Article criticizing FIRE

[karen1972]

Well the article also complains about working until you die. My dad worked until he died at age 82, he owned his own business... he said he thought if he quit he would die, he wouldn't have a sense of purpose anymore, he enjoyed what he did, he had flexibility and his customers loved him... nothing crazy about working forever if that is your choice.

As for retiring in your 40s, well that is my path. I won't know if I was wrong for a very long time. However, these articles all appear to assume once you have retired, there are NO take backs, if something drastic happens and derails your plans, not possible for you to be flexible and adjust accordingly.

Seriously, we all know once you get to a certain baseline, you are still better off than 95% of the country. If something happens, I'll figure it out. I don't expect my retirement to look exactly one way, I also have no issue cutting expenses, moving to a LCOL, selling the house, etc.. To me FIRE is all about having the freedom to do what I want with my time, the perks of living a nice lifestyle is secondary.

 

[Mr. Tightwad]

Your first post mentioned that some people refer to "retiring early" as 65. I never heard that. Interesting, to me that is the "normal" retiring age.


I would describe my situation as the guy that "stayed single with very few encumberments following a short but successful career". I have a partner, but she and I just live together. I retired at 50, am 52 now and all the calculators put me at 95% + ..actually 100% now with the market move the last couple of years.

Not getting married was very smart. I never married and I retired at 45. If I can do it anyone can.

 

[scrabbler1]

Not getting married was very smart. I never married and I retired at 45. If I can do it anyone can.

Same here. And no kids, either.

 

[scrabbler1]

Well the article also complains about working until you die. My dad worked until he died at age 82, he owned his own business... he said he thought if he quit he would die, he wouldn't have a sense of purpose anymore, he enjoyed what he did, he had flexibility and his customers loved him... nothing crazy about working forever if that is your choice.

As for retiring in your 40s, well that is my path. I won't know if I was wrong for a very long time. However, these articles all appear to assume once you have retired, there are NO take backs, if something drastic happens and derails your plans, not possible for you to be flexible and adjust accordingly.

Seriously, we all know once you get to a certain baseline, you are still better off than 95% of the country. If something happens, I'll figure it out. I don't expect my retirement to look exactly one way, I also have no issue cutting expenses, moving to a LCOL, selling the house, etc.. To me FIRE is all about having the freedom to do what I want with my time, the perks of living a nice lifestyle is secondary.

One requirement of being able to ER was that I would not have to make any changes to my day-to-day lifestyle. I built into my budget a small cushion, or surplus, which would cover me in case I went on a little splurge once in a while. I refused to put myself into a situation where, if I spent an extra few hundred dollars in a month I would have to worry about offsetting it elsewhere or later on. All that would happen would be the cushion disappears temporarily.

 

[Dtail]

This forum is a small subsection of folks who actually figured out how to FIRE. However not everyone took the same path, but most have LBYM somewhere in the equation.
We LBYM'd, but high paying jobs were just as important at least for us.

 

[daylatedollarshort]

"The math doesn't work" doesn't even make any sense without a formula and actual numbers.

 

[Teacher Terry]

I noticed this forum and Mr. MM are full of big earners. However, there are some of us despite having graduate degrees are not because of our fields. I never regretted it as I loved my work. I do agree most here have learned to not be spendthrifts.

 

[rodi]

While it's true I don't have a crystal ball - so I can't say 'for sure' at almost 5 years in - that we'll have enough... I figure with a <3% WR and every calculator out there telling me we could spend more... I was prepared.

Heck - by the logic that you don't know until later in retirement if you have enough - you should retire till less than 5 years before you die.... So wait till you're too old to enjoy retirement 'just in case'.

My retirement plan is solid - the math is solid with a lot of padding. And we have places we could cut, fairly easily if there were an extended market downturn.

Teresa Ghildarducci has a history of poo-pooing early retirement. She's all doom and gloom. She's very consistent in this position.

That said - for folks who spend as much or more than they earn.... yeah - they can't retire early. But for savers/investors who lived below their means for decades, socking away the extra.... the math can work... even just a few years in.

 

[Sunset]

+1 (Again!)

There sometimes is a tendency for folks here to want to be able to "lock in" future results, which just isn't possible. I believe that my worse case scenario leaves me with a few bux at the end, but I fully accept that there is some possibility things really could get worse than they ever have in the past. And, there is also a chance I'll end up with an amazing fortune. Only the passage of time will tell where on the continuum between broke and fabulously wealthy any of us will land. All we can do is conduct ourselves prudently following strategies that have worked for others preceding us and hope things don't change too much.

