By Richard
Quinn Published: Sept 11, 2019 7:28 a.m. ET
Dropping out to lead a stress-free life seems
childish
Although it’s only been a
few months since I first heard the term, I’m already tired of all the chatter
about the financial independence/retire early (FIRE) movement. This so-called
movement is so irrelevant that I don’t know why anybody,
including me, writes about it—and yet my curmudgeonly instincts compel me to do
so.
Don’t characterize me as
a movement hater.
To each his own. But consider a recent story in
MarketWatch about a couple—he’s age 44, she’s 33, plus they have
a small child—who plan to retire next year. My reaction: Simply being frugal
for the next 45 years isn’t enough. There’s a lot more you need to think about.
For instance, if you’re truly retired, what are you going to do, sit on a beach for eight hours a
day?
I’m all for frugality.
But then I read about FIRE devotees giving up luxury items and it all seems a
bit pompous to me. Let me get this straight: You give up stuff to live on a
tiny percentage of what you make—but that tiny percentage turns out to be
pretty close to what the average American earns in total.
Then there’s the family
thing. Are you thinking what I’m thinking? Those FIRE folks aren’t couples with
three kids to schlep from soccer to dance class. Often, they aren’t funding 529 plans, because there are no children or
they’re planning to make the kids take out loans.
I love the simplicity of
FIRE thinking: Save 40% to 70% of your income for several years. The goal:
Accumulate enough funds so that 4% of your nest egg equals what you spend each
year. Bingo, you’re set for life. That 4% rule is supposed to keep 65-year-olds from running out
of money during a 25- or 30-year retirement. But is it enough to keep up with
the vicissitudes of life from age 40 onward? In addition, aren’t these dropouts
effectively giving up much of their Social Security safety net, even if they do collect some
modest benefit based on their relatively short earnings history?
Hey FIRE folks, have you
been listening? There’s talk about a wealth tax, free tuition, baby bonds, free
child care and more. We have lots of government debt, that debt is growing
rapidly and we still need to fix
Social Security. Can you say, “higher taxes”?
I’m thinking that might affect your plan to live off your nest egg for 40 or 50
years.
If you’re living on
$40,000 in 2019, do you still want to live on the same inflation-adjusted
amount when you’re 70? Is the goal to be mega-frugal forever? I don’t get it.
The FI part of FIRE is
just fine. Who can argue against financial
independence? Go for it. But dropping out—the RE, or retire
early, part—to pursue a dream of leisure, travel and a stress-free life strikes
me as childish. But in many cases, it seems retiring doesn’t really mean
stopping work. It just means doing something that doesn’t sound like work.
Writing a blog, perhaps?
Over half a million Social Security recipients live outside the
U.S. Some of the FIRE folks look abroad for the
good life, mostly seeking a lower cost of living. If you want to
live outside the U.S. because that’s your dream, great. If you must live in a
place because your budget dictates it, maybe not so much.
Richard Quinn blogs at QuinnsCommentary.com.
Before retiring in 2010, he was a compensation and benefits executive. Follow
him on Twitter @QuinnsComments.
This column originally
appeared on Humble Dollar.
It was republished with permission.
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