What is financial independence?
I suppose it’s up to each individual to define that for themselves.
In terms of pure numbers, I’ve already defined financial independence for myself:
Financial independence is being able to cover personal essential expenses with passive income.
As long as I can cover my basics in life, like rent and food, I’m good. And I am good. My passive income greatly exceeds these basics.
I don’t need to make sure that I can cover, say, the cost of a new computer down the road with passive income. Being able to pay for a trip somewhere with only passive income is unnecessary. So on and so forth.
I didn’t feel the need to be in such a position when I retired in my early 30s. And I still don’t feel that way, almost six years after quitting my job.
Of course, I’d argue FIRE is much more than simple numbers. Anyone who sees it as only a money thing is missing the big picture. Unfortunately, way too many people I’ve come across are blind to this.
FIRE is actually life-altering platform that sets oneself up for an amazing lifestyle. It’s the foundation upon which you can build a customized life for yourself.
I’ve laid out how to build and enjoy that foundation in both of my best-selling books: The Dividend Mantra Way and 5 Steps To Retire In 5 Years.
But I digress. I’ve delved into all of this before.
What I really want to do is, take a few moments today to clear up a huge misconception.
This misconception appears to be pervasive, based on comments I’ve received here at the blog, as well as emails and conversations I’ve been involved in over the years.
It’s a misconception that relates to having enough passive income to cover every single expense for the rest of one’s life.
Let me be explicitly clear.
FIRE does NOT require being able to cover every single expense from now until judgment day with passive income.
Some people apparently believe that once you pull the trigger on quitting the job, you’ll have to be in a position to cover every foreseen and unforeseen expense alike with passive income. Furthermore, they’re under the impression that not being able to cover every single future dollar spent with matching future passive income somehow invalidates or nullifies being financially independent.
Wrong. And wrong again.
For example, when I have a high spending month, like this past November, which ran me north of $1,800, I’ll get the unavoidable comment or email that goes along these lines:
“You earn $1,500/month in passive income. But you spent more than your passive income this month. You’re not financially independent. You’re a liar!”
Needless to say, these same people never show up when I have the super cheap months, like this past February, when I spent around $1,200.
The months with surpluses are great. Pop the champagne and have a party.
But the months in which deficits occur seem to, according to certain people, suddenly invalidate one’s financial position, as if financial independence is this membership card that you have to renew every month. And if your spending for a particular month goes over your passive income, your membership is revoked by some mysterious council of judges.
Umm, okay.
It’s silly. Beyond silly, really. But this is the perspective that a lot of people operate with. More people than you might realize. Trust me. I’ve had way too many inbound communications from them.
I think it’s fear, envy, ignorance, and/or one’s own shortcomings that lead to these viewpoints and responses.
I always assumed that it would go without saying that anyone who’s going to achieve FIRE would be skilled at budgeting. Likewise, anyone who’s skilled at budgeting would be able to deftly manage monthly fluctuations in cash flow, whereby surpluses would be rolled over into months with deficits.
Yet I had to write a post on this very subject not too long ago.
Well, after some emails that came my way, I’m here, to my complete bewilderment, writing another post tackling another silly misconception.
Look, if you want to spend time at your job until you’re old and used up, just to make absolutely sure that every single expense you could possibly imagine will be offset by passive income, be my guest.
But that’s overkill. And totally unnecessary.
Most of the early retirement math that way too many people hang their hat on is moot.
In addition, I don’t even think the financial independence part of FIRE is necessary.
I’ve personally met or had discussions with countless people in the FIRE space over the years.
I’m not exaggerating when I put that number well into the hundreds.
Many have retired from their primary careers and now find themselves in a post-FIRE phase of their lives.
Guess what?
Almost none of them are living completely off of passive income. Just about every single person I’ve ever been in contact with has some kind of active income in their life, even after they retire from their main profession. They’re consulting, blogging, coding, vlogging, marketing, graphic designing, etc.
Active income, after all, complements passive income.
The person out there who quit their job at a young age to live off of passive income alone, without ever lifting their finger again to earn a dollar, is a unicorn.
If you think FIRE is this thing where you quit your job at a young age, live only off of passive income, and never engage in any kind of work again for the rest of your life, you believe in a myth.
Frankly, “early retirement” is a euphemism for spending more time on hobbies/activities you enjoy (and probably make money at anyway).
It’s easy to understand why this is.
If you’re driven enough to accumulate a significant amount of wealth and passive income at a young age, you’re not going to be content with sitting around.
You’ll feel the need to continue adding value to society.
You’ll feel the gravitational pull toward passions, productivity, and progress.
And you’ll make money as a result.
It’s an inevitable conclusion for almost everyone. Even The Wall Street Journal recently pointed this out, stating we are coming upon the end of retirement as we know it.
