Financial Independence Retire Early (FIRE)

[Jim99]

This is all 99.9% of people can do, there's no other option.

Also if people didn't 'give the majority of their lives to a job' the economy wouldn't be prosperous. We need workers to create GDP.

I know I'll **** some people off, but that's where I totally disagree.

99.9% of people do not need to spend what they earn. For example, apparently Sky TV is in 28% of homes. Loads of people have the latest iPhones. Sales of luxury goods are huge. I know someone on benefits who takes multiple foreign holidays each year. And it seems like now, the idea of not holidaying abroad is to some people totally horrifying. I'm not saying that nobody should have these things, or that all poor people buy X, but I am saying that most people spend what they earn because it's a learned / instinctive behaviour, not because they actually need to. I think there's a question as well as to how many people actually interrogate whether their spending makes them happy. I'm not convinced it makes people as happy as they think it does.

Again, I'm not looking to dump on people who have that lifestyle. I just think it's weird that when someone pops up and says "actually it doesn't have to be like that", people vehemently defend the status quo and are absolutely convinced that any other way of existing is mad.

And they don't need to give the majority of their life to a traditional job, either. We have so many people doing frankly pointless things in big corporations, and I just refuse to believe that it's somehow a major boon to the economy. Yeah, we need people to do something with their days, but doing a pointless job, so you can spend tonnes of money on Chinese made tat via an American conglomerate that siphons off all the profits to the US... how is that driving UK GDP?

 

[danlightbulb]

I know I'll **** some people off, but that's where I totally disagree.

99.9% of people do not need to spend what they earn. For example, apparently Sky TV is in 28% of homes. Loads of people have the latest iPhones. Sales of luxury goods are huge. I know someone on benefits who takes multiple foreign holidays each year. And it seems like now, the idea of not holidaying abroad is to some people totally horrifying. I'm not saying that nobody should have these things, or that all poor people buy X, but I am saying that most people spend what they earn because it's a learned / instinctive behaviour, not because they actually need to. I think there's a question as well as to how many people actually interrogate whether their spending makes them happy. I'm not convinced it makes people as happy as they think it does.

Again, I'm not looking to dump on people who have that lifestyle. I just think it's weird that when someone pops up and says "actually it doesn't have to be like that", people vehemently defend the status quo and are absolutely convinced that any other way of existing is mad.

And they don't need to give the majority of their life to a traditional job, either. We have so many people doing frankly pointless things in big corporations, and I just refuse to believe that it's somehow a major boon to the economy. Yeah, we need people to do something with their days, but doing a pointless job, so you can spend tonnes of money on Chinese made tat via an American conglomerate that siphons off all the profits to the US... how is that driving UK GDP?

If most people didn't spend what they earn, the economy would start to collapse. People spending on stuff you consider unnecessary above drives our economy, creates jobs and taxes, and funds the investment growth you need to do FIRE in the first place.

 

[MichaelAwkward]

If most people didn't spend what they earn, the economy would start to collapse. People spending on stuff you consider unnecessary above drives our economy, creates jobs and taxes, and funds the investment growth you need to do FIRE in the first place.

Most of retail sales (which only makes up 6% of GDP) is on essentials. That doesn't really change when people leave the workforce.

It also means there is opportunity for growth in other sectors of the economy, such as food & hospitality, leisure, etc - as someone going down to 3 days a week will have more time to do those things.

Again, it's being framed that people retiring early are doing so to reduce their outgoings. That's not the case. I'm willing to bet that the effect that people leaving the workforce through FIRE has on the economy is a net benefit overall and that their spending in aggregate doesn't materially change - it just changes to other things, i.e. enjoying themselves rather than spending £000s on a rail season ticket to commute.

Someone doing FIRE who doesn't buy the latest car, doesn't buy a new phone every year, etc is usually someone who was like that anyway.

The wider economic problem of growth being largely now driven through consumption increases rather than innovation is not the individuals problem and is probably going to go belly up regardless sooner or later without people who are opting out of it a bit being made to feel guilty.

