Myths and misconceptions about financial independence and early retirement

As the financial independence and early retirement movement (or FIRE movement, for short) has gained popularity, some myths and misconceptions have sprung up about what it entails. Too many people make assumptions about what the FIRE movement is and what it’s made of.

A lot of folks think the FIRE movement is cult-ish. Some think that financial independence and early retirement are only for rich white people. (Or, more specifically, for white men in the tech industry.) Others say that early retirement is only possible with a high income. Or you can only do this if you’re so frugal it hurts. And, of course, there are folks like Suze Orman who “hate hate hate” the FIRE movement because they believe you need millions in order to retire — early or otherwise.

I’ll be honest. Each objection and complaint about financial independence contains a grain of truth. But each objection and complaint misses the point in some important ways.

Today, let’s look at some of these myths and misconceptions about financial independence and early retirement, and explore why these myths and misconceptions are myths and misconceptions.

What IS financial independence?
Before we dive in, here are the basics of FIRE for those who are unfamiliar.

Financial independence and early retirement are two terms for the same concept: You’ve saved enough money that — in theory – you shouldn’t ever have to work for income again…unless you want to. We talk about “financial independence” because too many people want to argue over the definition of retirement.

Roughly speaking, you can consider yourself financially independent (and able to retire early) when your investments equal 25x your annual spending. There’s some nuance to this, but that’s a fine rule of thumb. So, if you spend $50,000 per year, you’ve achieved F.I. when you have $1.25 million in your investment accounts. If you spend $20,000 per year, you need $500,000 invested. If you spend $200,000 per year, you need $5,000,000.

Financial independence is achieved by creating a gap between your earning and spending. This gap — your saving rate — is the key to achieving all financial goals, especially early retirement. The larger your saving rate, the sooner you’ll build the life of your dreams.

That’s it. That’s all there is to it. It’s just math — plus hard work and patience.

While researching this article, I found a October 2018 survey of the FIRE movement produced by TD Ameritrade. The Harris Poll talked to 1503 Americans about their money and about early retirement, then TD Ameritrade interpreted the results. This is the only systematic survey about FIRE that I know of, and I’m going to refer to it throughout this article.

Financial Independence Isn’t Possible with Kids

The most common misconception about FIRE is that it’s not possible if you have children. When I explain the idea to people I meet, this is often the first thing they say: “Well, that works great if you’re single, but it just won’t work if you have a family.”

Parenthood is an expensive proposition. The USDA estimates that it costs roughly $250,000 to raise a child — and that does not include college. Obviously, this means that if you have children and want to retire early (or achieve other financial goals), you’ll need to earn more money. But children don’t make financial independence impossible.

In fact, from my experience, most folks in the world of FIRE have kids. It’s the norm rather than the exception. (This 2019 article from Marketwatch profiles several families pursuing financial independence, including Angela from Tread Lightly, Retire Early.)

Kids are only a barrier to your financial goals if you allow them to be. And the reality is that many people in the FIRE community take great pleasure in their children, especially in educating them about how money works. (Doug Nordman recently published a book called Raising Your Money-Savvy Family for Next Generation Financial Independence. That’s a mouthful, but the gist is FIRE can be a family pursuit.)

Financial Independence Requires Extreme Frugality

Probably the second-most common misconception is that financial independence requires extreme frugality. “I don’t want to live like a miser,” people tell me, and they dismiss the FIRE movement without fully understanding it.

While thrift is certainly a virtue, it is not a requirement for achieving financial independence. If you have a high income, it’s perfectly possible to retire early even while enjoying a luxurious lifestyle during your working years. (But a good salary is required for this to work.)

If your income is average — or less — then some degree of frugality is needed, no doubt. Again, financial independence is all about math. There are only two variables here: what you earn and what you spend. If you can’t adjust one variable to boost your saving rate, then you have to adjust the other. (Ideally, you’d adjust both.)

For the sake of completeness, I should point out that there’s actually a third variable involved. What you do with your savings is also important, so your return on investments is another factor. But these are the three fundamental variables of financial independence: what you earn, what you spend, and the rate of return you earn on the difference.

Believe it or not, the afore-mentioned FIRE survey found just one key difference between those are and those who aren’t on the path to financial independence: F.I. folks spend about 7% less of their income on housing — and put about 7% more of their income into saving and investments. (These numbers are more striking if you frame them differently. FIRE folks allocate 30% less of their budget to housing but set aside 78% more of their budget for investing.)

FIRE budget vs. regular budget

So, what’s the source of the misconception that financial independence requires hard-core thrift? I think it probably stems from the fact that two of the earliest proponents of the modern FIRE movement were Jacob from Early Retirement Extreme and Pete from Mr. Money Mustache, both of whom advocate extreme frugality as a path to wealth. They’re not wrong. But they’re not the only ones who are right.