You can call it what you will.
I call post-FIRE work “funemployment”. Perhaps “recreational employment” is a better way to look at it.
Either way, you’re going to have hobbies. And some of these hobbies can and will pay you money. It’s a natural evolution.
This isn’t about money. It doesn’t matter how much money you have. I mean, it’s not like Warren Buffett shows up to Berkshire Hathaway HQ each weekday because he needs the money. As he puts it, he “tap dances to work”.
There is a difference between work and a job. And doing something you want to do is very different from doing something you have to do.
I have absolutely no goal in my life to make sure all future expenses are completely offset by passive income.
I’ll continue to live my best life, regardless of what it costs.
That’s because my essential expenses are covered by passive income, and I plan to remain productive for decades to come.
Those essential expenses, by the way, are very low because of who I am and where I live. I’m frugal by nature. Moreover, I’ve taken advantage of geographic arbitrage, which means I’m not blowing a fortune on basics like housing and food (which I probably would be if I were still living in the USA).
When I publish future expense reports, keep this in mind. If the overall expense number comes in lower than passive income, great. But if the expense number is higher, that’s also just fine by me.
And it should be just fine by you, too.
What do you think? Is financial independence even necessary? Is the early retirement math moot? Must you cover every expense with passive income for the rest of your life?
Thanks for reading.
P.S. If you’re interested in achieving FIRE, check out some awesome resources I personally used on my way to becoming financially free and quitting my job in my early 30s!
BOOM! Mic drop!!!! Haha
Jason, I’ve been reading your stuff for years. You’re spot on! I’ve been gradually shifting towards FIRE and it’s been fun. It’s funny that everyone had this “all or nothing” view.
You’re an inspiration. Keep up the good “work”
Nick,
Appreciate the longtime readership and support. 🙂
Yeah, that all-or-nothing mentality is a strange kind of defeatist thing. I think it mostly comes from those that will never achieve much, so they’re aim is to tear down others. That said, I do sometimes get this kind of thought process from those who have been at it a long time. Kind of hearkens back to OMYS (one more year syndrome). Either way, it’s a mentality that shackles you and really holds you back.
Thanks for stopping by!
Best wishes.
I like the highlighted part in particular:
FIRE does NOT require being able to cover every single expense ***from now until judgment day*** with passive income.
That made me lol.
I like to think of FIRE as simply being: more money = more options
and also: more money = less stress
FIRE is not a binary condition. Its not like you save and save and save and then finally one day you hit the magic number and you are done. FIRE is a continual process which starts from the very first $1 you invest.
When you first start out you are in the “fluffy bunny” zone. As time goes on you reach higher stages of FIRE evolution…
FIRE investment income can buy you a hamburger every day… congrats, you have achieved “hamburglar” status.
FIRE assets can pay your rent… you have earned “Jimmy McMillan” status.
https://www.youtube.com/watch?v=3L7bwT8kr2w
FIRE assets can “cover every expense from now until judgement day” = some kind of Jesus / Godzilla hybrid.
jh,
Right. It’s not a binary condition at all. It exists along a spectrum, which is a topic I covered many years ago:
https://www.dividendmantra.com/2015/02/freedom-exists-on-a-spectrum/
I’ve argued many times now that getting to about 50% of FI is probably enough for most people, due to the dynamics pointed out above. If you need 300% or 400% or whatever, and you feel ready to do your job until such time, go for it. But it’s unnecessary overkill.
I quit my job when I had much less than I do now. Realized way back then that I was going to continue doing things and making some money. Just never stressed out about it the way a lot of other people do. It’s almost this ironic thing where people with a lot of money stress out about money more than people with little money. The money creates this prison where it should instead create freedom. Kind of sad, really.
Cheers!
There must be some FIRE people out there who don’t make any money. We just don’t hear about them because they’re not marketing themselves.
Anyway, I agree with you. It’s nice to cover 100% of your expenses with passive income, but not that’s not necessary. Working part-time is a much better way to enjoy life. You have goals and you keep busy. I can’t imagine you or I not working at all at this age. It’d be super boring.
100% FI ratio (that’s what I call it) is a good goal to have, though. It’s a numerical goal that aspiring FIRE devotees can work toward, easy to keep track of.
Joe,
Super young people who only live off of passive income? I’ve come across almost none. That’s counting coaching, emails, comments, real-life meetups, etc. I remember only one guy leaving a comment a while ago talking about how he doesn’t do anything at all. Living off of passive income and doing nothing productive seems pretty lame to me. And arguably unhealthy. I think most people with the drive to achieve FIRE will see that drive take them in new directions after they quit their job.
