FIRE Hype: Want to Retire Early? Not So Fast

I don't know who needs to hear this, but the FIRE movement isn't the best path to retirement for everyone. 

The idea of early retirement is compelling to many of us. In a survey conducted earlier this year, 41% of Gen Z and millennial Americans said they'd like to retire before reaching age 45. Our curiosity about #earlyretirement is apparent on TikTok, too, where videos with that hashtag have close to 140 million views.

The FIRE movement, which stands for Financial Independence, Retire Early, has been around since 1992. Originally coined in the bestselling book Your Money or Your Life by Vicki Robin and Joe Dominguez, it gained traction in the wake of the financial crash of 2008-09. With unemployment spiking to 10% and 401(k)s plummeting, some began to rebel against traditional get-rich-slowly financial advice. And as Reddit boards and social media took off, so did the FIRE community. 

The classic FIRE practitioners aim to dramatically cut expenses, save and invest until they've amassed about 25 times what they expect to spend annually in retirement, well before the traditional retirement age. More conservatively, some will multiply their annual expenses by 33 to get to what's called their "FIRE number." Within the FIRE community, there are different approaches, too, including Fat, Lean and Coast FIRE, which require lower FIRE numbers and may be more achievable. (You can read more about the different formulas here.) 

Once reaching their FIRE number, some also continue to generate income through blogs, online courses and coaching, or other income streams. The bottom line is that you're no longer tethered to the demands of an employer. You've earned the freedom to call the shots and live and earn how you choose. 

Recently, FIRE was showcased in the new Netflix documentary Get Smart with Money. Pete Adeney, aka "Mr. Money Mustache," one of the early role models in the movement, introduced a young family to the financial benefits of investing more than 35% of their $300,000 household income to retire in their 40s. 

The FIRE movement has an exciting promise, I'll admit. But I wonder if this idolized money model can feel impossible to achieve and leave many feeling defeatist. Saving over $1 million in a lifetime, let alone by age 40 or 45, is difficult to pursue without going to extreme lengths. 

I'm not saying you must abandon this goal or ditch the movement. But my main message is this: Don't let the fear of missing out on FIRE bring you down. There's nothing wrong with working through your finances and achieving independence gradually. 

And if you look into FIRE and decide you don't want to follow such an aggressive formula, use the opportunity to plot out different ways to plan for retirement. Here's my take on how you can use FIRE as a springboard to be more thoughtful about your money overall. 

Figure out what you're after

If the path of working for a company, saving a little at a time, and retiring in your 60s feels less stressful and more feasible than retiring early, accept that decision. If you're overwhelmed by the idea of achieving certain financial milestones or worried that you're missing out on the opportunity to retire early, consider why it's making you feel this way in the first place.

FOMO, or the fear of missing out, tends to flare up when we hear about others doing things that we find intriguing and then experience anxiety along with a sense of loss or lacking. The FIRE movement is no exception. 

But FOMO can create pressure to live up to an ideal that isn't necessarily healthy, said Chantel Chapman, co-founder of The Trauma of Money, a course that certifies professionals in trauma-aware and trauma-informed approaches to finance. When Chapman joined me on my podcast, we discussed how that urge to follow the crowd can prevent you from achieving your long-term goals, leading to paralysis or recklessness. 

When you experience FOMO, focus on the feeling you want to experience, rather than the thing you want to possess. This gets to the root of what you're aspiring to achieve and makes the solution personal to you.

For example, are you interested in FIRE because you want to feel part of a financial community and connect with like-minded people? If that's the case, you might try pursuing open conversations with your partner at home or joining an online support group. Depending on your goals, there are many social media groups, podcasts and websites that provide financial literacy and coaching. For budgeting inspiration, there's Inspired Budget and You Need a Budget. For investing help, I find experts like Amanda Holden and Delyanne the Money Coach to be approachable and fun. 

Or maybe you're interested in FIRE because you feel you've spent too little time thinking and planning about retirement in general. If that's the case, take advantage of the momentum to work out a realistic blueprint for saving or investing more in your retirement fund.  

Strive for balance over perfection

Chapman and I also specifically discussed financial FOMO, or a fear of not pursuing your financial goals the way others are. "Financial FOMO is essentially embodying this perfectionist expectation around how your finances should be," she said. 

The danger is how those expectations can affect your well-being, causing shame and creating material roadblocks. "The shame is going to impact your goal of being able to create that type of financial portfolio that you're desiring to create," Chapman explained.

She recommends a kinder approach to addressing our finances, which focuses on progress, not perfection. For example, working in steps and creating small, short-term wins, like eliminating that high-interest credit card balance by next summer, is more achievable than amassing $1 million by age 40 (and you're 37).  

In the Netflix documentary, Mr. Money Mustache, who is known for being extremely frugal, advised the couple to become more stringent about saving on groceries and housing. He recommended that they DIY their home remodel projects and invest more aggressively. I appreciated how the couple, who had two small children, aimed to strike a balance between saving for their future and enjoying their lives today. While they downsized and saved an extra $35,000 a year on housing costs, they also took a vacation that year.  

We all want to feel happy, secure and in control. But how we ultimately achieve these feelings should be different. Because last I checked, no two people were the same. 

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