Most people would say that gaining financial independence is a good goal. The Financial Independence Retire Early Movement, or FIRE movement, is a phenomenon leading people between the ages of primarily 20 and 40 to work towards financial independence in order to retire long before age 65.
Whether you’re thinking about retiring to the Sunshine State Florida (remember you need car insurance in Florida just like anywhere else!) or to the ski slopes of Vermont, the goal involves paying off debt and the motivation is giving up the nine-to-five.
The FIRE movement advocates living as cost consciously as possible while investing a high percentage of your earnings and building a nest egg.
The hope is to gain enough passive income to fund all your monthly living expenses. Then, retirement is possible.
Managing home-related debt is one way to prepare for early retirement. With a little bit of buckle-down and a lot of eating PB&J sandwiches, you could be ready to retire in your 40’s.
So what is the impact of FIRE?
No matter the potential for success and positive results, there are always going to be those who set out to find the potential for negative results. You know the ones–they will never be happy unless you aren’t.
Even the FIRE movement has its share of negative attention in the last few years.
Here’s what they say is flawed with FIRE:
- Retiring early depletes your retirement funds way too early
- Early retirement means losing out on investment income later in life
- The potential for medical costs draining the bank is possible
- There’s always the potential for a recession
- FIRE isn’t attainable for everyone–only the top tier of earners
How much of this is true and how much is a smoke shield from what could actually happen in the lives of those who try?
The worst thing that could happen is people learn how to invest their money, budget their expenses, and save for retirement at whatever age. I’m not sure I see the negative in that.
We’re Finding out the Struggle is Real
Even if people aren’t able to retire at 40, they may learn valuable skills like investing and budgeting. There may be less spending and more saving. The stress of financial worry could be reduced tremendously even if retirement is put on hold.
Learning how to manage your money when there’s little to manage is a great way to help you learn how to manage when there is plenty. If you plan to continue having plenty, that’s a great lesson.
Maybe you don’t know the first thing about investing. You don’t know where to start, who to ask, or how much to invest. Finding the safest investment may not be the best investment, but how does anyone know without trying?
It’s all in how you look at it.
Consider this–if you obtain financial independence by paying off debt but aren’t able to retire till your 65, would that signify failure or success? It depends on whether or not you are a glass half full or glass half empty person. Just remember, paying down debt is never a bad thing!
We’re Seeing an Increase in Entrepreneurship
People who are seeking financial freedom often look for opportunities to start a business of their own. While their reasons for starting a business may be misguided, the premise is the same. People have an entrepreneurial spirit that leads them to find ways to make the almighty dollar work for them and not the other way around.
Businesses and jobs are great for the community and better for the economy. Entrepreneurship is essential for a thriving economy, but you must have a survival plan in place when you become self-employed.
Chances are high that starting a new business will cost more than it saves in the long run. You must make certain that you are able to meet your expenses each month in the event that you aren’t paying yourself a salary.
Maybe starting a business isn’t the best idea if you don’t know the risks. However, starting a side gig may be the answer. If you can start a part-time job or find a side gig that will pay your monthly expenses, then your regular monthly earnings can be used to pay off debt and invest.
We’re Seeing the Value in Financial Planning
Regardless of the disadvantages to the FIRE movement, the advantages include financial growth and prosperity, which is always a bonus. Don’t go into it blindly, though. Do your homework and make a plan for debts and other financial obligations.
- Know how much you need to meet your monthly financial obligations.
- Set a budget and stick to it.
- Speak to a financial advisor or planner to learn about your investment options.
- Decide on a monthly percentage to invest.
- Plan for pitfalls and expenses. Things break down, so be prepared.
- Set a target for retirement but if that isn’t until age 65, be okay with that.
- Don’t give up.
Join the Movement, and Get FIREd Up for Early Retirement!
Regardless of whether you can spend your 40’s sipping cold drinks on the beach or you’re still working, with a little planning and a dose of motivation, you can become financially independent.
Retiring early is just icing on the cake.
Author Bio: Robyn Flint writes for FloridaCarInsurance.com and has an MS in Clinical Mental Health Counseling. Robyn is an entrepreneur, business owner, licensed realtor, freelance writer, and published author. Robyn works to fund her idea of the perfect life.