It’s the same with you and I. The blogging gig isn’t treating us too badly. Just as I couldn’t see myself no longer staying engaged with some kind of productivity, I couldn’t see that for you. Nor do I see it for pretty much anyone. A driven, passionate person is gonna make money well after quitting their job. It’s almost inevitable.
I think TWSJ is on to something with their proclamation about the end of retirement. It is kind of an outdated concept. And early retirement is nothing more than the above euphemism. It doesn’t really exist in a pure sense where you just stop being productive the day after you quit your job. Not for, probably, 99% of people.
Best regards.
Some folks (too many) just don’t understand money. The “rules” to thrive in a capitalist economy are pretty simple. The same people who think they’re doing fine because they can make the minimum payment on a high balance credit card, are the same ones who declare FIRE a failure when a month or 2 exceeds the passive income.
I will pull the trigger and quit my job in a month or 2. I’ve established an oversized emergency fund to utilize when large expenses pop up. During good months I’ll be able to add to this fund. I hope to find a paying gig here and there. But that’s just icing on the cake. I won’t need the gigs pay the bills, it’s more about being productive at my leisure.
Thank you Jason, you have had a hand in shaping my view of money. It’s gone well.
Fred,
Love it, man. Wish you nothing but the best in this next phase of your life. It’s a lot of fun to pull that trigger and see the growth happen. 🙂
Cheers!
Nice little read, I’m just catching up on your most recent post 🙂
I find it hard to believe what some people point out to you about your financial results.. a little bit ignorant. Keep doing what you’re doing Jason.. it’s working 🙂
Regan,
I usually don’t pay any attention to that kind of stuff. But it’s something that has come up numerous times over the years, even from coaching clients who are really concerned about quitting their job until they’ve got passive income covered something like three times over. I’m simply pointing out that FIRE isn’t the end; it’s actually the beginning in many ways. And the money ain’t gonna stop flowing.
Thanks for the kind words! 🙂
Best regards.
I just shake my head (which has some holes in it from scratching) that you even have to (continually) write about this stuff. It seems like these people are part of the FRIGID movement instead of FIRE… in that they are F’n RIGID in their thinking, comprehension, extrapolation. Admittedly, I am on a collision course with passive being able to more than cover all of life’s needs, and should be there within 3-5 years. Does this mean I am going to stop being active and productive? Heck no, but it is on my terms. I am, and will continue to be Financially Independent and Retired Early from the rat race I was in for years. Now, I tap dance to my office, which when I am home in NY, is across the hall from my bedroom. Since I am in Mexico right now, working and playing, I Mexican Hat Dance to my office, which also happens to be the dining room across the hall from our rented house. Come on people! Get over it, and off of Jason’s back! LOL… If they could only hear the music behind your words, I am here to give testimony as to how sweet and achievable they are. Keep on rocking in the free world my friend.
Andrew,
Frigid. Love it! 🙂
“the music behind your words…”
That reminds me of one of my favorite things ever:
Life is really about music and dancing. Enjoying yourself. Not letting money dictate what you do.
It’s funny, because it doesn’t behoove me to convince anyone of anything. I’m better off if people stay plugged into The Matrix, slave away at jobs, and buy the products/services I’m invested in. But I’d be remiss if I didn’t spread the word.
Enjoy Mexico!
Best wishes.
I completely agree with you, Jason. I wasn’t fully FI when I quit my full-time job, but just being part of the way there gave me the confidence to set out on my own. I can’t imagine never earning another dollar working on something that lights me up, how boring would that be lol?
Also, I just arrived in Chiang Mai yesterday, had some delicious Khao Soi, and am loving it so far! I hope all is well, and KL is treating you better.
Nomad,
Absolutely. Boring. Lame. However you want to describe it. I just couldn’t imagine being young and avoiding productivity for the rest of my life. Meanwhile, productivity tends to lead to money. It’s a natural course of events. Nothing groundbreaking here, but quite a few people are unable to understand how that works. I’m bewildered by it, but such is life.
I’m enjoying the lifestyle very much. And part of that enjoyment is in the writing and inspiration. I genuinely gain pleasure from helping others to achieve a greater degree of freedom and happiness in their lives. The fact that this leads to money is a a side effect.
Chiang Mai rocks. I miss it very much. Haven’t had Khao Soi in a while now. After eating food here in KL, I could go for a giant bowl of the good stuff.
Have fun over there! 🙂
Best regards.
Hi Jason,
it´s so true what you are writing because I´m guilty exact with this. I saved till I had 100% of the expenses of a normal month and today I know, this was absolutly unnecessary. Today I´m still working in the IT business, but only with my terms. And not the classic way I did for years in the past. And guess what: I still have more active income as I need for my living, so the passive money isn´t even necessary at the moment. I think, if you are not dependent on money, it is quite easy to negotiate what you charge and which projects you like to do. I also had a period of summer months where I didn´t work anything just enjoying the summertime. What also happened with dividend increases and the surplus of money which I invest is, that the fund will cover after 2 years reaching the 100% of an average month now around 130%. My expenses don´t grow much.
