FIRE to me is broken up into two parts.
Firstly, you must reach financial independence (FI) where you’ll need to have enough assets generating enough money to cover your expenses forever.
This is pretty straight forward and whilst there are different variations of what people consider financial independence it’s much less convoluted then early retirement (ER).
Which is the second part to the FIRE equation and by far the most important.
I’ve done my fair share interviews for media outlets reaching out to me because they wanted to know more about the FIRE movement and what it’s all about. For some reason, I had quite a few in the last few weeks which you can listen to here, here and here.
These interviews prompted me to make this post because the question that ALWAYS comes up is why would a bloke who has 50+ (hopefully) years left in the tank want to retire?
Wouldn’t it be boring?
So I’m here to set the record straight as to what I consider ER is and why it’s the more important step!
What Is Early Retirement?
The most misunderstood and important part about FIRE has to be ER.
It’s mostly because the word ‘retire’ has a certain connotation with most people. If you actually look up the definition of retirement you will get different answers depending on which dictionary you are reading.
Retire Early in a FIRE context does not mean you stop working!
I honestly could think of nothing worse than to sit around all day doing nothing for 50+ years and I’ve yet to hear about anyone who achieves FIRE handing in their resignation letter only to sip Pina Coladas by the pool and play golf all day until they die.
Meaningful work that ignites a passion is awesome. I want to do work that brings purpose and meaning to my life forever. But unfortunately, the fact of the matter is the majority of today’s society (myself included) sets an alarm to go to their place of employment to earn money.
We trade time for money.
Are there people out there that would do their job for free?
Are there many?
You cannot do some forms of meaningful work without first having achieved financial independence. Volunteering full time is one example.
Other forms of meaningful work may actually turn a profit. Maybe you always wanted to have a go at that coffee business but could not afford the risk financially. FIRE opens up these doors and allows you to pursue your dreams that you wouldn’t have otherwise had the money to take on.
If you think that people who have achieved FIRE are phonies because they still do paid work I have great news for you! Turns out there is an entire group of you guys dedicated to upholding the semantics of the word retirement called the internet retirement police! At least you’re not the only one…
My interpretation of retire early was never about not working. It was always about retiring from the rat race and having the freedom to pursue meaningful work of my choice whether that is paid or unpaid doesn’t matter.
Retire is probably not the best word but FIRE is a catchy acronym and it’s stuck so just deal with it.
If you don’t like using the word retire that’s understandable. I myself have often thought that it doesn’t quite describe what FIRE is all about.
But what I think we can all agree on is that simply reaching FI should not be the end goal which brings me to discuss…
Why ER Is The Important Part
Think back to when you first discovered FIRE, or even just the concept of financial independence.
If you’re anything like me, the thought of having all the money in the world was not the exciting part. It’s what having that money could do for your life. The freedom that financial independence can grant is something that has never left my mind since I stumbled across it ~6 years ago.
Is there any point in reaching FI without using that freedom to live your dream life?
I know plenty of people at my old job who have reached FI but are still miserable in a job they don’t particularly enjoy!
You know the type.
Been at the same steady job with great benefits for 35+ years. Pretty conservative type operator who has tucked away enough Super to comfortably fund 4 retirements yet has lost all enthusiasm, motivation and what seems to be general happiness in the last few decades but still rocks up every Monday and complains the whole time.
You often wonder to yourself, why the f is old mate still working if he clearly isn’t happy here and has enough money to retire…?
That’s a very good question.
Maybe they are a creature of habit. Maybe they don’t know they are FI yet and think they still need to work. Maybe they are super conservative and are worried they will run out of money.
Or maybe they just don’t know anything else and are scared that they will lose purpose in life.
I have no idea about other peoples situation but if someone was truly FI and too scared to quit their job because they feared the unknown… they have missed the entire point of financial independence and FIRE in my opinion.
Everyone who reaches the end goal will always have to take a leap of faith of some sort. Maybe you have crunched the number for a standard 4% withdrawal rate or maybe you are a little more conservative and have opted for a 3% rate.
Regardless, all of us will reach the point where we will have to make the decision and hand in our resignation letter to start our new careers in the exclusive and more exciting field of ‘whatever makes me happy’. This career is not fueled by monetary gains, status symbols or power but rather what brings the most happiness to your life. If you get paid for this passion, sweet! Maybe you can donate this extra money to a charity which will almost certainly bring you even more happiness.
If you’re one of those lucky ones who thoroughly enjoys their current job and would happily work it for free then hats off to ya, you’ve already reached the end goal in terms of ER! I really wish everyone was in that position but the truth of the matter is they aren’t. And failing to RE to move onto more fulfilling, meaningful and enjoyable work is such a tragedy.
If you reach FI but continue working a job you don’t like and fail to RE, what’s the point?
Don’t Wait Until It’s Too Late
Just one more year…
Let’s tuck away just a little bit more so we definitely won’t run out of money in retirement…
This is a dangerous game to play but completely understandable and something that I’ll almost certainly do as well. But at some point we must trust our planning, numbers, and ability to adapt to the situation should something disastrous happen post rat race.
The biggest risk in life is not taking one!
Once you have reached FI, complete the journey, pull the trigger and RE to start the new chapter in your life.
I’ve haven’t heard too many people ever regretting pulling the trigger early, in fact, most say they should have done it earlier!
Have you retired yet? Did you wish you did it earlier or was it something you regretted? I’d love to know in the comment section below.
Oh and I’ve now decided that every good blog should have a sign-off.
So until next time…
Spark that 🔥