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Financial Independence, Retire Early – How FIRE is Shaking up How We See Retirement

| December 06, 2018
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In a perfect world, we would all be able to retire young so that we could spend the best years of our lives doing exactly what we like. For many millennials, they are doing just that – by following the FIRE method, which stands for Financial Independence Retire Early. Popularized on internet message boards, it has become one of the hottest trends in retirement, and doesn’t seem to be slowing down anytime soon.

FIRE is essentially a lifestyle philosophy that combines anti-consumerism, a serious commitment to saving, and working towards achieving total financial independence.

FIRE method advocates are usually scrupulous super savers, prefer renting over owning, and are able to stick to a strict budget. They often have a smaller home or drive an older vehicle. They might not go out to eat or go on many vacations. Some might have side jobs on top of their 9-5 jobs. This is all in the name of aggressive saving, so that (hopefully with the help of a financial advisor), their nest eggs grow enough to cash in on the huge payout of financial independence when they are 30-40 years old.

Many of the FIRE supporters are also using these methods to help reframe the traditional idea of retirement. Instead of focusing on never having to work again, some savers strive for a different goal. This might mean cutting back to part-time hours at their normal job, having the ability to work flexibly, travel, start a small business, or spend more time volunteering. By changing the idea of retirement as being financially independent enough to make bold choices and take more risks, they don’t necessarily have to quit working forever.

As an advisor, the FIRE method is intriguing to me. I have been in this industry since 1987 and have never seen so many young people seeking financial counsel, which is truly exciting. From my experience, millennials seem to have a more thoughtful and frugal relationship to money than the Baby Boomer generation before them. Many don’t seem to be as tied to money and image, and would rather spend their hard-earned cash on an experience, whether that is traveling or other social ventures. They desire to control their time, not the things around them. Of course, this isn’t the case for every young person under 40, but it seems to resonate with a large majority from my experience. I can see why the FIRE method is such a tempting concept.

As the younger generations continue to get savvy about saving and their finances, I believe that the FIRE method (and offshoots of it) will continue to grow in popularity and scope. If the FIRE method is a little too extreme for you, financial planning might not be. Having a financial coach in your corner can move you towards retirement that much faster. Perhaps even faster than what you think is possible! By getting ahead and starting to think about retirement early in life, you put yourself in the driver’s seat of your finances. Make a goal to thrive, not just survive – and light your best life on FIRE!  

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