I must admit that my understanding for the passive income changed a lot the last years when I changed my overall living. May be it is necessary to gain the experience first to understand, that FI is far different from the beginning idea, where you only save to get as much passive income in a short saving period as possible. From my side I didn´t think too much what will really change. I only thought getting away the money pressure and have the possibility to do what ever I want.
But now I know, even with the 50% coverage figure you mentioned you can simple start in a different and way better life. I think, about 99% of the people outside wanting to reach FI don´t know this, me included in the saving phase.
Today I don´t care if someone says I´m too expensive or whatever he think I should do for him, if I don´t want it from my side. I simple can say „No!“ and that is really freedom. Also I discovered that I get more and more nice ideas and my shortest ressource is time. Sitting every day in a beergarden is way too boring. I really like doing this on nice days, no question. But it is not enough to do only such things because life has to offer much more possibilities and fun. With FI you can take the possibilities you want to have in your live. So comments like you have a deficit of some hundred dollars in an expensive month is bullshit. Even with deficit months on passive income you have still positive months including what you get as active income. I can´t understand these comments anyway, because the people who are writing this can see, that you still invest nice amounts of money every month, even in the „deficit months“.
Best regards
Oliver
Oliver,
I totally hear you. Don’t feel bad for not getting it right away. I was guilty of this, too. My initial goal – which was really all I could think about at the time – was to achieve FIRE by 40. That was it. Quit my job. Live off of passive income. Kick back and enjoy life. It was shortsighted, but I was young. I actually reflected on the realization of being wrong about this, as well how financial freedom exists along a spectrum, five years ago:
https://www.dividendmantra.com/2015/02/freedom-exists-on-a-spectrum/
“I simple can say „No!“ and that is really freedom.”
Couldn’t agree more. The ability to say no is awesome. You’ve gotta put yourself in a position to be ready to walk away from anything.
Money only means freedom to me. The good news, though, is that it doesn’t cost that much. Not nearly as much as some people think. And certainly not, you know, being able to cover every potential expense until you die with passive income. It’s nonsense.
Thanks for adding that!
Cheers.
Inspirational stuff as usual. Some people just have a glass half empty mindset.
Really appreciate what your doing here thanks.
Dave.
Dave,
I’ve always been more of a glass-half-full kind of guy. It’s much more fun to be an optimist. 🙂
Appreciate the support!
Best regards.
I think TIME is more valuable than money.
We can make money exchanging time but we can´t make time exchanging money.
So when you finally have the minimun, you have to jump because we are not going to live 500 years or more, and life can´t be rat race all the time.
I have been investing for 5 years and my current portfolio produces just 380 euros after taxes, unfortunately, I will have to work longer, at least 5 years more saving and investing a lot, but as soon as I have 900-1000 euros per monht, I want to be free, life is too short, I don´t need much, just a place to sleep, food and books.
Jesus,
Yeah, I totally agree with you. I quit my job the day after my 32nd birthday because I just couldn’t imagine spending most of my waking hours doing a job I didn’t like. Life is way too short for that.
But once you’re free to do whatever you like, you tend to find that most of the hobbies/activities you enjoy doing can be monetized in some fashion. It’s a natural course of events.
Best regards!
Jason, this is a huge debate on all the FIRE blogs and forums. My take on it is that there are two elements of FIRE – FI and RE. You are FI but from what you say not technically RE. FI is highly subjective. In the UK it is called “F*&k You Money” because it is the amount of money that allows you to walk away from your job or at least stand up to your boss and negotiate from a position of strength. It comes from a feeling of strength and independence that a sum of money gives you. That number is down to each individual. RE is more objective because it is a concept that comes from older people who want and/or need physically and emotionally to leave the world of work ie retire before the official retirement age. On these terms RE means having enough money to cover ALL your expenses till you die. I think there is a bit of a misunderstanding happening. Younger people are really looking at the FI bit and older people are looking at RE. It is understandable because young people in their 20s and 30s are hardly likely to want to retire because they have too much energy and creativity left. However they fail to see that for many people entering their late 40s/50s and older it is the RE component of FIRE that comes to the fore.
Tim,
I think there are mainly two camps of people who don’t get what this is all about, and those are the two groups that cause the most consternation.
On one hand, it’s those who haven’t yet achieved FIRE.
And then you have the older people who are still clinging to the more traditional idea of what “retirement” used to be.
