Early retirement is something that many people desire. In fact, the pursuit of early retirement birthed a movement that has picked up steam in the last several years. The financial independence-retire early (FIRE) movement started when a group of people decided to get out of their corporate jobs and do what they wanted to do.
Their path to financial independence (FI) follow some basic financial principles – spend less than you make, save and invest the difference, reduce or eliminate debt. These are simple concepts in theory. Few execute them effectively. Many who subscribe to these principles save fifty percent or more of their income. They live frugally and avoid debt like the plague. Some are frugal to the point of being minimalists.
To me, that sounds like a reasonable pursuit. Many, if not most, of the personal finance bloggers, subscribe to the principles of FIRE. But these principals aren't just for the FIRE community. We should all be following them in our lives to better manage our money.
As the FIRE community has grown it's received more public attention. Media outlets write about FIRE a lot these days. Some of the articles are supportive. Many are not. The argument isn't around these three principals. It's around the idea of early retirement.
It seems everyone has a definition of retirement that leaves no room for nuance; no room for alternative views. Like many modern-day arguments, people are making them loudly, sometimes hatefully. I guess it's a sign of the times. It's troubling to me.
I want to explore why this is happening and see if we can convince people to calm down. Okay, the last part is probably unrealistic. But I'm an optimist, so here we go.
Early retirement and FIRE are not new
Some say the concepts of FIRE started with the book Your Money or Your Life by Vicki Robin and Joe Dominguez. It was originally published in 1992, with revised additions published in 2008 and 2018. It's sold over 1 million copies to date.
The authors promote the three pillars of personal finance listed above. Many people take exceptions with parts of the book. That's not surprising. I can't say I've ever read a book where I agreed with everything written. Overall, though, the book and its principles are sound.
The Early Retirement Dude traces the history of FIRE back much further. Read this article if you want a detailed walkthrough history up to modern-day FIRE. Mr. ERD spent some serious time putting this together. He traces FIRE back eight hundred years. Mr. ERD points to the little guy getting access to the capital markets in the early twentieth century as the turning point for the modern-day financial independence culture.
Though good arguments are made against it, FIRE is for anyone who wants it. One criticism lodged is that FIRE is made up of white males who made high incomes in the tech world and cashed out and into early retirement. There is some truth to that argument. But nowadays, I find the community to be very diverse in many respects.
The poster child for early retirement
Pete Adeney gets credit (rightly or not) for launching the modern-day FIRE movement. His blog, Mr. Money Mustache, gained fame and made Pete a small fortune (a slight exaggeration, but close to $500k a year ain't bad) for his efforts. He was a prolific writer when he started his blog. He wrote an article every day. As a blogger, that blows me away. We're not talking about short, pithy little articles. We're talking in-depth articles with incredibly detailed descriptions of financial concepts.
He published his first article on April 6, 2011. Though many bloggers have been around much longer, Pete's blog took off. He gets millions of page views every month. Pageviews are bloggers lifeblood. Eyes on the page are what we all seek. It attracts advertisers, affiliate relationships, and sponsored content to monetize (make money from) our blogs. Though not everyone blogs for revenue, Pete showed the kind of money available to bloggers.
Pete's success and his telling of his journey to FIRE spurred many Millennials to seek FI. Side hustles became their way out of the “rat race.” Many started blogs. Others invested in real estate. Some used dividend stocks and funds to create outside sources of income. A few do all of these things.
The idea behind Pete's success was to save 25x your expenses and use the 4% rule to let your investments replace the income from your corporate job. Applying the three principles of spending less, saving and investing more, and reducing debt are the steps to follow to get to your number quicker.
Pete was not the first personal finance blog. Others who started long before Pete and write with equal or greater expertise. Pete found the magic combination to attract media attention and pour fuel on the FIRE (pun intended) that already started. That fuel gave birth to the current personal finance blogging community.
