So, why is it that F.I.R.E gets such bad press? I think, fundamely, it’s due to a total misunderstanding of thinking behind F.I.R.E. This tends to be on the following topics:
Table of Contents
You have to live in misery/say no to everything
There is no set rules for F.I.R.E- only what you set for yourself. So, if you decide to say, no, I won’t ever drink a coffee at a coffee shop ever again, then that’s on you. Just because somebody else looks into the figures (£3 per coffee, every workday x 270, x 20 years = £16k with no growth) and decides that, actually no, if I give up that coffee I can retire 1 year earlier, then that’s up to them. Others might look to cut costs on transport- not buying that brand new car (or even, just running 1 car in a family instead of 2). So, you can say yes to whatever that thing is- even if others think its “too indulgent”, after all, you only report to yourself at the end of the day (and perhaps a partner).
So, if you do choose to have that coffee, and that new car- how does that person who is looking to F.I.R.E any different to the person that just goes about their life without making that conscience decision? Well, exactly that, they have decided that the cost of whatever it is (coffee/car etc) versus the savings/time to F.I.R.E is worth it to them. Whilst the other (non F.I.R.E) person has only decided if they can afford it, rather than thinking about how it would affect their retirement.
You have to have a well paying job
Well, I’m not going to lie here- having a well paying job is going to make F.I.R.E much much easier for you, than for example, getting something paying minimum wage. Does that mean you cannot F.I.R.E on a lower salary? Of course not- it just means that either:
you are going to take longer to reach your F.I.R.E number,
you will need to cut your spending even further than somebody earning more
look into other “life hacks” to reduce spending, eg. renting a room of your house- or other means to reduce housing costs (since they are the number 1 item on a budget in the UK)
But, please don’t think its impossible for you to retire early if you aren’t earning well into the higher tax bracket etc.
You can’t have a car/PCP etc
Let’s be honest here- cars are expensive. If you really do need a car, then something budget (think well under £10k, and really, under £5k), should last you easily 5 years, and more like 10 years if it’s carefully maintained. Does that mean you can’t have a car, or PCP deal? No, of course not, just be aware of the dent that it’s going to make in your savings- every single month. Then, when the deal ends, 2/3 years later, you still don’t have a car if you “bought” it on PCP- so what are you going to do then? Take out another deal? Then you are going to be in exactly the same position all over again.
What happens if you get ill?
Now this is a difficult one- as every circumstance is slightly different, but I think this really stems from countries like the USA, where healthcare is paid for by the individual (or insurance if it’s taken out). This is where the UK has a massive advantage, we have (for the moment at least) the NHS. This would cover most treatments and cost of hospital stays etc. Now, this wouldn’t cover you if you were still working for loss of earnings (though, you can get insurance for that). But it would mean that a week’s hospital stay would cost exactly £0, compared to £30k+ in the USA (always get travel insurance everybody!)
What happens if you get ill after you have F.I.R.E’d? Well, hopefully the withdrawal rate that you have picked, will see you through this time, since the only real additional costs here would be very minimal (transport etc). If you get better and find that you ended up overspending, then you can make lifestyle adjustments to get back on track (even by getting a job again for a short period). What happens if you don’t get better? Well, hopefully your will is in order, and then it’s not going to be your issue any longer. If your with a partner- then life insurance might be worth it if you think your remaining estate won’t be enough for them to live on etc.
You can’t retire that early
This is one of the most confusing points of the “anti F.I.R.E” campaign. Who says that you can’t retire that early? You can retire whenever you want, hell, I could retire tomorrow if I wanted to. I mean, I’d have about 10~ years before I’d need to go back to work as I haven’t had my F.I.R.E number yet (or I’d have to slash my spending by another 60%). So, I’m not quite there yet, but you might be- and whatever that age is, you can retire. If you want.
Have I missed something else that the “anti F.I.R.E” campaign says? Let me know in the comments & I’ll update this article with my response.