Regarding the latter, the old retirement model is outdated and no longer relevant. I’d implore you to read the piece by The Wall Street Journal. It’s excellent. It has nothing to do with “early” retirement, either. It’s more about traditional retirement (at an old age). Longevity, the digitization of work, shorter careers, gigs, etc. It’s all changed. This thing where you have a career for 40 years, then retire and just play golf… I don’t think that has much of a basis in reality, nor is it a very rewarding way to go about life. This is what spawned all of this FIRE stuff in the first place, obviously.
Regarding the former, they lack perspective. The exchange Oliver and I had further up the comment thread illuminates this. If you’re not yet FIRE, and you have a job you wouldn’t ordinarily choose for yourself, you’re still in “wage slave” mode. I get it. I was once there, too. But it’s a limited perspective. You’re only thinking about escaping slavery. Once you’ve escaped, though, you find that it’s a totally different world than the one you had imagined. You build choice/options in your life. You take up hobbies you enjoy. Lo and behold, a lot of those hobbies end up making you money.
I quit my job at 32. I started blogging about FIRE in 2011. And I’ve met a lot of people over the years. So I have a fairly broad and unique perspective on this, as well as lot of experience. I’ve simply not met this mythical unicorn who lives off of passive income in their 30s or 40s and no longer earns some form of active income from enjoyable productivity. There is a universal drive among us to stay productive and be part of society. We have hobbies. And many of these hobbies pay. But if you’re used to only exchanging your time for money in a more traditional “job” setting, you’re unable to fully grasp this. That’s why I continue to write the content and share my post-FIRE experiences.
Best wishes.
At last… I’ve been waiting for this moment. A opportunity to disagree with you! Sorry, Jason, you don’t get to define FIRE any more than your critics get to. You saying those critics are wrong is just as erroneous as them calling you a liar.
Also, retiring early on 100% passive income is not a myth. It’s just exceedingly rare, because most people with the gumption and delayed gratification skills required to achieve FIRE are the same types of people who cannot be satisfied leading a life without meaningful work.
The Germans have a saying, “arbeit macht das leben süß” which translates “Work makes life sweet.”
Cheers!
DL,
You bewilder me yet again, my friend. You bewildered me with your question about trying to even out monthly dividend income (which spawned a full post, so thank you…). And you bewilder me by disagreeing on a phantom point. I don’t mind being disagreed with. It’s fun to have a thoughtful conversation. But I don’t like when people put words in my mouth. I do take my time to be explicitly clear with my writing.
I never said I get to define FIRE more than anyone else. I’m not under the impression that my “definition” of FIRE is any more correct than any other definition. It’s only MY definition for MY version of FIRE.
In fact, I stated – right at the very beginning of this article – that it’s up to each person to define FIRE for themselves. And I included a link to an article that discusses the importance of defining FIRE for YOURSELF. My friend, please take the time to fully read and understand what I’m writing.
Cheers.
I think there has been some miscommunication from both sides of this argument. The IRP (Internet retirement police) on one side, and the F.I. or FIRE folks on the other. I admit I have been on both sides at times.
IMO early on (10 years ago) some bloggers and even their site names and some posts were at least partially disingenuous. I’ll add that I feel many have softened on the definition though. They projected that they were fully retired and not really explaining their “other” sources of income transparently. In fact respectfully IMO one of those people has even commented here. I believe for some, this controversy could even been intentional to drive more traffic to their sites thus creating more income. Clicks, positive or negative create income. That is why a lot of news is deliberately negative.
I think the word retirement means different things to different people. Older people may have that image of a Palm tree and a beach. Younger people have their own different images of retirement and even traditional work methods. So someone who has the former image not that familiar with the FIRE movement, claiming they are officially retired, then learning that the following is also true : Their spouse is working + makes good income, and will be working for quite a long time to come. Their spouse has top notch health care. Also maybe a DB pension that their time working will contribute to. Several home based streams of income and/or being a landlord. (fixing toilets etc.), that when all added up easily requires 20 hours of what some would say is “work”. Just because you don;’t have a boss telling you to do that, doesn’t redefine that it is something other than a alternate form of work. Or simply a reversal of the traditional work roles in a family with older values, but you cleverly frame your posts as if its something new and unique. So… that is why I think it is fair that some would dispute the claim of the “retirement” definition in certain situations. However, I don’t think people have to fight with each other about this. That is the real issue. I believe we have to accept that there is some truth to both sides of the argument. I believe a lot of these bloggers themselves have admitted to this being correct later on in posts.