One can hope things work out well.

I was just watching a series on WWII, in it , I see actual footage of some old probably retired people and their plans for retirement are now (at the movie recording time) destroyed along with a good portion of the city and their country.

So I plan for what I can, and hope.

 

[brucethebroker]

Let the critics talk all they want. As my DW says "______ (fill in the blank) is not for everyone."

"ER does not work" is just another excuse for those who cannot make it work. And if a person decides not to buy a house, but buy "experiences" or "toys" instead, they will trot out articles on rent vs. buy. Others will justify all sorts of LBeyondYM expenses, including high interest credit card debt, as they refuse to save/invest. Let 'em. No need for us to try to change the world.

The "professors" who poo-poo ER are most likely similar to a HS Principal at my first job. When I resigned as a teacher (after 4 years), he looked at me with a blank stare and said "but what are you going to DO?" Obviously, sitting there with his Masters and a Doctorate on the way, he had no idea of life outside of teaching. Well, I found no shortage of opportunities in new and exciting fields.

Part of our PR problem (if you will) is defining just exactly what ER/FIRE really is. For me, personally, it is the option to work, or not to work, full time or not FT. No rule book says you cannot have something you do PT to make some cash. It isn't cheating to downsize your home, move to a LCOL area, or become a one car household. The same with taking SS at age 62.

Look no further than the discussions on ER/FIRE on this forum. I am blown away by the financial investments accumulated by some. And I am sure others are blown away by the stories of some of us on the other end of the spectrum, happily ER'ed on far less than $1M of invest able assets, without a pension/inheritance.

But, "it isn't for everyone"...

 

[Nick12]

It's all the mindset what you can do and what at times to extremes you are willing to achieve it to get to the finish line ( i.e. FIRE ). When I achieved this at 51, I was mostly met with shock, amazement, jealousy, lots of questions how I did it, you name it. One person even advised of how I can teach a class on how to retire early. If I did I would charge an entry fee. ( Ha,Ha ). It took me 30 years of a mindset of not depriving myself of living comfortably, but saving and investing heavily in the market thru index funds, not listening to the critics when they say the sky is falling and reaching the end goal of ER.

 

[BigNick]

Something I didn't take into account with my planning, but probably should have done (although it didn't stop me ERing at 52 ) is that if the kind of event that blows up even the 100-year predictions were to occur --- maybe a major war, an 9.8 earthquake all down the West Coast, or a small asteroid strike --- then many people with a j*b (prior to the event) wouldn't be doing all that great either.

 

[EastWest Gal]

While I was already laughing out loud at the article, when I cam across this, I knew the article was pure BS.


"And do you need to replace 100% of your annual salary?


You need 70% of what you normally live on."


How many times do we say I this forum is tat it isn't any percentage of your income which really matters in retirement, especially ER. It is your expenses, expenses, expenses. I'm not filthy rich and I don't have expensive tastes.


I worked on the math for many months in 2007 and 2008. I was only 44-45 then. I made my plan to get to age ~60 intact using just my taxable portfolio. After that, my picture only improves because of the reinforcements which begin arriving: SS, frozen pension, and unfettered access to my tIRA. I am 10 years into that 15-year time period and all is fine, just as I predicted. (In fact, things are better because of the growing markets.)


The math can work even in your 40s.

What’s worse, they say you need 70% of your gross salary. Huh?! I never took home all of my salary. After taxes, especially in California, maxing out the 401 K, and investing after tax income, we lived on less than 50% of my salary.

Cut the expenses. Go to the thrift shop, by food on sale, don’t eat out. I’m amazed how many nursing staff stop by the fancy coffee shop in the lobby on their way to work. $20 per week x50 weeks is $1000/year on that one high calorie high fat high sugar item.

As usual, it’s just a pundit trying to keep their job by writing another fluff piece about something they know nothing about.

 

[marko]

You can't know if 'the math will work' or not until your at or near the end of your retirement anyway. I'm always puzzled by people who say we've been retired for 5 or 10 years and report the financial aspect is working - happens here often.

I agree with your point and it also falls into the recent 'won the game' thread as well.

