Smoke Screen or True FIRE

Even firefighters can get burned

Earlier this month, it occurred to me that all this chatter about early retirement lately reminds me of the late-90s, and it makes me think that a severe market correction is on its way.

Recently, the FIRE (financial independence, retire early) movement traded barbs with financial wisdom expert Suze Orman when she made disparaging remarks about early retirement. The ridicule coming back was fierce, and “escalated quickly” to align with Millennial nomenclature.

Unfortunately, what Orman’s critics do not understand – and what many FIRE proponents have not learned yet -- is that there are a lot of unforeseeable changes ahead. Orman is coming from the perspective of having lived through all the changes that she has, and she knows how unpredictable life gets. She knows that even the best laid plans often go awry. And she knows, but she graciously did not say it, that, in the case of a majority, FIRE is a fad.

As troublesome as instant gratification in everything is, delaying gratification in everything is fraught with its own pitfalls. As tragic as it is to say, witnessing the early deaths of fellow FIRE proponents or other friends will make many re-evaluate those priorities. And in terms of gratification, it is very rewarding to put $10,000 aside today and have it equal $15,000 within two years.

If their target is to retire between the ages of 35 through 40, then they are more likely than not earning a salary that reflects a full college education and equal work experience. That means that they started about 10 years ago, at most 15 years. Therefore, whatever little amount that they had invested in the markets were not devastated in 2008-09. They remind me of my peers who attempted early retirement based on the rising markets of the late-90s, most of whom refigured (or abandoned) their plans once the market retreated. While setting aside $10,000 and having it rise to $15,000 within two years reinforces that behavior, having that amount then equal $8,000 after five years will be a different story altogether. If the early deaths of peers do not make them reconsider their commitment, this financial loss could start a paradigm shift away from the lifestyle.

More to say than Twitter allows

I knew a girl whose face looked at least 10 years younger than she was. It was age-defying. But it was not natural luck or good genes. It was the result of a concentrate regimen. Her list of don’ts, won’ts and can’ts was extremely limiting. It is not that most people are unaware of the damage their skin suffers and how it ages them, but they have weighed the pros and cons and have decided that aging skin is worth the benefits of having fun in the sun once in a while. Many FIRE proponents are living their lives to a set of rules far more restricting than conventional wisdom, and all for the sake of forgoing the same conventional wisdom.

It is not that today’s FIRE kids cannot retire early. Suze Orman and I (and others) know that upwards of 90% simply will choose not to retire early.

To be clear, I am not rooting against the FIRE proponents. I am crediting that at least 10% of them will see the commitment through (and I hope it is more). Besides, plenty of FI/RE proponents will experience the markets tumbling below where they started investing, and immediately think “it’s a FIRE sale!” (Which, for the record, was my reaction in 2008 when it happened in relation to my own purchases in 2003 and thereafter.) But having a bit more experience and wisdom in life and in the markets, I am just a lot more skeptical and more reasonable to believe that most of the FIRE kids will see it through.