Its simple math that even with a $1M portfolio with an average dividend % of 4% that’s $40,000.00 a year pre-tax. Not enough to comfortably live off in most North American cities. People also have things tying them to their local area and can’t just pack up and move. Family is very important to some people, some people like shiny objects. There is no way they will jump on a plane solo and fly 18 to 36 hours and start another life. So yes they will grind it out on the rat wheel a little longer and save a little more. To each their own, and I think we should respect the choices that works for each person or family individually.
Some people just reacted and posted before analyzing the data fully. So you got the nasty side of some because they just made assumptions rather than going through the whole story. But you have handled it well over the years.
Paul,
Totally hear what you’re saying.
My comment to Tim, further up the comment chain, which hearkens back to a conversation I had with Oliver (even further up the chain again), gets to the heart of the matter.
It comes down to a limited perspective by those who haven’t yet achieved FIRE. I was once one of those people. I could only think (obsess) about the idea of achieving FIRE, escaping wage slavery, and getting on to owning my time and enjoying my life. But this is a very myopic way to go about it. You see only the one problem right in front of you. And you hack away at it until it’s gone.
Then what? Well, you see that there’s this gigantic world out there. And it’s not this black-and-white thing that you thought it was. The FIRE problem is gone. Now you’re on to new problems, solutions, hobbies, ventures, etc. And all of that is much bigger than the first thing you were busy hacking at. You level up in life and grow. At least, you should. Those who cling to the job and that one FIRE problem are refusing their own growth.
Like I noted in the article, if someone wants to spend all of their time at their job until they’ve got a ridiculous amount of wealth and passive income, go for it. It doesn’t harm me any. It’s quite the opposite, actually. My wallet would prefer people to stay plugged into The Matrix, wage slave away, and buy the products/services I’m invested in. It does not financially behoove me to convince anyone of any of this. I just feel like I’d be remiss if I didn’t spread the word.
“I’ll show that Jason. He’s totally wrong about this. I’ll work until I’m in my 60s, scrounge up millions, and then I can really be fully “retired” according to Merriam-Webster.”
Umm, okay. Go for it. But that’s total overkill. I’m just saying that anyone who is relatively young and has enough passive income to pretty much do what they want, will find that many of the hobbies/activities they enjoy can (and probably will) be monetized. It’s a natural course of events. But those still stuck at the job have a difficult time understanding how that works. It’s just a mindset thing, really.
And this is coming from someone who’s been blogging at it longer than most, quit his job at a younger age than most, and met more people in this space than most. I’m simply sharing with all of you what I’ve found to work out in the real world when FIRE is actually applied (not theoretically debated in forum boards or whatever).
Best wishes!
“You see only the one problem right in front of you. And you hack away at it until it’s gone. Then what?”
THIS I am trying so hard to see, but it feels impossible until I am actually there.
Like a virgin fantasising about sex, it just cannot be explained.
Your post made me really think about this. That 50% FIRE could actually be enough. And that is almost where I am at today. On a side note this is what i like about FIRE the most, there is always more, always next level, other things to learn, new perspectives etc etc.
My fear is, that most othes I assume, is that if i drop out to early I might not make it and have to go back and start over/continue. And that feels like suicide.
Andreas,
Appreciate your thoughts. And I’m glad this got you thinking.
There’s way too much focus on money and the minutiae in the FIRE community, in my humble opinion. I think it’s the totally wrong thing to focus on. Because if that’s all your focusing on, you’re going to be poorly prepared for everything that comes next. You know… like… life.
Money is pretty easy to figure out once you put your mind to it. It’s everything else in life that’s challenging.
I stand by my belief that 50% is enough for most people. There are always people at the margins that act as exceptions to the rule, but I think 50% is enough for, probably, 99% of people. If you can get there, you can get anywhere. How you do one thing is how you do everything. That tenacity doesn’t disappear overnight.
Best regards.
I completely agree that working in some capacity after achieving FI at a young age is a given. The problem is that when you are grinding your way to FI you lack perspective about life on the other side FIRE. The idea of lounging around while others continue the grind seems so great. And for a while, it is. However, it doesn’t take long to get through all the to do items on your post work fun list. Then you get bored and will be looking for something more.
That’s what happened to me anyway. After 3.5 years of puttering around, I’m ready to get back to work. With 55 years of expenses saved, money is not the issue for me. Doing productive work has an odd lure it never had before.
On another note . . . Do you have an archive where I can easily find all your old posts? I’d like to read through some of your older stuff without going page by page.
Prob8,
55 years of expenses saved? You’re exactly the type of person I’m referencing in this article. You’re just like a few coaching clients I’ve worked with. They have a lot of money. Money isn’t the problem. The problem is more along the lines of, “Now what?!”
