Want to ruffle some feathers? All you have to do is utter “FIRE movement” on social media or in a crowded room of financial advisers.
FIRE—short for financial independence/retire early—has grown ever more controversial as rising stock prices have fattened the portfolios of super-savers and brought their early retirement dreams closer to reality.
I fit the mold of the supersaver. I’ve saved 90% or more of my after-tax income over the past few years. Below, I’ll explain how. That sky-high savings rate is on top of the solid financial foundation I built early in my working life, beginning in high school when I bagged groceries at Publix Super Markets. Still, I’m not a vocal advocate for the FIRE movement.
Read: This man reached FIRE at age 36 and says the key to happiness is ‘owning your own time’
For background, those who buy into the movement look to accumulate a portfolio equal to 25 times their annual spending or more. Based on a 4% withdrawal rate, that should be enough to cover your retirement living expenses.
To retire in their 40s or even their 30s, FIRE aficionados aim to save much more than they spend. They usually invest those savings in index funds, primarily U.S. total stock market funds. According to the stereotype, once these folks hit their target, they relax on a beach, put out a podcast, write a blog or do whatever else they please. In reality, many continue to work in some capacity to keep busy and healthy.
Read: I want to retire in a college town with low taxes — where should I go?
That’s the idea. Again, I don’t proclaim all this works as promised, nor do I subscribe to every FIRE movement nuance. But yes, at age 33, I am FI—financially independent—which is a nice thing. But I’m not about to spend my remaining days relaxing on a beach.
I need to stay active and social. No two ways about it. I also see being FI as more of a dimmer switch than some magical moment. There are so many risks out there—from a market crash to a health event to (God forbid) me finding that special someone. Certainly my “single dude” lifestyle would be far more expensive if I added a spouse, kids, a house and health issues.
So much can change over a retirement that, for the FIRE folks, might last six decades. Uncertainty is high. Right now, I’m financially independent according to all the metrics, having saved about 100 times my annual expenses. But I also know that could change quickly. I might go from 100 times to 50 times if my lifestyle changed. And then I might go from 50 times to 25 times if the stock market crashed.
Even with all that, maybe …….
Source: https://www.marketwatch.com/story/im-financially-independent-at-age-33-now-what-11616092130