Financial Independence Requires a High Income

The flip side of the “extreme frugality” myth is the belief that financial independence requires a six-figure salary.

Now, this myth is grounded in reality. Most folks in the FIRE movement do have high incomes. They’re doctors or software engineers or entrepreneurs. Or they work multiple jobs so that they can earn more. The TD Ameritrade survey makes this clear. While it is possible to pursue F.I. with a low income, it’s much easier to do so with more money.

FIRE survey income graph

There’s a reason for this. You reach FIRE by increasing the gap between your earning and spending. Thus, a high income absolutely accelerates the process.

That said, there are plenty of people who reach financial independence without making millions of dollars. This is only possible, though, if you keep your expenses low. Remember, this is all about math. You want to increase the difference between your income and expenses. If your income is low and you can’t (or won’t) increase it, then your only option is to cut expenses.

Also, I hope it’s obvious to you that if both of these beliefs exist — FIRE is only possible through extreme frugality and FIRE is only possible with a high income — then neither is likely accurate. Because that’s the truth.

In reality, financial independence is best achieved by finding balance, by doing whatever possible to both increase earnings while decreasing expenses. Ultimately, your aim is to increase the gap between the two, to increase your saving rate. How you choose to do this depends on your own strengths, goals, and circumstances

Let’s look at some actual data! According to the TD Ameritrade survey about financial independence, FIRE folks take both approaches: increasing income and reducing expenses. But one is a clear favorite.

income vs. expenses in the FIRE community

Of those surveyed, nearly twice as many people prefer to increase their saving rate by cutting expenses rather than increasing income. From my experience, this is largely due to the fact that it’s easier to cut costs than to boost earning power. If you were motivated, you could slash your non-housing expenses drastically in only a couple of weeks. But it takes time and planning to increase your income.

Financial Independence Is a Get-Rich-Quick Cult

My brain has grown numb from the people who call the FIRE movement a cult. It’s not a cult. There’s no leader. There’s no rulebook. There isn’t even collective agreement on many of the core concepts. (Seriously, you should see the arguments in the financial independence subreddit.)

The FIRE movement is a loose collection of like-minded folks who are all pursuing similar aims: They want to save enough that they can quit their day jobs and pursue more meaningful lives.

Now, it’s true that FIRE folks can exhibit cult-like qualities.

  • They’re enthusiastic about the subject, so they can be evangelical and want to share with the people they meet.
  • They use a lot of jargon, which is unfortunate.
  • They tend to lead unconventional lives, eschewing a lot of what most people consider “normal”. (I downsized from a fancy 1800-square-foot penthouse condo, for instance, to a quirky 1100-square foot “country cottage”.)
  • They tend to hang out with each other, both online and in the Real World.

It’s also true that the FIRE movement is indeed about getting rich quickly. (Or quick-ish, anyhow.) But this isn’t a bad thing.

Typically when we talk about get-rich-quick schemes, we mean shady enterprises that are somehow meant to trick people and/or build wealth by cutting corners. These schemes are scams. They offer promises that cannot possibly be fulfilled.

Financial independence isn’t a scam. It’s math. There’s nothing shady about it. It’s simply the process of putting existing tools to use in a highly-efficient manner so that you can make the numbers work in your favor.

Most folks save 5% to 10% of their income. Aggressive financial advisors urge their clients to save 20%. People in the FIRE movement have saving rates of 50% — or higher. There’s nothing scammy about saving more of your own money.

Financial Independence Is Only Possible Through Privilege and Luck

During the past year, a new myth has reared its ugly head. And it’s a myth that gets me riled up.

Some have begun to argue that financial independence and early retirement are only options for folks blessed by privilege or luck. (Better yet, both.) The point of these pieces — whether explicit or implied — is that preaching the power of personal responsibility is misguided, that we should instead focus on the Big Picture in order to improve economic opportunity for people.

I agree that privilege and luck do make it easier for some folks to achieve their financial goals than others. I, as a white man, have enjoyed benefits that other demographics have not. And systemic poverty is a real problem. Fundamentally, there are barriers that make it extremely difficult for certain people to succeed. I think it’s great that there are people out there who want to prioritize a fight for public policy that leads to increased wealth for more people.

Having said that, I also value personal responsibility. I’m not going to mince words here: Those who deny the power of self-determination are full of bullshit. No, agency isn’t going to be equally effective for every person. Some who take action will enjoy better results. Some people are starting from much better positions than others. And bad things will happen. They happen to everyone.