Some of the confusion stems from people making “work” and a “job” analogous. Sometimes they are. But usually they are not. I think it’s important to differentiate between the two. I quickly pointed that out in the article. And I’ve done my best throughout the years to make this a point of contention:
https://www.mrfreeat33.com/year-three-a-d-three-lessons-about-life-and-money-ive-learned-after-retiring-from-the-auto-industry-three-years-ago-at-age-32/
I mean, what is my writing? I certainly wouldn’t call it a job. I’d barely call it “work”. I view it more like a hobby that’s been monetized.
Productivity, progress, and passions. All three are important to feel like you’re living a meaningful life. Just because you could sit around and do nothing but cash dividend checks, that doesn’t mean you should or will.
As for the archives, you can search them via three ways (near the bottom right of the blog): date, category, and keyword. The same goes for Dividend Mantra (another blog I founded and ran for almost five years).
Best regards.
Hey Jason,
I couldn’t agree more with your post that FIRE in of itself is not an end all and be all. It’s more so a spectrum of options limited by your preferences.
I’ve switching many employers over the course of my career and now I’m finally working where I enjoy my day job but that doesn’t mean I’m pursuing FIRE any less because I don’t want to “Retire Early”. I pursue FIRE as a life hedge and for path of options it can create 🙂
-DGX Capital
DGX,
Right. Absolutely. Money is nothing more than a means to an end. The end isn’t even FIRE, really. It might be the initial “end”, until you realize that it’s actually more of a beginning.
It comes down to having freedom, options, happiness, purposefulness, productivity, personal growth, etc. And money aids one in the pursuit of all of that. All of it, by the way, requires much less wealth and passive income than one might initially think, which relates back to what I’m writing about here today. If anything, you might just find (almost by accident) that you end up making way more money after you quit your job.
Cheers!
I would agree with Paul N above. The word retirement means different things to different people. Some go with the dictionary definition. Others would go with your definition or the Wall Street Journal’s conception of it in the article you linked to. It is a question partly of semantics and also motivation really. Some do want the security of being able to live 100% off passive income and being able to move into a conventional type of retirement whether they actually do so or not. Many want to earn an active income in a way they find fulfilling. People have always pursued freedom and lived unconventional lives even in the heyday of the corporate career and final salary pension plan. People have FIRED before FIRE was a thing. A concept that seems to have faded from view that used to be big was downshifting which is a pretty similar idea. This is what I do. I could live off passive income with a bit of care but I have a job where I am able to work less than a third of the year, have a comfortable income and save a decent chunk of money still. I use the time to travel and do long distance treks. I don’t have as much freedom as someone who is properly retired but it is a good lifestyle that suits me for now at least.
Tim,
Yeah, I agree with you on different visions of what retirement means. There are probably a lot of older folks out there that are clinging to the more traditional view on “retirement”. But I’d argue, which I’m not alone on (see: WSJ), that this is an outdated concept that doesn’t hold a lot of weight in today’s world. This is a yesteryear way of thinking. I guess it’s sad for some people to see these changes play out, so they get defensive over maybe not being able to realize some kind of dream or fantasy they might have had.
However, these same people who are clinging to a more traditional retirement idea aren’t part of the FIRE movement anyway, so it’s moot. I’m not writing for them. I’m talking about people quitting their primary careers in their 30s or 40s. Almost anyone who’s aiming to quit their job in their 30s or 40s is going to find themselves in the position I’m discussing here. They’ll have that same drive and gumption that got them to where they’re at. They’re going to use their newfound time to take on new ventures and hobbies, and they’re going to make some money. It’s a natural course of events.
I was once unable to see this natural course of events because I was so focused on quitting the job and owning my time. Once I could get past what was immediately in front of me, I saw a whole world open up. It’s hard to have that perspective until you’ve actually done it. And that’s why I think this is lost on a lot of people. So few people have actually quit their primary careers in their 30s or 40s. It’s a tiny percentage of the population, even in a very rich country like the USA.
Ultimately, it’s up to each individual to define FIRE for themselves. I’m only sharing what I’ve personally found to be true after blogging about this for nine years, meeting a ton of people, and personally experiencing FIRE firsthand at an extremely young age.
Cheers.
Hi Jason,
I’m a big fan of yours – really enjoy the writing. I also feel like a kind of kindred spirit even though our current lifestyles are different in almost every way 🙂
I very much agree with your message here, although I do think there’s one interesting exception that my wife and I have struggled with a bit. On the one hand, we have been very fortunate, probably could afford to dial back significantly at work, and would enjoy that freedom. On the other hand, there are certain careers where if you step out, you could not realistically expect to step in at anything liker your current compensation level and interesting-work level if you wanted to come back in the future.
Just an interesting wrinkle that is probably not unique to my family.
