Opinion
Want to retire early? Consider these things first
Paridhi Jain
Money contributorHave you ever noticed the common patterns in mainstream personal finance narratives?
Remember The 4-Hour Work Week, the bestselling book that promised you could “escape the 9-5, live anywhere, and join the new rich”? Or even before that, Rich Dad, Poor Dad, the bestselling book that inspired you to believe that if you just swapped your liabilities for assets, you too could quit the middle-class rat race and never have to work for money again?
Chasing the allure of FIRE (financial independence, retire early) could leave you worse off in the long run.Credit: Simon Letch
Well, today, we have a new promise. The “FIRE” movement promises that if you save and invest enough of your income, you too can “achieve Financial Independence and Retire Early”.
While the branding is relatively recent, the core concept is not. The idea that you can shorten your work life, take back your time, live life on your terms, free yourself from the rat race or hustle and grind, and finally do whatever you want … isn’t new.
After all, it’s an easy concept to sell. What’s not to love, right?
Years ago, when I started out in the personal finance space, I contemplated whether the FIRE movement was a bandwagon I wanted to hop onto. It would have made sense. It was already growing rapid momentum, tapping into a strong pain point and desire that many yearned for.
How much of life will you have missed, by the time you finally hit that milestone?
Yet something didn’t feel quite right about it. So, I never did.
Over the years, as I spent time in online forums and Facebook groups and talked to people on the FIRE path (and those who had achieved it), those misgivings didn’t go away. They got stronger.
Now, let me be clear. I have no qualms with the goal of financial independence in itself. In fact, I’ve found that teaching people the concept of financial independence helps create more clarity, purposefulness and engagement with their personal finances.
However, the way in which that goal is being pursued by many feels problematic.
See, for some, the desire to achieve financial independence quickly turns into a fixation or even obsession. It becomes the primary goal around which all other life decisions are made. This often leads to a prioritisation of the future over the present.
Now, this is in some senses what much of personal finance comes down to. How much do you prioritise spending money today vs. building wealth for the future?
Most of my energy is focused on helping people get out of short-term thinking and spend a little more effort thinking long-term. Dangling the carrot of “financial independence” can be a really useful strategy to help people see the value of delayed gratification.
But there is such a thing as going too far. This is a difficult thing to grasp. How can it be a bad thing for someone to save and invest most of their money? Isn’t that something to aspire to?
The challenge is that healthy behaviours are so applauded by society that we aren’t good at recognising when something has crossed from healthy to unhealthy.
For instance, there’s a difference between eating healthy and being so fixated on it that eating a cookie throws you into food guilt. There’s a difference between enjoying working out every day and feeling like a failure if you skip one workout.
While the outward physical behaviours might appear healthy, the internal experience – your emotional and psychological experience – is not. This is something I’ve witnessed a lot in people chasing FIRE.
- The person who has a soul-sucking six-figure job but buries their misery, focused on the day years from now when they’ll finally be able to quit for good.
- The person who thinks they’re a frugal minimalist but actually suffers from spending anxiety and can’t spend $5 without thinking about their early retirement goal.
- The person who achieves FIRE by 30 but falls into a depression quickly afterwards, having lost their sense of purpose and their connection to meaningful work.
Here, you’ve made the future more important than the present. In some senses, you are putting your life on hold until you hit this specific achievement, and then you will feel like you can finally start living. Everything you’re doing today is just in service of that future reality.
But how much of life will you have missed by the time you finally hit that milestone? How many opportunities would you have overlooked in your fixation on achieving your one goal? How much damage, psychologically and emotionally, will you have to undo once you get there?
Health is a useful parallel. Instead of being fixated on losing weight, you are better off aspiring to create a healthy relationship with food, exercise, self-image, etc, and a healthier body will be a natural byproduct of that.
Similarly, achieving financial independence should ideally be a byproduct of a healthy relationship with money, work and how you spend your time. If all you do is aim for the former, you might get the wealth.
But if you work on the latter as the primary goal, you’ll gain the wealth and fulfillment that come from intentionally designing a life you actually enjoy. Isn’t that what you really want, anyway?
Paridhi Jain is the founder of SkilledSmart, which helps adults learn to manage, save and invest their money through financial education courses and classes.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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