Making Better Financial Decisions

Is FIRE Right For You? The Pros And Cons Of Very Early Retirement

by Glen Hawkins

Should you join the growing group of Americans who form the FIRE movement? FIRE — short for Financial Independence, Retire Early — can be a route to freedom from the 9 to 5 routine and more enjoyment. But it's not for everyone. To help you decide about becoming a FIRE advocate, here are some pros and cons of this retirement planning method.

The Pros of FIRE

Certainly, the biggest reason to follow the FIRE movement is to gain the financial independence that allows you to decide when to leave your full-time job. FIRE followers work hard in their early careers, front-load retirement savings, and build up secondary income with the goal of retiring as early as 30. At that age, you have many years of good health to enjoy your time more. 

Even if you don't actually reach the goal of retiring decades early, the early planning and diligent focus needed for FIRE helps you keep a simpler life and avoid many of the debt traps and entanglements that hobble the finances of many Americans. It also encourages you to develop passive income, which can help any person at any point in their financial life. 

The Cons of FIRE

The biggest obstacle for most people is FIRE's single-minded devotion to the goal of very early retirement. You may need to make significant sacrifices in areas like housing, transportation, recreation, vacations, and education expenses. Therefore, the FIRE devotee must be passionate about their goal and value it more than other luxuries. 

Some critics rightly point out that a FIRE early retiree often doesn't actually retire from earning income. Instead, they reduce their workload, usually leaving wage-earning careers, and develop nontraditional forms of income. This could come from blogging, documenting their journey, making crafts to sell, doing consulting, or becoming landlords, for example. 

Finally, the goal of retirement in your 50s, 40s, or even 30s means you must plug some gaps that traditional retirees don't. You must fund retirement for decades longer than standard. You generally need to cover health insurance on your own. And you can't include many sources of retirement income, including Social Security, until well after retirement. This all means more planning and better saving. 

Where to Learn More

If the pros of the FIRE movement might outweigh the potential cons for you, start by learning more about early retirement challenges and opportunities. Meet with financial planner in your state today. With their professional experience and your determination, you can choose the best time to start retirement on your terms.