Entrepreneur,
Appreciate the support very much. 🙂
Definitely a wrinkle. I hear you there. But I think of it differently. If you’re aiming for FIRE, there are certain motivational factors that put you on that path in the first place. One of those factors, almost universally, is a dislike for one’s job. The structure, scheduling, boss, tasks, co-worker drama, or whatever. This is one of the things driving people toward FIRE – that distaste for the job. So I guess I don’t see it as a “wrinkle” that one’s primary career might not be suitable for part-time stuff or trying to make some kind of lateral move. I saw FIRE as more a “burn the ship and storm the island” kind of thing. It’s about growth and evolution in life. I would never look at my old job as something to return to or somehow laterally transition from.
Best wishes.
I’ve had similar conversations with friends when explaining FIRE. For example, we want to go to Hawaii for our 10 year anniversary soon. A friend asked how that’s covered in our FIRE calculations, and I had to explain that we have a $500/month travel budget for our family, so we’d make it work within those parameters or pull from somewhere else. The future is unpredictable, and we just make the best guesses we can with the information we have right now. We also enjoy recreational employment too, particularly jobs that we put aside during our high-earning engineer years to maximize income (like teaching fitness classes).
Kim,
Super interesting that you have the fitness classes in there. I still have my PT certification from ACE. Might dust it off one of these days, but not while I continue to live in SE Asia. I always thought it’d be neat to get into the fitness industry. 🙂
Thanks for sharing!
Cheers.
I find that most people with this attitude are not disciplined enough to save and likely will never achieve FI. Everyone wants it, it’s really not complicated, and almost everyone can achieve Finanicial Independence. But like many other things in life, some people would rather bitch, complain, and make excuses rather than applying your core principles (and others) to get them there.
Don’t let it bother you at all, they will likely be miserable all their lives as we are living the dream. The dream we created for US.
Jerry,
Yeah, the Internet is a good place to air your grievances anonymously and try to put down others (so you can feel like you’ve lifted yourself up).
Everyone has to figure out what kind of financial plan works best for them. But this idea that FIRE is a thing where every single expense for the rest of your life must be covered by passive income is narrow-minded and quite removed from the experiences that I (and many others in this space) have had in the real world. To think you’re never again going to be productive after quitting your job at 30 or 40 years old is… beyond silly, really. There might be a person or two out there who avoids lifting a finger beyond collecting passive income. But they’d be the exception to the rule.
Best wishes.
Your post reminds me of a guy called Bob Brinker who hosted a radio show called “Money Talk.” He is the father of FIRE and talked about reaching “critical mass” where you don’t have to worry about money anymore. Wish I had paid more attention to his show because many years later I realized your blog talks about the same important concepts.
According to Bob Brinker, he always talked about money giving you the ideal lifestyle. Freedom is our goal here. We aren’t stashing away money to become the next Bill Gates or Warren Buffett. If you want to be mega rich, then you can really NEVER stop working. Look at Buffett, he is almost 90 years old yet still works as CEO of Berkshire Hathaway. This guy never quit his job because he wants to make as much money as possible for himself and shareholders.
The haters of FIRE talk about your investments covering your excpenses 100% because they still have a “corporate mindset.” They are bean counters obsessing over every little dime because they cannot enjoy the freedom that money buys. Living in America after post-FIRE tends to reinforce that mindset because America is still a corporate, money obsessed culture.
I enjoy your blog because you believe in using money as a tool rather than obsessing over your investment balance every month. I’m living overseas as an expat and understand exactly why you still work on your own projects. It’s hard to stop working 100% and just sit by the beach everyday. The desire to contribute to society and help others is a powerful fuel that you cannot turn off easily.
Right now, I’m setting the retirement goal of 40.. I want to work on projects that inspire me and help society advance further. FIRE gives you immense power and FU money to do work you enjoy.
Lastly, dividend growth investing benefits from compound interest so your money will grow much faster in the future. As long as you don’t touch your investments, the income will swell up a lot more in your 40’s, 50’s and 60’s. Just look at Warren Buffett. He made most of his fortune after 60 because of the compounding effect.
investor trip,
W’re very much on the same page.
It comes down to a mindset, in my opinion. Those who think FIRE is this thing it’s not, have probably not actually experienced FIRE, so they’re looking at it from a completely different perspective. I understand that to a degree, because I once had that same perspective. But now that I’m on the other side, experiencing it and talking to so many other people also experiencing it at the same time, I’ve come to see what it’s really all about.
“The desire to contribute to society and help others is a powerful fuel that you cannot turn off easily.”
Absolutely. This is something I’ve harped on repeatedly. I think it’s not only a powerful fuel, but it’s a particularly powerful fuel for the very same people who achieve FIRE in the first place. That kind of drive isn’t going to magically disappear overnight just because your passive income hits a certain number.
Thanks for adding that!
Best regards.