But I believe — strongly — that individual action is always the most effective way for any given individual to better her circumstances. In fact, “action beats inaction” is one of the fundamental tenets of my financial philosophy.

It’s so frustrating to to hear people argue that personal action doesn’t work. They’re wrong. And what they’re doing (without realizing it, I think) is giving people permission to do nothing about their circumstances instead of resolving to take responsibility.

Here’s the thing that really bugs me though. This is a false dichotomy. It’s not either-or. These aims aren’t mutually exclusive. You can pursue both systemic change and personal responsibility at the same time. That’s how I’ve tried to live my life, and that’s how many others in the FIRE movement live theirs. I believe that those who argue solely for policy change are just as misguided as those who argue solely for personal responsibility.

Privilege and luck play a hand in the FIRE movement, yes. But from my experience chatting with hundreds of early retirees over the past decade, more folks find financial independence through deliberate efforts to save more and spend less than through the whims of fate.

Some will dismiss my response here simply because I’m a white guy. Fortunately, the message of self-determination is prominent in all demographic groups. Because it’s important. For instance, check out The Wealth Choice: Success Secrets of Black Millionaires from Dennis Kimbro or A Latina’s Guide to Money by Eva Macias. Same message, different delivery vehicles.

Financial Independence Means Never Working Again

It’s a persistent myth that when somebody retires early, she’ll never work again. People think that once you achieve financial independence, you transition to an indolent life of luxury: beaches, martinis, pedicures, personal assistants. This simply isn’t so.

In nearly every case I know, folks who achieve FIRE maintain their existing lifestyle. In fact, that’s usually the goal. People on the path to financial independence generally make a deliberate decision to save enough to fund their current way of life. That’s the explicit aim. Only a handful of people want to live large after early retirement.

Plus, many of people do choose to work in early retirement, just as many choose to work after traditional retirement. The so-called Internet Retirement Police want to argue that “if you work, you aren’t retired”, but this is bullshit. This has never been the definition of retirement.

Work gives people purpose. It offers meaning. It lets them do good work that improves their community — and the world. And sure, work provides additional income. There’s nothing wrong with that. If anything, earning more in retirement is a smart risk-mitigation measure. But mostly, the jobs we take after reaching financial independence help us to fend off ennui.

I always use myself as an example when tackling this subject. I have enough saved that I don’t have to work again if I don’t want to. And, in fact, I took some time off for a couple of years to do nothing. But you know what? A life of leisure isn’t all it’s cracked up to be. It turns out that writing about money makes me happy. It brings me fulfillment and gives me a reason to get up every morning!

I’m reminded of the end of one of my favorite TV shows, The Good Place. (Spoiler alert!) Our main characters reach the quasi-heaven of the afterlife, where every wish is fulfilled and life is perfect. But they’re surprised to find that the existing population of The Good Place is anything but happy. The residents are numb. They’re bored. Why? Because having it all doesn’t mean anything without context.

FIRE folks are not Scrooge McDucks!

Financial Independence Is All About Greed

Another myth that bugs me is the belief that the FIRE movement is all about greed, that we’re a bunch of Scrooge McDucks looking to hoard our wealth for selfish purposes.

Sure, there are people who are in this only for themselves. They’re like Han Solo in Star Wars, who has no interest in defeating the Galactic Empire. “Look, I ain’t in this for your revolution,” he says. “I’m not in it for you, Princess. I expect to be well paid. I’m in it for the money.”

If that’s your aim, fine. I’m okay with that. Who am I to judge other people’s motivations? But I think it’s a mistake to ascribe this motive to everyone in the FIRE movement. (Or even to most people in the FIRE movement!) Those who learn about financial independence and stick with it often have higher aims.

Famously, Mr. Money Mustache, one of FIRE’s most prominent voices, makes no secret that his website is only secondarily about money. His goal is to get people to live lighter on the world. He wants to help the environment by reducing consumption. He wants people to be rich, happy, and to save the world.

Or there’s Vicki Robin, one of the modern FIRE movement’s earliest voices. When I wrote to ask about her initial inspiration, Vicki responded:

“I wanted the world to be a better place. More beautiful. More aligned with my highest sense of interrelatedness of life. I was also influenced by Thoreau and Emerson. I studied utopian communities as early as high school…Money itself was never of interest.”

Vicki’s vision is clearly evident in Your Money or Your Life, her 1992 book that inspired many folks in the FIRE movement to pursue this path.

And what about about Tanja Hester from Our Next Life? Tanja is all about using her position in early retirement as a force for good.

As you can probably tell, I’ve thought a lot about this, and I’ve had many discussions about the topic. In fact, I’ve begun developing a talk on this subject, which I presented for the first time in October 2019. And it’s a big reason that I recently ordered a copy of What We Owe to Each Other by T.M. Scanlon. (The other reason? “ELEANOR — FIND CHIDI”.)

