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Schmolke Investment Team

FIRE Movement

FIRE Movement

Something I have been recently hearing about more and more often is the FIRE movement.  Many people in my age cohort have been either getting into or working their way into this extreme saving financial plan.  FIRE is an acronym for Financial Independence, Retire Early.  It is exactly what it sounds like: Dedicating a very high percentage of income to savings/investments in order to retire from a traditional job before “retirement age”.  I put retirement age in quotations because that is extremely subjective:  I know people who want to retire in their 40’s and 50’s and I also know people who say they will die at their desk (and they’re saying that in a positive way, as in they enjoy working and don’t feel the need to stop: right now I am one of those people). 

So what exactly *is* the FIRE movement?  According to Investopedia, the idea started with a book from 1992 called Your Money or Your Life by Vicki Robin and Joe Dominguez.  To them, “every expense is compared to the time spent at work in order to earn a purchase”.  So, it’s a mindset to get into in order to save more money than one otherwise would.  Most people have a number they want to get to, like $1,000,000.  Others will use their annual expenses and figure out the amount they need to save if they take a certain percentage payout. The idea is to take 3-4% of the amount and live off of it, just the same way people do who retire at a more traditional age (in their 60’s or so), except they take a smaller payout because they will (theoretically) have many more years to make this money work for them. 

There are many different reasons for people to want to do this and there are different ways to go about it.  One thing about the Millennial generation (the main people who are participating in this movement), is that they value balance between their work and their life.  Not everyone has realized or is working in what they consider their calling, so they work to make money so they can live more comfortably and better enjoy life.  Their argument is if they are at work all the time, when can they enjoy life?  Many people from the older cohorts, Boomers and some Gen X, answer with “you can enjoy it when you retire”.  That is the crux of this movement. 

Millennials say at this point that they would rather enjoy the money and lifestyle now when they are still relatively young and can do most things.  Many people put off doing what they want to do for whatever reason.  When they finally get around to doing it, many times they find it is more of an inconvenience than it is something to enjoy.   So their answer to this is to work more now and sock away a lot more than they would otherwise in order to quit the work grind earlier. 

That’s not to say they don’t still work.  Many times, people who take this route work even MORE after they start taking income off the investments than they did before.  Why would they do that?  The main answer is because they now have the means to find something that means something to them.   They can go to work at a job that is meaningful to them but may not pay much or even volunteer for a cause. They won’t be worried about money because they know they have investments to fall back on.  That’s not to say they can be fast and loose with their money.  They have to remain very diligent with saving/spending so they don’t spend their accounts down too much. 

It looks to me like a younger generation grasping at a new way to go about life that maybe their parents and grandparents thought about but never went ahead with.  Like everything else, it will have detractors and proponents and it is most definitely not for everybody.  There are people out there who are making it work for themselves and remaining disciplined.  There are many things they need to be aware of as well, like inflation rates and changing investment returns.  Those are just a couple of the issues that we face on a regular basis with our retiree clients that get compounded the younger the retiree is.

If this is something you are interested in knowing more about or you are considering trying it out, give me a call, I would love to go over it with you and see if it’s something that would be a good fit for you to get started with. 


Be Happy, Be Well, and most importantly, Be Kind.