Pouring water on the FIRE movement: Experts say retiring at 35 is impossible for most, and even if you can, the cost is high

When Mississauga-based CPA Danish Ghazi first heard about FIRE, the movement to achieve financial independence and early retirement, he was intrigued.

Ghazi grew up in an immigrant family where money was always tight, so when his friend explained the concept to him, he was inspired. He started researching FIRE, and found blogs from people who had retired in their 30s and wanted to help others do the same.

While some FIRE devotees take frugality and investing to the extreme, aiming to retire much earlier than others and live off their investments for decades to come, Ghazi said his plan is not necessarily to retire early, but to achieve financial independence. . You want your investments to provide a safety net and flexibility to do things like travel with your family.

Ghazi enjoys his job as a certified public accountant, and also has personal finances. Youtube Channel, so you won’t be leaving work anytime soon.

“It’s about giving me that option if I ever need it,” he said.

There are many stories of people who have skimped, saved, invested, and retired early, some as early as 35. These stories sound idyllic and their storytellers inspiring: do what I did and you can have this life too. But it’s not that simple. Finance experts say the concept has both advantages and disadvantages.

Ian Calvert, vice president and director of HighView Financial Group, said there are different interpretations of the FIRE model, from moderate to extreme.

There are success stories from those who have taken the more extreme route, Calvert said, but it’s important to remember that there are certain prerequisites to this lifestyle.

“You have to have … super aggressive savings up front,” he said. In other words, if you graduate from college with debt, or don’t have financial help from your parents, you’re starting out with a disability that likely means you won’t be able to retire at 35 no matter how aggressively you save.

Jason Heath, Managing Director of Objective Financial Partners, agreed.

“It is not possible for a large part of the population,” Heath said. No matter how many times you turn down latte or avocado toast, you can’t make up for big financial setbacks in just a few years.

Another misconception about FIRE is the idea that once you reach retirement, the rest of your life will be a financial breeze.

While that may be the case for a lucky few, for the majority, the discipline that got them there must continue, as they essentially rely on a fixed income for the foreseeable future.

Those who retire significantly early will lose the opportunity to pay for pension plans, Calvert noted, meaning they won’t have the later-life pensions that others have. Their best years of income will also be lost, as many people see their salaries and bonuses rise towards the middle or end of their careers.

Heath said the longer people are retired, the more chances there are for things to go wrong, be it a stock market downturn or a medical emergency.

Some millennials have been lucky so far in the market or in real estate, but they can’t assume that growth will continue unchecked, he said.

Jessica Moorhouse, a financial educator and host of the More Money podcast, said it can also be difficult for people’s mental health to be extremely frugal, even for a few years. His advice? Plan for tomorrow, but live for today.

Heath worries that when people choose “frugality at all costs” to reach certain milestones, they will make lifestyle sacrifices that they later regret. Meet some people who managed to retire early, got bored, and went back to work. Financial independence does not have to be related to retirement; it can help people make a career change or go back to school.

As FIRE becomes more popular, more followers are picking up on that.

Graeme Falco, Certified Public Accountant and author of the self-published book “Building Wealth and Being Happy: A Practical Guide to Financial Independence,” and the friend who introduced Ghazi to FIRE, said the community has changed and expanded for the better.

A decade ago, some FIRE bloggers were like “cult leaders,” he said, and followers took the lifestyle to the extreme. The community could mock or judge anyone who did not have the discipline to do FIRE in a specific way. Now people are more receptive to different interpretations, he said.

Falco doesn’t stop traveling or spending money on things that bring him short-term joy. Your mindset is about finding balance and building a life that you can sustain for a long time.

Falco’s first tip for people who want to realistically implement FIRE is to be consistent with their savings. Rather than saving without a plan, Falco said it’s better to save a small amount each month, as the savings add up over time. He also recommends prioritizing bills and savings or investments before setting aside “fun” money for discretionary spending, rather than spending on bills and fun before investing money.

He also allows himself to be flexible and recommends that people not “emotionally tie” themselves to save a specific percentage each month.

“Just by thinking about these things, you will be way ahead of what you would be otherwise,” Falco said.

Falco recommends thinking long-term about investments, including ETFs, index funds, and other diversified investments. You are not in favor of relying on stock selection or focusing only on dividend stocks.

Moorhouse said early retirement is difficult to achieve and does not guarantee a “happily ever after” ending.

The simple math that some FIRE evangelists push is not always the best path, Moorhouse said. People need flexibility and a buffer for emergencies, not a hard and fast rule, when it comes to saving and investing.

“You are more likely to be successful with whatever your goal is if you can be flexible and make changes and twist when you need to.”

Heath said what the average person can learn from FIRE is the principle of setting financial goals and trying to spend less than you earn to achieve them.

“A lot of the motivation behind FIRE is really good and it can help anyone reach their financial goals.”


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