There are well over 2,000 blogs who list themselves as personal finance related. Some focus on retirement. Some focus on budgeting and frugality. Others are more broad in their content. When I peruse one of the online directories of blogs, I see that most of them are in the Millennial generation. That makes sense. Boomers (like me) are too late to pursue early retirement. People in their twenties and thirties are the ones with a reasonable chance to get to early retirement. Gen Xers have a presence in the community as well.
At the end of the day, it's more about getting to financial independence than early retirement. The point is to have a choice. If you save and invest enough money to replace your current employment income, you have more choices in your work life. You don't have to feel stuck in a dead-end job or one that feels pointless. Financial independence offers freedom. That's the attraction to the movement as I see it.
Many who achieve FI choose to continue in their full-time jobs. Though they may not be ideal, those jobs provide the income that allowed them to get to FI much more quickly. They don't necessarily hate their jobs. Some do. But not all.
Those who reach FI and decide on early retirement seem to be the target of all the vitriol thrown around these days.
Early retirement controversy
Boomers and beyond
Sorry for the somewhat long-winded history and background. Some of you may not know this history. Others may not care. I hope it helps you understand why early retirement so controversial?
To me, it lies in the definition of retirement. When we look at the “traditional” definition, retirement meant you worked at your job(s) as the means to the end goal of retiring and not working any longer. Historically, the U.S. was an agrarian society. From there, it moved to industrial. With the onset of international trade, many manufacturing jobs moved overseas where cheaper labor and less restrictive regulation made it easier to do business. That moved the country into more of a service and technology-based economy.
Throughout the agrarian and industrial periods, it was common for workers to stay at their jobs until they retired. Most didn't have to worry about retirement income. In the old days, pensions provided a guaranteed income to retired workers. The higher your salary level, the greater your pension income. If workers lived by the three personal finance principles, they retired with low expenses and little to no debt. They had savings to take care of emergencies. Though some did, retirees didn't need to work in retirement.
The source of the anger
When the Boomer generation and those before them look at retirement, that's the picture they see. If that's the definition you have, seeing others retiring at younger and younger ages seems foreign. Working in retirement isn't really retiring.
When Boomers and the older generation see people retiring twenty to thirty years earlier than they did, it makes many angry. Some Millennial bloggers stir up that anger when they disparage those who stayed at their jobs, even though they weren't ideal, to provide for their families. They saw the sacrifice as something they needed and were willing to do.
For many of them, it's not the early retirement in and of itself. It's the perceived attitude that goes with it. It's the arrogance of some in the community.
Those with lower incomes
Another vocal group who finds fault with the early retirement crowd are those in the lower-income brackets. Many of these hard-working folks feel like early retirement is out of reach. They're scraping by on incomes that barely support their families. In many cases, both mom and dad work. They're paying for childcare for their younger children. They live modestly, saving what they can.
When they read bloggers talking about how anyone can FIRE, they bristle. These writers validate the view that many personal finance bloggers are out of touch with the general population. When they talk about saving 50% of their incomes and living on a food budget of $250 a month, they can't conceive it. They talk about moving from a high-income area to a more affordable place. The term for that is geographical arbitrage. Here's the thing.
Geographic arbitrage is expensive. If you're living on a lower income and a high-expense area, it's hard to implement. The concepts are great. Many people benefit from it. But when people on modest incomes hear others saying how all you need to do is move to a lower-income area, they bristle. Again, they leave out the nuance and minimize the risk.
To be blunt, it pisses people off to hear bloggers shame people for not doing something they think everyone can do. In my opinion, it's the shaming nature of the personal-finance community that brings out the anger in so many.
A small sample of the vitriol
One of my good friends who I came to know over the last year and a half is Steve Adcock. You've heard me mention Steve a number of times in my posts. What I love about Steve is he's not afraid to take on controversial topics. If you're a regular reader of Money with a Purpose, you know that describes me too. Steve's blog is ThinkSaveRetire.
