What could possibly be wrong with saving like crazy, so you can retire early? That’s the notion behind the Financial Independence/Retire Early, or FIRE, movement. Yet lately, I’ve read a lot of carping about FIRE, both in articles and in the emails I receive.
Just last week, those complaints got yet another airing in The Wall Street Journal. Earlier, Suze Orman weighed in, arguing you need at least $5 million to retire early. “I hate it,” she said of the FIRE movement.
Read: ‘Radical savers’ shred trader for backing Suze Orman on early retirement
The complaints prompted a recent rejoinder from one of FIRE’s leading evangelists, Mr. Money Mustache. “The whole reason for doing any of this is to lead the happiest, most satisfying life you can possibly lead,” he argues.
Is all the controversy justified? Here are just five of the complaints I’ve heard about the Financial Independence/Retire Early movement:
1.Quitting the workforce in your 30s or 40s simply isn’t an option for the typical worker. Most of those who retire early had high incomes, allowing them to save great gobs of money during their truncated careers.
Read: Why you shouldn’t retire early — even if you can
2.Many FIRE adherents are able to retire at a young age either because they avoided the cost of having children—or they hope that, by dropping out of the workforce before their kids reach college age, they’ll get heaps of college aid.
3.Just as quitting work may boost financial aid eligibility, it can increase the premium subsidies received under the Affordable Care Act. Some FIRE adherents even collect food stamps. That’s led critics to charge that these early retirees are gaming the system, effectively mooching off the rest of us.
4.The frugality required to retire early is excessive. While most Americans make the mistake of spending too much today while shortchanging tomorrow, FIRE devotees are criticized for being just as foolish—but in the opposite direction: They’re so focused on tomorrow that they constantly defer gratification.
5.Many of the FIRE movement’s vocal advocates either earn substantial incomes from blogging, writing books and other endeavors, or they have a spouse who still works full time. In other words, they really aren’t living off the savings they amassed during extraordinarily brief working careers.
There’s some sliver of truth to these complaints. Still, it feels like a cooked-up controversy. In a country where most people save too little and are pitifully ill-prepared for retirement, should we really be getting exercised over folks who are maybe saving a tad too diligently? Indeed, I’d argue FIRE devotees deserve our admiration: They’re sacrificing today so they can have a better tomorrow.
Read: How much does financial independence cost? Depends on your retirement philosophy
Perhaps I’m sympathetic because I favored the FIRE lifestyle long before it was a thing. Through my initial decades in the workforce, I lived modestly and saved prodigious amounts, so today—in my 50s—I can spend my days as I wish. Maybe more important, the philosophy that underpins the FIRE movement meshes with four key themes I often harp on.
Read: How to save twice your salary (or more) by age 35
First, forget pursuing your passions in your 20s and 30s. Instead, you should spend those years pursuing dollars, so you can spend your 40s and 50s doing what you love. My contention: Pursing your passions in your 50s will bring greater happiness than endeavoring to do so in your 20s, when you probably don’t really know what you want and when the conventional work world will likely still seem novel and exciting.
Second, the key to financial success is no secret at all: You need great savings habits. By comparison, everything else—investing in stocks for the long haul, favoring low-cost index funds, managing taxes—pales in importance.
That said, one of the key notions that drives the FIRE movement is also propelling the shift from expensive active management to low-cost, tax-efficient indexing. In both cases, folks are focused on managing money more wisely, by cutting out expenditures that bring little or no benefit.