But as someone who's often demonstrated my lack of math skills here, here is how I measure it:

At the end of each year if the bills are all paid and (accounting for inflation) I have more money in the portfolio than when the year began--and it's usually a lot more. A few exceptions, of course (2008 and 2018) but over the past 15 years I think it can show that the math (implied by the results) is working for me.

My overall growth, net of inflation and withdrawals over that time is 5.2%.

Of course, I as pointed out in the 'won the game' thread, you never know what special event is just around the corner, so yes, it could take 30 years to know for sure.

 

[Winemaker]

It will be 4 years in June for DW and 5 years for me in October. We have never in our lives felt this alive. We travel, garden, cook, do charity, see grand kids, redecorate, together. We chose to retire when we did in our middle 50's on our terms. We have more income now at a <3% WR, pensions, and rental income, than when we slaved. DW may take SS at 64.75 per opensocialsecurity.com recommendation, in a few years. Other than some aches and pains, we are in great health. The only disappointment we have had is that neither of us were offered health insurance by our employers, but we have been able to handle the ~$23,000 annual premium. We are truly blessed, but nobody has knocked at our door for an interview.

 

[Badger]

Nothing new here. Like many articles of this kind the author only focuses on saving money. That is only part of the equation. No matter how much you save it won't help if you don't know how to handle the expenditures. Look at how many big time lottery winners go broke in a couple of years. All things being equal it is possible for a person with less money than another to retire early and make it work if they also plan for medical, a paid for home, no debt (which is mentioned) and a live within your means mindset.


Many of these kinds of articles are getting to sound like sour grapes from someone who hasn't taken the time to figure this out. Because we planned for and have taken care of the other issues we are set for life with money to spare. Not too shabby for a couple of teachers. But IF for some reason we fail in this it will mean about 90+% of the country will already have one foot in the toilet.


Cheers!

 

[marko]

Many of these kinds of articles are getting to sound like sour grapes from someone who hasn't taken the time to figure this out.

+1

IMO, not so much sour grapes as a balm for those who didn't get it done. Confirmation of sorts. "Boy am I glad I'm still working at 72 years old!" sort of thing.

 

[steelyman]

What’s worse, they say you need 70% of your gross salary. Huh?! I never took home all of my salary. After taxes, especially in California, maxing out the 401 K, and investing after tax income, we lived on less than 50% of my salary.

I ran across “rules of thumb” like this in various sources/articles. Usually it was “plan to replace 70-80% of your gross salary in retirement to maintain your lifestyle”. That’s all they are, rules of thumb, and of course every person’s situation is different.

My employment-related expenses were very low due to the nature of my job: casual attire, low commuting, etc. So I adjusted, in my retirement planning spreadsheet, to 85% and called that my “target income”. It’s still there in a column, adjusted annually for 3% inflation (another rule of thumb).

It gave me a starting point for a “magic number” calculation while still working. In reality it’s meaningless, now almost 7 years into ER.

So I agree with this point about not taking home the gross salary and that many deductions from gross while working can significantly reduce what’s left for living.

 

[ER Eddie]

Yeah, lots of things wrong with that article.

- You don't need 70% of your income. As we all know (but she apparently doesn't), what you need depends on what you spend.

- She says people who are considering ER need therapy and are engaged in "fantasy and avoidance." She is arrogant and condescending. Auto-disqualify.

- She advises that you have 8x your salary saved by age 65, and that'll set you up for a solid retirement. I don't think that math works.

 

[Dtail]

Yeah, lots of things wrong with that article.

- You don't need 70% of your income. As we all know (but she apparently doesn't), what you need depends on what you spend.

- She says people who are considering ER need therapy and are engaged in "fantasy and avoidance." She is arrogant and condescending. Auto-disqualify.

- She advises that you have 8x your salary saved by age 65, and that'll set you up for a solid retirement. I don't think that math works.

Bolded by me - this statement is mentioned by many advisors including even the big ones like Fidelity.
The assumption of living the same lifestyle in retirement as pre-retirement is just not true in many cases, especially with larger earners.
We reduced our expenses by 60% leading into retirement and live a wonderful (so far) retirement on much less monies than pre-retirement.

 

[ER Eddie]

Quote from article:
"But when researchers probe a bit and ask people why they retired, you get most people saying that their retirement isn’t voluntary. They were pushed out, or they were laid off, or they had to take care of their spouse or had to attend to their own illness."

I'd like to see backup on that research. I'm not sure that's true for anyone on this forum.