For more on this subject, check out my article on what happens after you achieve financial independence.

Financial Independence is a Fad

Finally, there are a lot of people who believe the FIRE movement is a fad, and that its popularity will fade with time.

Some would put me in this camp. I’ve been very vocal that I do believe FIRE’s current popularity is a product of the past decade’s roaring economy. Times are good, so personal wealth has grown. People feel rich. They’re interested in topics like early retirement. But when I started Get Rich Slowly, things were bleaker. Frugality and thrift and getting out of debt were the popular topics.

The past 11-12 years have produced an extraordinary set of circumstances that have allowed many people to build wealth quickly — if they had the ability (and knowledge) to invest in either real estate or the stock market. As a result, there’s a bunch of people who find they’re able to retire early if they want, and that’s led to greater interest in the FIRE ideals.

In one talk recently, I claimed that we’ve reached “peak FIRE”. And I stand by that. But while I think we’re at (or near) peak popularity for this subject, I do not think financial independence is a fad. In fact, I know it’s not.

If you research the history of financial independence, you can see that this idea has been around for a long, long time. In 1758, Benjamin Franklin was espousing many of the core concepts we know and love today. But it wasn’t just Franklin. Throughout the 19th century (and into the 20th), many books promoted “pecuniary independence” as a path to financial fulfillment.

What we’ve seen lately — over the past eight years or so — is a rapid refinement of these concepts, a codification of the steps required to build wealth rapidly. It’s sort of how the the various elements that make up the theory of evolution had been around for centuries, but it wasn’t until Darwin published On the Origin of Species that the entire process was neatly packaged in one place.

The Bottom Line

Most of these myths about financial independence and early retirement stem from the same problem: assuming that the FIRE movement is homogenous, that there’s some unifying motive or method. There’s not. Financial independence isn’t simply one thing. Early retirement is different for everyone.

From my experience, the only thing that unites FIRE folks is math. This pursuit is only possible by creating a personal profit, a gap between what you earn and spend. That’s it. That’s the only commonality.

Before I close, I’d like to address one final myth. There are those who discover the idea of financial independence later in life. They don’t decide they want to retire early until their forties — or fifties. Too many times, people abandon the idea because they think they just can’t make it happen.

But according to the survey I’ve been citing this entire article, the average FIRE adherent starts his journey to financial independence at age 37 and plans to retire in twenty years. Only one-third of FIRE folks start before age 30. (In July, I met Becky Heptig who writes the blog Started at 50, which is all about this subject.)

There’s no question that starting early helps. It makes a huge difference. But you know what’s better than starting yesterday? Starting today. Don’t fret having waited so long. Start where you are.

If you’re intrigued by financial independence and early retirement but don’t know where to start, check out The Money Boss Manifesto, my free guide to achieving financial freedom. There are no sales pitches in this thing. It’s not an attempt to upsell you. (I don’t think I even ask you to sign up for my mailing list!) The Money Boss Manifesto is a legit free introduction to the framework of financial independence and early retirement.

If this subject interests you and you want to learn more, you should read it.

To wrap things up, I’d like to point out that my buddy Diania Merriam recently hosted a webinar about FIRE misconceptions, assumptions, and criticisms. Diania is the founder of the EconoMe conference, and I’ve been helping her in a volunteer capacity lately. She’s awesome. I haven’t watched the video from the webinar, but I suspect it’s solid. If this topic is up your alley, you should absolutely watch the video below.

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There are 30 comments to "Myths and misconceptions about financial independence and early retirement".

  1. Patrick says 10 December 2020 at 13:34

    Solid T-Swift reference. Surprise album release tonight! You gonna get the cassette tape?

    • J.D. says 10 December 2020 at 13:41

      I might if she releases one. She didn’t release a cassette for “folklore”. She did release vinyl, which I like, but it was expensive. But no doubt: I’ll be up past bedtime tonight listening!

  2. Febe says 10 December 2020 at 17:00

    One of the reasons why people think it’s a cliquey cult is because the same people are highlighted over and over again.
    You say FIRE isn’t just white men, but you basically help propagate this reality by only highlight white men and then some white women in this post.
    Were you aware of what you did? Or was it subconscious?
    The reason why diversity is needed bc people just tend to hang out with and take care of people who look like themselves.
    Please recognize your bias JD. Plenty of amazing other people in the FIRE community who don’t all look like you.

    • J.D. says 11 December 2020 at 16:21

      Sorry, Febe. This was flagged by our spam filter. I only now just caught it.