Steve is one of those guys who took early retirement. He, his wife, Courtney, and their two dogs currently travel the country in the Airstream trailer. They sold two houses and most of their possessions to pursue this lifestyle. Listen to some of the things people have said about Steve and Courtney's choices:
“My wife and I have been called selfish for not wanting children. We’ve also been accused of “living off the fat of the land” in a “life of destitution” because we chose not to sentence ourselves to frustrating commutes and insane deadlines at full-time work.
People assume that we're dirt poor because we live in an RV, but then assume we are filthy rich because that RV happens to be an Airstream.
It's amazing how much people will say when they can do it anonymously via the internet. We say things we'd never say to a person's face. Steve recently published a post about what would happen if we stopped caring what people think. It's a great read.
So, how can we become part of the solution to this problem?
Three steps to change
Here are three things we can all do.
1. Be more open-minded
In life, there will always be people with whom we disagree. Rather than try to understand them, it's popular to try and discredit them. When that doesn't work, it often moves to personal attacks. Racism, sexism, and many other “isms' come out of closed minds. We have opinions about things we often have little experience with. Our opinions get shaped by what others say or by what we'ver read on the internet.
How about we try to learn about the opposing view; try to understand why that view exists. Are there things in the view we find in common? What personal experience did the person or group with that view have in common? Why do they have such strong beliefs?
Rather than blow off with a visceral, emotional response, how about taking a step back to see their side.
2. Be less judgmental
It seems like a contact sport these days. We think our viewpoint is the only one that matters. When our minds are closed (see point 1 above), we become more judgmental. Berating someone for something does not motivate them to listen to us. In fact, it does just the opposite. It makes them dig deeper into their belief and do the exact opposite of what we think they should do or think.
Those of you married and reading this know exactly what I mean. When I challenge my wife on something she's doing that I think should be done differently, how likely is it she does it the way I think it should be done? Right! The chances are slim to none.
When someone feels judged, they are not going to listen to the person doing the judging. They are certainly not going to change. Follow the advice in #1 and see if the results aren't different.
3. Allow space for opinions different than yours
I'll apply this one specifically to the idea of early retirement. Just because you and I may not conceive how it's possible doesn't mean it isn't for others. The criticism of those who retire early often comes out of jealousy. That's a trait that rears its ugly head far more than it should.
The comparison game is a losing game. There will always be someone who does what we do better. They will have more stuff, prettier husbands and wives, better jobs, and many other things we think are important. That doesn't make them bad people. They've chosen the paths they've chosen. We've done the same.
I always try to remind myself we don't live in a Facebook/Instagram world. You know that world, right? It has pictures of the perfect house, the two beautiful children, and the happiest of families. The internet is a wonderful place to create our fantasy worlds. Don't be deceived.
There's much more to the story than what we see on Facebook.
Early retirement doesn't mean a perfect life
Everyone is fighting some kind of battle. We all have scars we don't want anyone to see. People who choose early retirement are no different. Though their lives may seem perfect, they are not. Cancer can strike them just like anyone. Divorce can too. Their investments can tank just like yours and mine. Their real estate investments can go sour.
My wife and I were on our way financially. Then life happened. We found out our son was a heroin addict. Life quickly spun out of control. We kept up the happy public face. Inside, we were fighting a battle on all fronts. The story is in the midst of a very happy ending. The point is, how we looked on the outside covered up a battle going on behind the scenes.
I have been one who judged the early retirement crowd in the past. I've written about it. Was some of that out of jealousy? I hope not. But who knows. Maybe it was. As I've come to know more and more people in the community, my view has changed. The early retirement community I've come to know are a hard-working, generous group who have taught me a lot.
Are some of them arrogant? Sure. Do some of them come across in a condescending way? Yup.
I try to take the advice of a very good friend who says this, “Don't let an incident become an indictment.” Translation – Don't let the actions of a few become an indictment of an entire group.
Let's be part of the group that brings positive change. Let it start with us, no matter what anyone else does. Be more open-minded, less judgmental, and leave room for views that differ from ours. It may not change the world. But is sure can change ours.
Now it's your turn. Where am I off base? What would you add? What's your experience with those who retire early?