FIRE’s pros and cons
Financial independence doesn’t have to come at the expense of enjoying life.
My colleague Kathleen Elkins has for years covered the FIRE lifestyle, short for financial independence, retire early. It’s a world traditionally defined by people who aggressively save and invest, building nest eggs large enough to escape the 9-to-5 grind decades ahead of schedule.
Now, she’s found that a new wave of young investors is adopting a much more chill alternative to FIRE. Instead of relentless hoarding, they’re front-loading their retirement accounts early, then easing off once their portfolios are on track. The logic is to work enough to cover current expenses and let investment gains compound in the background.
Kathleen recently spoke to 30-year-old Cody Berman, whose income quadrupled in three years while his spending stood still. He broke down the two levers and the simple formula he says he used to hit financial independence before his 26th birthday.
There’s also the story of a 24-year-old Meta software engineer who makes over $300,000 a year and doesn’t own a car, couch, or TV. (He plans to retire around age 30.)
Personally, I find the FIRE movement both fascinating and baffling. It’s easy to declare financial independence in a roaring bull market when one’s net worth only goes higher.
It’s a lot harder to preach that gospel during a brutal bear market, like the 2008 financial crisis, when stocks plummeted and unemployment soared.
Another thing to consider: the potential for loneliness. Most people aren’t FIRE fanatics. Being one of the few who retire early and are untethered to a job or income stream can lead to anxiety and a lack of purpose in life.
Count financial influencer Mrs. Dow Jones — whose real name is Haley Sacks — as a FIRE skeptic.
In a recent Live Q&A with Business Insider, she pushed back against the movement, saying extreme frugality does more harm than good and scares everyday people from investing entirely.
“You know, I beef with them,” Sacks told my colleague Dan DeFrancesco of the FIRE followers. “I basically look at FIRE as like financial anorexia, where you’re being so extreme, it’s so much deprivation.”
Where do you stand? Is retiring decades earlier than usual a brilliant life hack? I’d love to hear what you think at [email protected].
