Money, Life, Philosophy
This is my third post about FIRE. You can read the other two here and here.
The FIRE movement has changed since it first began, leaving behind its roots in thrift and a simple life and turbocharging into maximum capitalism, income, and luxury. But there were some positive changes in the years since I first learned about FIRE.
FIRE has split into many subgroups. You can find all their Reddit threads (LeanFIRE, FatFIRE, BaristaFIRE, CoastFIRE, and PovertyFIRE to name a few) online and probably a dozen bloggers and a half-dozen YouTubers covering each flavor. I think this is great, honestly. For people who want to retire early with lavish lifestyles, they have a space to discuss their $50 million portfolios. But so do the people who plan to live on less than $27,000/year (adjusted for inflation) and only need $675,000 to retire.
A new segment I find particularly interesting is called CoastFIRE. You save aggressively for a short period of time until you build a nest egg that will compound over the years to be able to retire at regular retirement age, using time and compounding interest to do most of the work for you. Once you’ve reached that initial number, you can kick back and let it grow without needing to contribute a single cent more. You’re just responsible for your normal living expenses until the time that you retire. For some people this means they can keep working at their job but start putting money toward a dream house or traveling the world. For other people, and what I hope I to be able to do, it means being able to move to part time work and have more free time.
This is all a bunch of math stuff, and there are calculators out there if you’re curious, but I’ll give you an example.
You’re a young person who just found out about FIRE. You know you want $40,000/ year to live off of when you retire at say, 65. So you know you’ll need something like $1,000,000 before you can hang up your hat. You’ve been a ski instructor for several year and love it, but it really barely pays the bills. So you come up with a plan. For five years you take a job in the city with lots of overtime and squirrel away as much as you can to invest in index stocks. You’re thirty years old now and have an invested nest egg of $100,000. That nest egg is going to grow for 35 years at a rate of about 7% (adjusted for inflation). When you turn 65 you’ll be a millionaire (actually, a multimillionaire, but I like to keep things in inflation-adjusted numbers.) Now that your future is secure can go back to being a ski instructor and hitting the slopes, making enough to live off and pay your normal bills and not save a single dollar more knowing that your retirement will be there when you’re older.
But wait! What about inflation? What about market crashes? What if AI takes over ski instructor jobs and you’re out on your butt in the snow?
Frankly, if the market crashes so hard that it doesn’t recover for 35 years, we have WAY more problems than not being able to retire. And if AI takes your job, bummer, but you’ll find another one. The great thing about CoastFIRE is that so much of the pressure of modern life is alleviated. All you have to do is pay your bills, and nothing else. And hopefully you’re living frugally so your bills don’t feel so overwhelming. I know this is still a tall order, but you have that nest egg, and it’s available to help pick you up when you need it.
This version of FIRE really appeals to me because of its flexibility. I can try different jobs. I can work more or less depending on what my expenses are. If I decide to change course and want to buy a castle in France, I can pivot and put in the overtime and work toward that dream knowing that it won’t negatively impact my future retirement since all of my money is now going into my castle fund.
I don’t actually hate work. I’ll stay up until all hours working on something I find engaging, building crazy things or writing weird stories. I even enjoy my construction job. I like being outside and getting better at building. I love that the things I do for work serve the community around me. (You can thank me that your toilets aren’t backing up because I just helped install new water treatment pumps!)
But I like being able to have choice. I like being able to take off seasons from traditional work so that I can spend time on a passion project. So that’s what I’m working toward right now, and it’s exciting to know that in the near future I’ll be able to dial down traditional work and be able to lean into doing more things that feel important to me.