I have came across a recent commentary article from CNA – “By wanting to retire early, millennials are subverting conventional ideas of work and finances”, which I found particularly interesting and relevant in our times today. Therefore, I would like to share what are the 5 important takeaways that you and I can learn.
1) What is FIRE - Financial Independence, Retire Early? And why?
As the name suggests, achieving FIRE means being able to be financially independent as quickly as possible and then have the choice to retire early from a 9 to 6 job.
The reason why people want to retire early mainly is because:
1) They are unhappy with their jobs and want to escape from their jobs as soon as possible with enough money to live life,
2) They are OK or happy with their jobs but they want the choice to retire from it whenever they want.
After retiring, then, they can start to pursue whatever they would love to do and lead a happier, more meaningful life.
2) A mindset shift in many millennials nowadays
Many millennials are pursuing financial independence and early retirement. This notion of an early retirement is becoming more and more common nowadays, which was pretty unheard of in the past. Millennials (typically age 26 – 41) are becoming more and more attracted to this notion of early retirement. This is probably because they have worked for some time now and cannot wait a long 20 to 30+ years to retire in their 60s. This is also coupled by the fact that more millennials are feeling dissatisfied with their jobs.
Rising costs due to high inflation, particularly rising prices of cars, housing and daily household goods, are causing the millennials to worry about or even delay their marriage, getting their own homes and having children. Therefore, it’s understandable to feel the need to pursue financial independence.
Social media is also another source of great influence. Imagine that you are so busy and while taking a breather, you saw that your good friend or your favourite influencer is enjoying life on an exotic beach club! Frequent exposure to these content does result in a disillusioned mind over time.
3) The reality of FIRE
To achieve early retirement by 40s or even as early as 30s, you can imagine what one needs to do in order to attain financial independence as soon as possible.
Extreme frugality. FIRE practitioners aim to save up as much as possible their income, some 70% or even more. Also, to increase their income, they might take up several side hustles.
One simply cannot have the cake and eat it at the same time. Sacrifices in life have to be made so that they can save money or they simply might not have the time and energy. This means they might miss hanging out with friends, avoid enjoying expensive good food, go on less vacations, delay their marriage, stay with their parents instead of getting their own house, not having any children, neglecting their health, etc.
Sounds like torture? Well, for others, perhaps. But for some, maybe not.
4) Not suitable for everyone
In my opinion, FIRE is not suitable for everyone. It really depends on what you find value and meaning in.
For example, certain things like going on a vacation with elderly parents or having children – these are precious moments which are time sensitive, and one may not have the chance to do later on in their lives after they achieve FIRE. However, if one does not find value in these moments then perhaps it is fine to miss them.
Or perhaps one can take a more moderate stance and dial down on the intensity of FIRE. But this will mean to delay retirement, perhaps from 30s to 40s or even 50s. I also suggest one can learn how to invest wisely which helps compound and grow their wealth.
5) Life after FIRE?
After all that hustling and sacrifices, one managed to achieve FIRE in his/her 30s. One might ask – so what now? Have a solid plan to execute after FIRE. Otherwise, all that sacrifices would be for nothing.
Having a solid plan can also help to have a clear goal to know exactly how much funds are required to fulfil the dream life that you want after achieving FIRE, based also on how long you might live till. It’s good to budget some extra in case of any unexpected emergencies. It is also wise to already have the insurances in place to tackle accident events or encountering certain health issues down the road.
Are you suitable to be a FIRE practitioner? What sacrifices do you have to make? What is your goal after FIRE? Ask yourself these questions before exploring and plunging into it.
Be a smart FIRE practitioner! :)