      Warning: This response is long. And I’m riled up by your comment because, honestly, you’re a part of the very issue I’m describing.

      I think you’re right that there’s a problem with the same people being highlighted over and over again in the world of FIRE. When articles are written about financial independence and early retirement, reporters always interview the same folks. It’s the same cast of characters telling the same stories. They’re good characters and good stories, but it’s repetitive and serves to create a narrow view of what FIRE is (and can be).

      So, I try to be diligent about finding new creators and, when possible, featuring them (both here and Apex Money). For instance, I pointed to Becky from Started at 50 in this article.

      That said, one reason certain people get mentioned over and over is that they’ve played a foundational role. I talk about Vicki Robin, Doug Nordman, Jacob Lund Fisker, and Pete Adeney all of the time (and so do many others) because they played pivotal roles in stoking the modern FIRE movement. If other folks had sparked the fire, I’d highlight them instead.

      I certainly try not to propagate this problem. As I say, I’m constantly searching for new material from new writers. I do my best to feature men and women equally. (I even alternate male and female pronouns when giving hypothetical examples.) And, when possible, I try to point to non-white contributions to personal finance (and to FIRE, in particular).

      But sometimes perception doesn’t match reality. For instance, you claim that I only highlighted white men in this post when I explicitly did not do that.

      Here, in order, are the people I talk about or link to in this piece. In each case, this was a deliberate, conscious choice. There wasn’t anything subconscious about it.

      Suze Orman (via Paula Pant*)
      Angela Rozmyn (via Tanja Hester)
      Doug Nordman
      Jacob Lund Fisker
      Peter Adeney
      Emma Pattee (via Chelsea Fagan)
      Dennis Kimbro*
      Eva Macias*
      Peter Adeney, again
      Vicki Robin
      Tanja Hester
      Becky Heptig
      Diania Merriam

      Those folks marked with as asterisk* are people of color. Now, let’s look at the demographics here.

      Women (10): Suze Orman, Paula Pant* , Angela Rozmyn, Tanja Hester (x2), Emma Pattee, Chelsea Fagan, Eva Macias*, Vicki Robin, Becky Heptig, Diania Merriam

      Men (4): Doug Nordman, Jacob Lund Fisker, Peter Adeney (x2), Dennis Kimbro*

      So, four of the fourteen people whose work I featured here — or about 29% — are men. That’s six out of sixteen (38%) if you count when I name-drop Franklin and Darwin. (Let’s count them because it makes some numbers prettier in a moment.) Yet you read this as me highlighting only men. Why is that?

      Now, let’s compare U.S. demographics to the demographics of the folks featured here. (I got my numbers from the U.S. Census website.)

      * U.S. Population: women (50.8%), men (49.2%), white (76.3%) — so, we can extrapolate white women (38.8%), white men (37.5%), people of color (23.7%)

      * This article: women (62.5%), men (37.5%), white (81.3%), white women (50%), white men (31.3%), people of color (18.8%)

      Obviously, I never write articles looking to get that close to statistical averages, but come on. That’s pretty fucking good! Amazing, really. Is it possible to do much better using a sample size of sixteen? Yes, by featuring fewer white women and more white men.

      So, let’s revisit what you wrote: “You basically help propagate this reality by only highlight white men and then some white women in this post.”

      Let me ask you: Who is the one exhibiting bias here, me or you? It’s you. And let me ask you what you asked me. Were you aware of what you did? Or was it subconscious?

      Look, there’s no question I have bias. We all do. We can’t avoid it. But I work hard to be aware of my bias and to make GRS an inclusive place. It’s frustrating to do all of this work and have readers not only not notice it, but then claim I’ve done the opposite of what I’ve actually done.

      Please recognize your bias, Febe. Because what you just did isn’t helpful.

      • yogi says 13 December 2020 at 23:18

        Just saw this comment.
        Wanted to endorse JD’s point about divesity and how FI principles are universally applicable to all demographics.
        With my personal example.
        I am a 50-year old middle-income male from India, a low income country. Following these solid FI principles for more than a decade, am at the cusp of FI.
        The principles are the same- living below one’s means, prudent investment with a defined asset allocation in low-cost (index) funds aiming to reach 25X ( X=annual expenses) with discipline over years.
        Have been a GRS reader for 14 years now and this site has helped me stick to the path of FI.
        So JD, a warm hug to you. You have helped a lot of folks like me.

  3. Lisa @ Mad Money Monster says 11 December 2020 at 03:17

    Great article, J.D! I’ve been known to voice my frustrations regarding the FIRE movement in the past. I continued to look at it from an outsider’s POV and thought it was a bit misleading in many aspects. I agree with your points though and have since calmed down a bit and have accepted what FIRE actually is and what it is not.

