational purposes only, it should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions