Many members of the FIRE community set dates for retirement. I constantly read things like I plan to retire in 5 years. I want to retire at age 40. I will no longer be working by age 45.
I understand the premise behind these dates. If you set a specific goal you are more likely to reach it, but I wonder if these dates are arbitrarily set or does it take a lot of number crunching to determine that magical retirement age.
Does a twenty year old declare his desire to retire on the first day at work? Does a thirty year old haphazardly set a date for the future? Do all of these FIRE bloggers sit down with a spreadsheet full of scenarios and pick the one that provides the largest margin for safety or do they pick a date and throw caution to the wind? I really don’t know how most people pick a date. If you have thoughts comment below.
I am genuinely curious about all of this because life is complicated and messy even with the best laid plans.
When I was twenty-seven I encountered unexpected medical problems that continue to haunt me fourteen years later. I’m not the only young person I know to experience medical setbacks. A family member was diagnosed with brain cancer in her early thirties. A close friend of the family blew out his kidney in his late twenties and a former college roommate died of an inherited disease before age thirty-five. Without solid medical coverage and long term disability benefits many of my friends and family members would still be digging out from piles of medical bills. They also couldn’t dig their heels in at work in search of promotions and bonuses during this time. They were focused on their health and getting back to work before their FMLA expired.
A friend, and former personal finance blogger, recently pushed back his retirement date because of a multitude of medical problems. While he technically has more than enough money in the bank to retire he fears for his future health and isn’t willing to jump off the career bandwagon without a solid medical net to catch him. If he continues working at his current job until age 55 he will receive retiree medical benefits for life. Suddenly the plan to retire at 45 may be pushed forward an entire decade.
What about those who struggle with unexplained infertility. IUI and IVF are unbelievably expensive, especially if you have to undergo multiple rounds of treatments, which most people do. Some people want to retire before they even have children. There are plenty of bloggers reaching for retirement dates in their early thirties. Would you forgo a child you always dreamed of because you didn’t expect to experience problems conceiving?
What if your child is diagnosed with a condition that requires expensive therapies? Do you factor these scenarios out in advance or simply wait to see if they happen?
Maybe we are all safe to set a date and retire without ever considering a worse case scenario. After all, the majority of families will never be faced with these issues. Isn’t that why everyone was harping on the interview with Suze Orman?
Medical illnesses can derail your retirement plans, but so can other crossroads throughout your lifetime. What happens if you decide one parent should stay home after the birth of a child? What do you do if your own parent becomes ill and requires you to cut back on the number of hours work or the type of job you do? What if your six figure income is suddenly cut in half? What if you experience an unexpected layoff? Do you feel like a failure when you don’t reach your age-related goal?
I guess I’m asking: What happens when your retirement plans have to change?
My husband and I have not set a future date for retirement. Oddly enough it’s not something we’ve ever definitively discussed. We’ve thrown out arbitrary date ranges from time to time, but never really formalized those details.
Setting a date feels a bit limiting. What if your career suddenly takes off and you begin to love the work you perform each day? What if you decide you’d rather enjoy a lower-paying career now then push forward for another decade in a career you don’t love?
What if you start a non-profit and decide you never need to quit working you just need to limit your lifestyle and ensure you spend more time focusing on living below your means?
What if you and your spouse decide to send your children to expensive specialized schools for art or music? What if you decide it makes sense for one parent to drop out of the workforce to care for a child?
Under the most ideal conditions your magical retirement calculation ensures you hit your desired net worth at the same moment you reach a particular age. You are driven to earn more, spend less and allow the power of the markets to help your money grow. That all makes sense, but sometimes the ideal doesn’t line up with reality.
Have you failed if you don’t reach your age-related goal? Of course, I don’t think so. I think it’s important to routinely weigh your options along the way and to be flexible for all life has in store.
In fact, I wonder if those in the FIRE community are limiting themselves by setting a specific retirement date in the first place. You wouldn’t want to mark a date on the calendar and then set your life on autopilot to reach it; ignoring the desire to follow your passions, get married, have children or any other big life decision along the way.
Are you living your best life if you spend day after day counting your money on one hand and counting down the days until retirement on the other? If you are fulfilling your other life goals then yes, otherwise you might want to rethink your retirement plan.
I also think this notion of date setting discourages those outside of the FIRE community from striving for financial independence in the first place. Some blogs and online forums can make you feel like a failure if you haven’t saved a million dollars by age 30 and/or retired by age 40.
Back in the day personal finance blogs focused on the importance of earning, saving and investing for the sake of a better life, not for the goal of escaping the working world and venturing into retirement.
What’s the difference you might ask? Well as soon as you talk about early retirement many people will begin to feel bad about their life choices.
So you didn’t live in your friend’s backyard or in your parent’s basement for a decade? Well then you really wasted your money. Oh you didn’t buy a house at age twenty and then rent out all of the other rooms so that your roommates could pay your mortgage? Well then you really wasted your money!
You know I lived in a group house for nearly two years after graduation. Financially speaking it was one of the best moves I ever made, but I can’t pat myself on the back entirely for that decision. My low starting salary provided me with a limited set of options. Twenty years later I recognize the financial significance of that housing decision, but at the time I hated sharing one bathroom with five other unrelated people!
Or what about the people who are now thirty or oh-my-goodness 40? They may read these notions about early retirement and feel like complete failures. They make ask themselves what’s the point of saving money if I can’t pull the plug on my career?
I understand the desire to spread the word about early retirement. I understand that headlines look bigger and shinier when you place the word thirty beside the word retired. But I also think that life is complicated, that we all make choices in our youth and that the goal should be to help people change their ways without feeling bad about when they get there.
Sometimes the FIRE community looks like an exclusive club designed and run by young, financially savvy gurus. I don’t think that is the intention of those in the FIRE group. Well, heck I don’t know, maybe it is, but I think it would help to emphasize the importance of being wise with your money over the headlines of ridiculously young retirees.
It’s easy to see how someone would give up hope for an early retirement if they haven’t made perfect financial decisions along the way. I think the glitzy headlines from mainstream media deter others from joining the quest for financial mastery and I don’t want anyone to be discouraged. With a little knowledge you can strive for a life free of financial worries even if you don’t retire exceptionally early.
I don’t want to downplay the success of those in the FIRE movement. I became a member of that community before I knew the community existed. On paper my husband and I became millionaires in our early thirties and we stand solidly atop the mountain of FI in our early forties.
But now that I’ve reached the top I recognize that we were lucky to meet one another, earn high salaries and make many wise financial decisions along the way. That was our journey. Everyone else’s will be different.
Don’t let the hype of FIRE turn you away from the cause. There are many vital financial lessons to learn, even if you don’t retire twenty years before the average U.S. worker.