    I found your point regarding housing of particular interest. My husband and I bought another primary home about a year ago and we really struggled with making the right purchase. We struggled against our lifelong desires of a big suburban home and the practical needs of our 3-member family. Ultimately, the FIRE burned. We decided on a modestly sized home in order to keep our high savings rate and goal of financial independence.

    Again, thanks for this. I enjoyed it as my first article of the morning. ??

  4. Joe says 11 December 2020 at 06:42

    This is a pretty thorough rundown of the FIRE myths. I think it’s really an excuse to avoid making a big change. Most people believe it’s easier to keep on doing what they’re doing. It’s hard to change your lifestyle.
    That’s probably best, really. Consumer spending is 70% of the US economy. If everyone changes their spending habit, the economy would be even worse.

    • Ryan says 11 December 2020 at 12:30

      It could be the same amount of spending, just delayed. Sure there may be some contraction at first, but as people retired, they would spend more in retirement than current retirees do.
      I know that’s the way it’s going to be for my wife and me. We’re saving now to spend later.

  5. Joel says 11 December 2020 at 07:41

    Love it JD. I hear the “no kids” misconception a lot. Some people think because I don’t have kids that’s the sole differentiator between me and them achieving FIRE. Sure, having no kids might put me a little ahead financially, but it’s not the only difference. You said it well, “Kids are only a barrier if you allow them to be”.
    cheers and happy Friday!

  6. Fred says 11 December 2020 at 07:44

    Great article. FIRE is no fad. My grandfather was born poor. He worked hard and retied at age 49 in 1961. He raised a family along the way. He started a small business as a hobby. It was very successful, he hired several people. He hired more people than he strictly needed so he could work less himself. He was FI so he didn’t need to work all day.
    My 1st boss retired in his early 50’s in 1993. Sold the family home and traveled with his wife for the rest of his life.
    Both men were smart and industrious. They didn’t waste money but they also had their toys and fun activities. Wise and balanced lives. The tern FIRE wasn’t used back then, but it is what they did.

  7. Dylin at Retire By 45 says 11 December 2020 at 09:43

    Excellent article, J.D.! I’ve written about many of these myths on my own blog, but you put it all together nicely. I especially like that you found a study about the FIRE movement. I wish there were more out there, so we can better understand the FIRE community. I’ll definitely be sharing this one. 🙂

  8. Eric at Rental Income Advisors says 11 December 2020 at 13:14

    Really enjoyed the read, JD! Great rundown of a lot of the misconceptions — I particularly struggle with people who think “retiring” 2 years ago meant I would be sitting around on the couch the rest of my life. Ironically, I feel like I’m busier than ever, but it’s on my own terms now.

  9. Treo says 11 December 2020 at 14:48

    “Financial Independence Means Never Working Again” – That really resonates with me, because Financial Independence is really about being able to make your own choices. The concept I like to think of “f-you money”, where one gets to the point where they only work because they enjoy what they do, they make an impact, they get fulfillment from the work, but they don’t need to for the paycheck alone; finally, and most importantly, they can walk away if the work isn’t satisfying anymore. Interestingly enough, at least for my experience, the closer I’ve come to that point (probably another 3-5 years out for me and my family), the more I’ve been earning and the easier money has become. This seems strange to me in some ways, but I certainly am not complaining.
    There is one area of the FIRE movement where I am skeptical, however, since in the US health insurance (good health insurance anyways) is still largely tied to employment, how do people handle that?
    I have a need for high quality health insurance coverage, and the premiums for what my family needs (based on employer provided plans) end up usually between $20k – $25k/year (total cost of the plan). I’ve always viewed health insurance more as a “health care” plan rather than “insurance” (which implies that it should only be used for “emergencies / unforeseen events”). I would be fine to go without regular “health care” insurance and only have emergency / catastrophic coverage if I could walk into a doctors office and pay what insurance companies pays them (i.e. the pre-negotiated rate), which is usually about 10-20% of the amount that gets billed. I’ve actually successfully done that in Europe when my wife was pregnant and we were traveling and she needed to continue her ultra sounds… cost ~$100 at the time for a full consultation, ultrasound and some medication that the local doctor recommended as a precaution. That’s totally manageable, but I can’t imagine the same thing costing less than $1000 in the US without insurance.
    How do people in FIRE handle health care when they actually need it for maintenance conditions / expensive periodic tests / medications?

  10. Selena says 12 December 2020 at 06:04

    The biggest myth about FIRE is that it’s somehow a new concept/movement. It’s not new. It’s only new to a certain subset of the population.
    Being smart with money, mostly through frugality, is common in my family and a certain subset of my friends and co-workers. And we didn’t need a guide. This mindset is common sense to us.
    Who are we? Immigrants and people of color.
    My department is dissolving and I’ll be laid off in February. Some of my coworkers are completely baffled because I’m neither panicking nor even upset. Why? Because I’m going to take my severance and retire at 40. Life is good.

