Is FIRE Actually Viable?
Chances are you already crossed paths with the FIRE movement, which stands for Financial Independence Retire Early.
You found it appealing and thought how awesome would be to have a passive income that would cover all your expenses. But is it actually viable?
Well, it is, but with a big asterisk.
FIRE implies that you save aggressively, pay any loans you might have in record time, and invest consistently. The goal is ofter to retire within the 30s.
Many FIRE enthusiasts seek to follow the 4% Rule, which consists of withdrawing only 4% of the investment portfolio without exhausting capital, over a 30 year period.
The 4% must cover all your expenses. Let’s say you want to retire at the age of 30 and you calculated that your expenses will be around $50.000. By the time you reached 30, you must have saved and invested $1.300.000.
Well, this is where the big asterisk resides. Most people don’t make enough money to achieve this goal.
Even if you bumped your desired retirement age to 35-years-old, you’d need to save over $40.000 per year — considering you started working by the age of 18.
The solution to this income restraint usually relies on extreme frugality, whereas people who follow the FIRE movement choose to save up to 80% of their monthly income.
This comes at the cost of low to none social activities, owning no vehicles, sharing a home with 4 strangers, or even limiting the diet to ramen noodles.
Though I’m all for saving and investing for the future, in my honest opinion, FIRE requires people to postpone their life.
Sure, it might pay off the freedom they’re able to enjoy, but can one really enjoy living the vast majority of their life resting?
Or does one have the energy to travel the world on a weekly basis? What about when they’ve seen everything there is to see? What’s next?
Part of having a “mandatory” occupation is the drive it gives us to reach our goals.
So why not loosen up a bit and expand the desired retirement age to 40 or 45?
That gives you room to live while you work to enjoy the rest of your life.
Inspired by a fellow creator, I decided to challenge myself to publish 100 short-form articles within January. This is article number 62.
