Why I am not a fan of “Retire Early” in the FIRE movement?
“Retired at 32. I will teach you how to #retire” - read the tagline of an Instagram influencer who spends time traveling, blogging, sharing saving, and investing tips. An advocate of frugal living, she frequently gives account of her frugal, bag packing, nomadic adventures. But I know someone else as well who also could have retired at 32 but is killing it in her Corporate job at 40. However, her life is much less ‘aspirational’.
What is FI/RE?
Financial Independence/Retire Early or FIRE isn’t a very old concept. It was born out of the 1992 best-selling book, You Money or Your Life. The idea was simple - work hard and save harder until 3% or 4% yearly returns of your investments cover the expenses. The day that happens you can retire, much before the traditional retirement age of 65.
Whilst the idea of FI (Financial Independence) is something that I love, it’s the RE (Retire Early) which I’m not a big fan of. You put in your papers the day your investment returns cover your expenses - whether you are 28 or 48 - only suggests how desperately you wanted to quit the workforce. What if you inherited enough money you could retire on even before you join the workforce? Although work can be monotonous, exciting, rewarding, depressing, or even thrilling - the reason why every generation leads a better life than the previous one is because humanity works hard and consumes harder!
“To work because you want to work not because you must pay the bills is arguably one of the most powerful emotions. It is not aspiring to not work at all!”
When I joined the workforce in my early twenties, I used to hear a lot about saving for retirement. And I was like “what’s the point of slogging and saving money for retirement when you are not enjoying the prime years of your life?” Saving for retirement felt like living in the (distant) future while screwing up today in the process.
However, in the mid-thirties now, I realize that the fuss shouldn’t have been about "retirement". It should’ve been about achieving Financial Independence - which can happen years before retirement. Financial Independence and Retirement have hardly anything in common, except the fact that the former is necessary to achieve the latter.
Retirement is the culmination of the idea “I’ve worked enough in life, now it’s time to hang up my boots”. Slogging, extreme saving and frugal living for 10 years to retire at 32 isn’t aspirational! Or is it? What is aspirational though is to be Financially Independent as early as possible in life. Then either continuing to work if you love what you do or find something else that you always wanted to do.
Retiring Early also partially stems from the (extreme cliché) vilification of the 9-to-5 life. I’ve met a lot of people who absolutely love what they do from 9-to-5. It not only keeps them going but they also love the stimulation and growth that a disciplined life has to offer (and of course, the paycheck!).
Is retiring too early practical?
Another reason why retiring too early is preposterous, is because someone, who saves 80% of the salary and retires by 32 could have 50 to 70 years of retired life ahead. A lot can change in those decades. You may suddenly realize you don’t enjoy traveling economy and wish you could afford to sleep straight-up in an over-night flight in the business class. Or you may suddenly feel like indulging in expensive sports or develop passion for luxury cruises. Or worst still, you could face a stock market crash and a decade long bear market like the 1930s.
Besides, the premise of the FIRE movement is to live frugally, save every penny and retire early. The money that you live on during your work-life tends to be the benchmark during the retirement phase - giving you little room to make drastic changes in your lifestyle later. This is another reason to carefully consider whether your future expenses are going to remain the same or not? If not, one’s better off accumulating enough to accommodate any unforeseen changes in one’s lifestyle or the (financial) world around you.
Social media has glorified the idea of living a nomadic life, showcasing someone’s life’s “trailers” which we get bonkers about comparing with our life’s mundane “behind the scenes”. The reality of today’s hyper-social world is that it’s easy to feel impressed and motivated but extremely difficult to live the life of the person on the other side of the screen.
The bottom line
The key, therefore, is not just to retire early, but to retire with a purpose. And if you find purpose in what you do in the years toiling to achieve Financial Independence, retiring early is hardly anything to crave for. If you find a purpose in your 9-to-5 life - if that’s your ikigai - your financial journey continues beyond Financial Independence to Financial Abundance.