  11. yogi says 13 December 2020 at 22:48

    Great article JD!
    This article is an example of simplicity at the other end of complexity.
    You have defined what FI is; how it can be achieved. Also addressed the prevalent myths well.
    The framework is simple- the execution is what is difficult.

  12. Adam says 14 December 2020 at 06:46

    Solid post! Thank you for sharing the PDF of that TD Ameritrade study; I can’t believe I hadn’t seen it prior to today. I think what steered me most toward this lifestyle was growing up in an anti-FIRE home. Mom and dad cut expenses to the bone in favor of wanton spending on crap (due to mom’s perceived deprivation by Depression-inspired parents); she threw obscene resources at whatever hobby-of-the-month caught her eye but we didn’t own a car with air conditioning until the mid-90s. “Cheaper than therapy,” she always laughed.
    After decades with an example like that, I grasped FIRE like a lifeline to trade frivolity for security.

  13. Melody says 15 December 2020 at 09:08

    One issue I’ve had with FIRE is how these people are planning for health insurance. My husband has a lot of issues, and there’s no way we could afford his medicines without insurance. My federal job provides excellent insurance, but I can’t retire early and keep the insurance. Buying decent insurance on the open market doesn’t seem possible, without making a LOT of money (but perhaps I’m wrong there?). I feel like I HAVE to keep my job, just for the insurance! Which is really not a fun feeling…some parts of my job are nice, but there’s a lot of red tape that drives me crazy and it only seems to get to be more over time. Is there any ideas or writings out there that addresses the health insurance problem?

    • J.D. says 15 December 2020 at 10:29

      As an aging member of the FIRE movement, I agree. Health insurance is a bigger deal than most people credit. Which reminds me: I need to go check the marketplace before midnight tonight to see if there are better options this year.

    • Lisa says 28 December 2020 at 12:17

      I am many days late to this post but I just wanted to say that I am glad someone brought up the health insurance aspect. Last year I finally went to a financial advisor and when I brought up that I would like to retire earlier than 67 he nodded and then pointed out that I am going to need a lot more money to account for the cost of health insurance and suggested I keep working for as long as I can. I kind of bristled at that and felt like he wasn’t really taking me seriously. But since then I have been doing some research and indeed, health insurance is one of my biggest worries about retiring early. I’m lucky that I am young and healthy now but that could change in a heartbeat. So for now I am socking away as much money as I can but it sort of feels like he’s right – my current health insurance with my company is pretty cheap so it makes sense to stick it out as long as I can.

      • Melody says 11 January 2021 at 11:24

        I didn’t get any notification about a reply on here, so I’m just seeing this now! Yep, that’s pretty much my scenario too. I’m guessing until our country figures out what they’re doing about healthcare, this probably won’t change! JD, did you have any resources or discussion about healthcare and FIRE?

      • GerryL says 16 February 2021 at 05:34

        I considered retiring early from a high-pressure job in tech but realized the lack of universal healthcare made that unwise.
        Back in the early 90s, when the Clinton healthcare plan was killed, I predicted that we were not going to see anything resembling universal healthcare until I was eligible for Medicare. Clock ticks forward. I became eligible for Medicare the same day that the ACA marketplace opened.

  14. Liz says 17 December 2020 at 08:00

    Love the link to the FIRE survey. I had not seen that previously and found it an interesting read. I started down the FI path last year and am doing what I can to catch up. I like your patient, calm tone. It helps remind me to take the time to enjoy life while trying to get to the end goal faster.

  15. Steve says 17 December 2020 at 22:29

    Seems like everyone in the FIRE movement writes a blog or has a hobby career to supplement their income. Do they need the extra income or do they not know what to do with their extra free time? I quit working 28 years ago at 45. I don’t think FIRE existed then. I didn’t intend to retire but I had just made a big mistake and took a new job. The company lied to me so I quit after 3 months and finished the house I was building. When I was done, I decided I did not want to work again. My biggest regret is that I was too frugal. I should have done more when I was younger and could have done more

    • J.D. says 18 December 2020 at 07:36

      Oho! This is another myth I should address when I revise this article: “Seems like everyone in the FIRE movement writes a blog or has a hobby career to supplement their income.”

      Very few FIRE folks write blogs. And some of us who do write blogs have been doing so for years. In my case, I’ve been blogging for DECADES — before blog was even a word. And I’ve been writing about money for almost fifteen years. When I started, I was writing about debt reduction, but I’ve turned to more advanced topics (like FIRE) over the years. I think there are plenty of FIRE blogs because it’s a subject that people naturally want to evangelize. The concept changed their lives, so they want to share it with others.

