At first glance, those of us who have been steadily socking away funds and dreaming of retirement in our fifties or sixties don’t hold much in common with those who plan for a FIRE retirement. Unfamiliar with FIRE? The Financial Independence/Retire Early movement has gained traction in recent years as more flexible working arrangements and an awareness of the lifestyle via social media have increased.
While there are varying definitions of FIRE, some key attributes unite most, if not all, individuals who believe in this philosophy. FIRE adherents spend consciously, allowing them to save more than average during their pre-FIRE working years. They often find ways to enjoy meaningful activities without spending a great deal of money. Far from being lazy or “slackers,” many people drawn to the FIRE lifestyle are overachievers who want to make the most of the time they are given. In fact, those in the FIRE community often continue to work in some capacity even after declaring themselves “retired.” This may lead others to question their candor—“Hmmph, you say you’re retired, but you are still working!” On the contrary, this is fundamental to the independence piece of FIRE; they strive to reach the point where they are not required to work; paid work is a fulfilling choice. If not retired completely, FIRE folks have more than likely transitioned from a traditional full-time career to one that maximizes time freedom and independence.
You may be wondering what in the world this has to do with you and your retirement. In my exploration of FIRE, I’ve recognized four key lessons that everyone should consider, whether they intend to retire at 40 or 75.
- Prioritize your passions and interests. In my work as a practicing retirement planner, I see many people who put off living their lives with the idea that they’ll have time to pursue hobbies, health, and relationships after retirement. My own mother was one. The demands of being a single mother meant her career took center stage, limiting her ability to enjoy life. Fun could wait until retirement… except that for her, it never happened. Tragically, she passed away from cancer at 48. A fundamental strength of the FIRE outlook is that they do not wait until old age to explore the things they love. If you’re still working in a traditional, full-time role, what little adjustments can you make to create time for activities aside from work?
- Build your community. Those who embrace FIRE understand that they must seek out connections and purposefully create a community to replace the coworkers who provided default companionship. This is critically important for any retiree. As your work life draws to a close, consider steps you can take to build new bonds based on shared interests. Strong social connections are one of the leading predictors of longevity; in fact, the surgeon general has compared the health effects of loneliness to the equivalent of smoking 15 cigarettes a day. Yikes.
- Recognize that saving for retirement is about more than reaching a magic number. The FIRE movement encourages us to analyze our savings and spending at a deeper level. Money is viewed as a tool, not an end, and the sole purpose of retirement savings is to enable living a great life. All of us can benefit from this perspective. The busyness of everyday life while working can easily distract us from putting our financial house in order. It’s tempting to set up 401(k) savings or automatic investments and then toil away, waiting for the balance to reach an arbitrary threshold. Pundits often toss out dollar amounts we need to safely retire. What’s missing is the thought behind what that number will be used for. Maybe the ideal savings is $1.46 million, maybe a lot less. How will you know until you map out your plan?
- Create a plan unique to your values and life. Those who embrace FIRE begin their journey with a vision of retirement, which, coincidentally, is also central to our Agile Retirement Management® process. A key step in the journey is to evaluate the spending that brings you happiness, not only in your current circumstances but also for the life you want to lead in retirement. Casting your vision of retirement and mapping out your plan of record will do wonders for your ability to manifest a rewarding, meaningful next chapter. Without one, you may remain too afraid to take the plunge or leave work only to find yourself aimless and bored.
You may have already missed the boat on retiring at 45. That’s ok. Incorporating these FIRE practices into your daily living can enrich your life and put you on the path to rocking retirement (at any age!).