Investing is the best way to reach Financial Independence & Retirement Early (FIRE). How successful has the FIRE movement been in the US? Linda Richardson, a New Jersey-based financial content writer and guest writer, opines.
The normal retirement age is 65 years. But does it mean you have to work until age 65? Well, many people think so, and they are not wrong. Living and other miscellaneous expenses eat up a lot of savings. So, people hardly have any other choice apart from working until retirement. However, there are people who want to retire early. In fact, young workers want to take this early retirement to a completely new level. They embark on a mission to be part of the FIRE movement and attain early retirement.
Now, what is this FIRE movement all about? Why are young people so excited about it? Let's find out.
Is the FIRE movement successful?
The FIRE movement didn't get much success in the USA because it's a very difficult path to follow. First of all, many FIRE followers couldn't have kids just to retire early. The childcare cost is quite high in our country. So they think that the only way to retire early is to avoid having kids altogether.
Some people even thought that quitting jobs before their children entered college would help them qualify for college aid easily. Moreover, some FIRE followers retired early to be eligible for higher subsidies under the Affordable Care Act. They even went ahead and collected food stamps. All these factors lead to a huge wave of criticism across different sections of society. Financial experts said early retirees were manipulating the system for their own financial gain. Honest players were getting victimized.
There is yet another valid reason behind the failure of the FIRE movement. FIRE movement followers have to lead an extremely frugal lifestyle, which is taxing. This means if you follow this movement, you have to become an extreme penny-pincher. You have to maintain a humble lifestyle and think of the smart money moves to make in your 20s. When you're young, your mind is care-free. It wants to enjoy the subtle pleasures of life instead of wondering about how to save money. You want instant gratification. This makes it more difficult to retire early. The constant internal battle makes it tough to follow the path sincerely.
Other reasons behind the failure of FIRE
Some other reasons behind the failaure of FIRE are given below:
Reason 1: The FIRE movement is not self-sufficient.
Given the rising cost of living and inflation, it's tough to accumulate enough money for early retirement on your own. Either you have to accelerate your income by blogging or engaging in other side gigs or you need to have a spouse who is a full-time worker.
Reason 2: Too much haste often leads to deadly mistakes.
As has already been mentioned, the goal of the FIRE movement is to save and invest money. Now, many times, youngsters make costly investment mistakes and end up losing all their savings as a result. There are strategies you can implement to become successful at the FIRE movement.
How to make FIRE successful
First, make it your passion to earn dollars in your 20s and 30s. Read articles that discuss smart money moves to make in your 20s. Lead a frugal lifestyle. Yes, it will be difficult to say 'no' to the many pleasures of life. But try to motivate yourself by saying, "If I can struggle now, I can probably do what I want in my 50s." When you're in your 20s, you hardly know what you want in life. So, take your time in your 20s and spend money on what you love in your 50s. That's the main part of your life.
Secondly, learn the right strategies to invest money. It's a myth that you have to invest a lot of money in the stock market or mutual funds to accelerate your income. You can even invest only $50 and reap profits. The secret is to apply the right investment strategies.
The bottom line
The FIRE movement sounds nice on pen and paper. But in practice, it's hard to implement. In a country where most people are more concerned about today and less about retirement, the FIRE concept is bound to fail. People save less and are not prepared for retirement. They love credit cards and overlook retirement savings accounts. This is the general tendency of average Americans. How can you expect these people to be successful at the FIRE movement?
Sure, there are people who are retiring in their 30s and 40s but that number is negligible. Most people are still in debt. So the concept of early retirement doesn't exist for them.
Nevertheless, if the FIRE movement becomes a grand success in the future, then many people can lead a life on their own terms even before they hit 50. What do you think? Leave us your comments below or become a subscriber.