Finance Basics,  Retirement

There’s a F.I.R.E. – I Just Don’t Feel The Warmth…..

There’s a “movement” afoot and its called Financial Independence and Retire Early or F.I.R.E. To oversimplify, the followers of F.I.R.E. live relatively frugal lives using the money they save to pay down debt and invest. The goal? To have enough passive income that they become financially independent – and that means retire early. Of course, the more frugal you are the quicker you can retire – as long as you continue to live frugally. If this idea interests you, one of the best pages I’ve read out there is Physician on FIRE; but stay with me for just a moment.

Why retire early?

Before I go any further let me say that I have a lot of respect for those that follow the  F.I.R.E. principles, but I also know its not really for me. For starters, I love me job and I don’t plan on retiring early! It wasn’t always this way. Once upon a time I worked in an organization where the environment could only be called toxic (and dysfunctional and hostile). I hated going to work. I dreamed about retiring early. Dreamed about it; thought about it; planned it – And then I did something about it. I quit. Today, I work for an amazing organization that is both professionally and financially rewarding. In short – I love my job! The best part – I get paid to do something I love. The idea of retiring early seems crazy. If you really think life would be more fulfilling if you retired, then maybe it’s your job! You have one of the most powerful degrees on the planet! A DVM (or VMD) can do almost anything: government, industry, clinical practice, research – you name it! If work isn’t professionally and financially fulfilling – then quit. Do something you really love and then ask yourself: do I really want to retire early? The answer is probably not

Why F.I.R.E. just isn’t for me!

When I started this entry I was traveling in Vietnam. It was an amazing trip BTW. I really love to travel and I’m already planning next years dive trip off the coast of Venezuela. My F.I.R.E. brethren are probably gasping in horror. They are thinking to themselves “Acierno is financially irresponsible!” They would say “That money could have been saved and produced passive income in the future”. First of all, let me state that I am comfortably on track so that if I wanted to, I could retire in my mid 60s and live a very comfortable life style – one that could easily support an occasional dive trip in an exotic local. Also, by planning trips one year in advance I can shop the best rates and have all the money I need saved up well before I travel – no savings squandered. But really, it boils down to what you personally value. Certainly, I could cut out my annual travel trip, once weekly dining out, the occasional music festival with friends, and live quite conservatively. I could invest that money that I currently “waste.” But why? So I could retire early and watch Netflix all day? I enjoy doing things with friends and I value the experiences more than being able to retire early. Look, I do live relatively frugally. I brown bag my lunch, make my own coffee to-go, do my own pool maintenance (even learned to repair a salt cell – thanks to YouTube), and I drive a Kia. But given the choice between seeing Halong Bay before it changes forever or retiring a few weeks earlier  – I’ll take Halong Bay every time!  Also, what type of retirement are F.I.R.E. folks actually planning for? It’s probably not the same one that I’m envisioning.

You can’t buy time – or can you…

Lastly, it’s worth mentioning the idea that time is finite. There are 24 hours in a day and only seven days in the week. Its been said that no matter how much money you have, you cannot buy more time – but maybe you can. One of my more extravagant monthly expenditures is a gardener. I pay for a gardener partially because if the HOA ever got to witness my significant lack of landscaping skills, – the fines would be more than the gardener costs. More important (to me) is that outsourcing this task allows me more time to do things I actually enjoy doing such as working out, or watching a movie. Essentially, every month I purchase some “time” (and peace with the HOA). It’s certainly a slippery slope. If I get a pool company I would have more time.  A house cleaning crew would give even more time. Only you can determine what’s worthwhile. I’m just suggesting that sometimes we can spend some money to outsource undesirable tasks and buy time to do the things we really enjoy and that’s ok. I suspect that this line of reasoning would rub some F.I.R.E. folks the wrong way.It’s not that I’m right and they are wrong – It’s just a personal choice. 

Does this mean that I don’t believe the F.I.R.E. folks are on to something? Not at all. I have a lot of respect for them; I just know it’s not for me. I’m all about bypassing Starbucks and brown-bagging lunch. I just know that I value experiences differently. Maybe the F.I.R.E. movement is for you! I would start your journey here. Some questions that you might want to think about before heading down this path include:

  • Why do you want to retire early – could it be your job? Maybe you need to do something you love!
  • What exactly do want to do in retirement and will you be able to afford it if you live to at least age 80 -which is average in the US.
  • Will you really have enough passive income without access to your tax privileged accounts (401K, IRA, etc). You cannot access them without significant tax consequences until you reach 59 ½ .
  • How will you provide for your healthcare costs until Medicare kicks in at age 65? Healthcare is expensive!
  • What effect will leaving the workforce early have on your social security benefits?

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