I read a book called The Retirement Maze once. It is probably hands-down the most depressing book on retirement I have ever read. It was obviously written by several academics who had no intention of retiring and sounded frightened by it. However, it was research-based, so that was good.

One of the bits I remember is that about 50% of their sample of retired folks were people who had been forced into retirement, because of being laid off, fired, for health reasons, or something else. I don't remember the exact stats, but it was about 50% voluntarily retired, and 50% involuntary. This was in a big, randomized sample. Not surprisingly, they found all kinds of people who had struggles and problems adjusting to retirement. And that is what the book focused on -- all the problems and struggles.

I always remember those stats when I read gloom/doom articles on retirement. There's a big difference between freely choosing to retire and being forced out before you're ready. You can't put those two groups together and then generalize about what the retirement experience is like.

p.s. The linked article says in a sample of 2000, only about a third retired voluntarily, when they decided; two-thirds felt forced out early, for a variety of reasons (almost half because of health issues).

https://www.barrons.com/articles/yo...an-you-want-to-51545483600?mod=article_inline

I agree that those stats wouldn't fit this forum, though.

 

[jollystomper]

I read the article. To me it did not seem at all as if were criticizing FIRE. It seemed to more try to introduce a dose of reality for 2 "extremes" - retiring in ones 40's or early 50s, and being able to work as long as you want. I agree with the article in that, though both of those are possible, the majority of people will not be able to achieve either one.

While some of her statements seem "wild" - though I wonder, given a short article, if they are said that way intentionally to get peoples attention - her basic advice is sound. Save as soon as you can, use retirement accounts you cannot touch, get out of debt as soon as you can. Note also that she does not say "70% of your annual salary", but "70% of what you normally live on" - that is, your expenses. Given that most people do not budget nor know what their expenses are, it is probably a good place to start (which can be refined once your expenses are under control) And later she states "about eight times your annual salary, if your annual salary is about what you want to live on, you know, net of taxes and savings" - again pointing out that what you want to live on is what is important.

On the "work forever" side, I believe she is correct in again pointing out how your employer and /our your health may not make that possible. Perhaps even most people who are "retired" from a job did not do so purely by choice, our without the influence of being offered a retirement/severance package. I am just speculating. It would be interesting if such a poll has been done on this site - but it might be biased as most of us here are happily retired, and those who are not might not frequent a site like this.

To make a sports analogy, the article is like telling a group of high school football players "Think you can make it to the NFL? that is wildly unrealistic" - and explaining the reality of the odds and the effort it takes to improve the odds in your favor - but still not guaranteed by a long shot.

The general tone of the article to me is "don't expect to retire in your 40s or 50s, don't expect to work as long as you want at what you choose, but do things that can put you on the path of being able to live comfortably in retirement at some point". In my view it is a good reality check, in conjunction with all the other information that is out there.

 

[scrabbler1]

One more thing about the "70%-80% of salary" which always makes me chuckle: Which salary? I worked full-time for the first 16 years, then reduced my weekly hours worked by nearly 50% for the next 6 years, then reduced them again, to about 1/3 of my original hours for the last 17 months of my career. So, of which salary should I use as a comparison?


I remember the first time I heard of the "70%-80% of salary" thing. It was part of a retirement package my employer gave out back in the early 1990s. It included a worksheet on a floppy diskette (that's how ancient it is!). One of the first entries we inputted was this figure. But I knew even then that it was a ridiculously high number (I was working full-time back then) to use to estimate my expenses in retirement.


Some things never change...….

 

[FREE866]

It will be 4 years in June for DW and 5 years for me in October. We have never in our lives felt this alive. We travel, garden, cook, do charity, see grand kids, redecorate, together. We chose to retire when we did in our middle 50's on our terms. We have more income now at a <3% WR, pensions, and rental income, than when we slaved. DW may take SS at 64.75 per opensocialsecurity.com recommendation, in a few years. Other than some aches and pains, we are in great health. The only disappointment we have had is that neither of us were offered health insurance by our employers, but we have been able to handle the ~$23,000 annual premium. We are truly blessed, but nobody has knocked at our door for an interview.

So wonderful!

 

[pjigar]

My father used to say “Do you want kids or money because you can’t have both.” )

Off topic, but similar saying in beekeeping circles: You can have more bees or more honey. i.e. you can increase the number of colonies or honey production but not both.