F.I.R.E. Movement
What is it?
In short, the F.I.R.E Movement is a growing trend among professionals who are seeking to achieve financial independence and to be able to retire early in their career. The abbreviation basically is: “Financial Independence, Retire Early” and is quite popular lately, especially among young individuals.
The goal of F.I.R.E. is to provide the required income for someone to live without the need to work for the rest of his life. The model gained widespread popularity among millennials in the last few years, primarily through online communities where information is shared via videos, blogs, podcasts, and online discussion forums.
A variety of reasons have contributed in making this movement popular. Some of those reasons have to do with the concerns people have about job security, career satisfaction & fulfillment. Other reasons include a desire for more flexibility and for individuals to be in control of their own lives and how they spend their finite time. Also, supporters of F.I.R.E. movement often argue that traditional retirement models (of people retiring at on old age above 60+) are no longer desirable or even feasible in the current market economies. Furthermore, state pensions are becoming increasingly riskier, as global population is aging and less young professionals enter the workforce.
How can someone achieve F.I.R.E.?
One of the key elements in achieving financial independence & early retirement, is the notion of passive income. Through a combination of passive income streams, such as renting Real Estate Properties, dividends from stocks and income from owning businesses (that are run by other managers with minimum involvement), investors can achieve a stable & reliable income that can cover their standard living expenses.
Supporters of this trend advocate a frugal life that prioritizes saving over spending. Living beyond one’s means and heavily investing every dollar saved, will eventually bear fruits in the future. This also requires avoiding lifestyle inflation and making short term sacrifices. Moreover, taking on additional side hustles and eliminating debt is of paramount importance. For someone to start building the required wealth on his one, aggressive saving is required. This means far above the standard recommended rates of 10% – 15% and well into the range of 50% to 75% of one’s annual income.
Support & Criticism
Critics of F.I.R.E. movement argue that this approach is unrealistic for the majority of people, since it requires a level of wealth above normal living conditions. Also, F.I.R.E. requires a very high level of saving and a very disciplined approach on spending. That approach may look unreal for most people including young professionals and families with children. Finally, an early retirement may not be suitable for many people, since work is a crucial part of one’s life. Through meaningful work, people find purpose, fulfillment and social connections.
On the other hand, an early retirement doesn’t have to be a meaningless waste of one’s remaining time. People that achieved financial independence, can pursue their dreams and aspirations. They can embark on their hobbies or find meaning in their family & relations. Having the possibility to retire early is an attractive idea even if you decide not to. It can also be a security measure in case you become redundant (especially near retirement) or your pension is at risk (either risk of pension fund going bankrupt or being too low to support your retirement). So, despite the criticism, the F.I.R.E. movement continues to grow in popularity and influence, especially in younger generations.