      Another important point is that most folks writing FIRE blogs aren’t doing it for the money. Very few blogs make any real money. (Hell, GRS only earns about $1500 – $2000 per month right now, and it’s a pretty big site!) From talking with folks who do have FIRE blogs, they’re not doing it to supplement their income. This is a motivation that’s been ascribed to them by other people. It’s a myth. A misconception.

      This is worth fleshing out when I re-visit this article in a couple of years…

  16. mary w says 18 December 2020 at 13:35

    I’m not a huge reader of FIRE blogs, but I’ve always noticed how many are ethnically Asian (or have Asian spouses) and frequently immigrants. Justin at Root of Good has a Cambodian immigrant wife (by way of a Thai refugee camp); Joe at Retire by 40 is a Thai immigrant; even MMM’s wife (now ex-wife) is ethnically Indian; Financial Samurai is, I assume, ethnically Asian.
    The only other FIRE (or FIRE adjacent) blogs I read are GRS and the Frugalwoods which don’t have an Asian component.
    Not sure what this means. Maybe my data set is too small is say much. Maybe minorities do FIRE just fine.

  17. Court @ Modern FImily says 18 December 2020 at 14:01

    Great myth buster post! Every FIRE content creator who gets on some sort of mainstream media platform should have this post in their back pocket to whip out to all the instant haters out there!

  18. says 19 December 2020 at 22:15

    I like the one where FIRE is supposed to be a get rich quick scheme. Its anything but that. Slow and steady wins the race.

  19. PS says 28 December 2020 at 06:16

    I agree, one can push for systemic change and financial independence; it’s how I roll as well. But, many of the policies that help lift people out of poverty may mean less savings for you in the form of higher taxes, occasional slower market growth, etc. I’m ok with that, but I don’t see FIRE advocates talking about it [in a positive light]. It’s totally fair that they may not feel it’s their business to talk about it, but it’s partly why the myth exists.

  20. Dividend Quest says 01 January 2021 at 20:58

    I liked your Han Solo reference and quote, as it pretty much reflects my own view. At 53, I’m at the point where my concerns are limited to me, my kin, and friends. I’m not into any causes except those that directly affect me. Am I being greedy? Maybe. I’m not as mercenary as Han, but then I don’t have the overhead expenses that come with owning a high speed starship.

  21. Nick G says 08 March 2021 at 11:20

    FIRE is only possible through luck and privilege??? Man, my journey completely blows that myth out of the ocean. I’m an African-American man who grew up poor, joined the Air Force at 18 (enlisted) and only made $8K (gross) my first year in. Five years after joining, an AF buddy referred me to a personal finance book. I read the book but only took action on a couple of simple things. I didn’t start investing in the stock market until four years after reading the book (1993). $50/month in the Janus Fund is what I chose to invest because I was a little nervous about the market. Why? NO ONE in my family invested in the stock market. They thought it was for rich people and didn’t trust it. Well, I continued to educate myself on personal finance and my anxiety about the market slowly disappeared. As I got promoted, I upped my monthly contribution in the mutual fund. I also opened an IRA and contributed $50/month to it. Over the years, I increased my monthly contributions to my taxable mutual fund, converted to a Roth IRA and started maxing it out. When I retired from the AF, I became a contractor and contributed to my company’s 401K. Long story short, 22 years after my first $50 investment in the Janus Fund, I reached FI. And this was accomplished in spite of the many, MANY financial mistakes I made along the way. I know for a fact that the primary reason I hit FI is I never stopped investing in mutual funds. Hell or high water, my auto-contributions never stopped. Compound interest did the heavy lifting. It truly is the 8th wonder of the world. FI was that easy. Reaching FI is the greatest accomplishment of my professional career. Not stressing about money like so many in my family was my #1 financial goal. I’m talking generations of hard-working, honest, wonderful, beautiful people who always struggled to make ends meet. Financial stress affects every facet of life. I’ve seen it up close. I never wanted that. I decided to break the chains of financial slavery. I will raise my daughter to be financially responsible/savvy to ensure she will never be a financial slave like so many Americans. I will teach her that wealth is invisible. Forget buying the latest I-Pad. Buy Apple stock instead because it’s better to be rich than look rich imo. I know a lot of broke people with pretty, shiny stuff.
    So, those who think FI and FIRE are only for the lucky and privileged, you’re wrong. I know several guys with similar backgrounds and circumstances as mine who hit FI. Some of us work, some don’t but none of us have to. No better feeling!

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