 

[200sols]

If most people didn't spend what they earn, the economy would start to collapse. People spending on stuff you consider unnecessary above drives our economy, creates jobs and taxes, and funds the investment growth you need to do FIRE in the first place.

A lot of this money simply flows out of the country. The investment growth and investment money is in American companies not UK ones(mostly).

 

[413x]

A lot of this money simply flows out of the country. The investment growth and investment money is in American companies not UK ones(mostly).

Investing and spending is flowing out in equal measure.

Will the world wake up and change international trade/law to actually rebalance some of this or not? Probably not as the most influential obviously won't.

 

[Chrisc]

I get loads of time off from work, but for the most part I get pretty bored. I’d like to trial part time though, likely when my current contract is up.

It’s a tricky balance with savings. My dad saved all his life, retired early then had a heart attack, stroke and brain tumour meaning he couldn’t enjoy his money to the fullest.

Yeah both of my Grandads died at 60, im doing my best to enjoy life now with a modest house and cheap mortgage. Retirement will bore the hell out of me but part time sounds ideal.

I may regret it If I reach my 60's, but for now at least, im trying to live.

 

[Chrisc]

I only buy 2nd hand cars, and run them until the repair cost or risks of breakdown become too high, and even then I only buy cheap family cars as their enitre purpose os to transport me and my gear from A to B.

Currently doing this right now, bought my mrs a £500 qashqai to do the shopping in and tootle around town. Im sick of paying 3-400 a month for a car on PCP for it to be dinged again in supermarket car parks.

My PCP is up on our main car and im looking to replace it with a car for half the price. Bizarrely, I can already feel the stress relief of having an extra £300 a month in my bank. Although I may regret that when the repair bills start to come in.

 

[Penfold101]

So basically, there’s a balance between the two…

 

[platinum87]

Investing and spending is flowing out in equal measure.

Will the world wake up and change international trade/law to actually rebalance some of this or not? Probably not as the most influential obviously won't.

Its a communist mentality that you associate blame to "investment" flowing out.

The reason its rubbish is due to a socialist over the top regulatory nanny state

Simply fix that, and the UK will do much better.

 

[Brok]

Personally, I think the FIRE thing only works for people who have high earnings from day one of their working life- and probably no kids. For your average earner, it's unrealistic.

The two parts of this statement present the extreme ends of the spectrum. Its possible to start out earning modestly, have kids and still FIRE as earning potential can increase very quickly.

 

[arknor]

Personally, I think the FIRE thing only works for people who have high earnings from day one of their working life- and probably no kids. For your average earner, it's unrealistic.

 

[potatolord]

The two parts of this statement present the extreme ends of the spectrum. Its possible to start out earning modestly, have kids and still FIRE as earning potential can increase very quickly.

For average PAYE earners (median salary), a couple both working full time would get around £75k before tax. That's around £5k a month, after tax. Assuming they have housing costs and kids, they're not going to be able to save enough to retire significantly earlier, without burning through their cash pile.

For people below median, it becomes increasingly difficult.

FIRE is not a realistic prospect for the vast majority.

 

[Efour]

I been reading the fire reddit thread.
It all seems like obvious common sense to me in my 40s but i guess when you're first starting out it's a radical way to look at your life/future.

 

[200sols]

Personally, I think the FIRE thing only works for people who have high earnings from day one of their working life- and probably no kids. For your average earner, it's unrealistic.

You don't need high earnings from day one, you just need to start saving something. Of course most people only start to think about this stuff when they are a bit older and they have already missed 10-20years of compounding.

 

[shredgodxp]

For average PAYE earners (median salary), a couple both working full time would get around £75k before tax. That's around £5k a month, after tax. Assuming they have housing costs and kids, they're not going to be able to save enough to retire significantly earlier, without burning through their cash pile.

For people below median, it becomes increasingly difficult.

FIRE is not a realistic prospect for the vast majority

Agree. Whilst I agree that saving for the future is a great idea (and you absolutely should be contributing to your pension), anything can happen in the future and sacrificing luxuries etc today to fund a future which you may not even get to live the way you want to doesn't make sense to me.

I was similar to this when I was younger, always wanting to save etc, then I got married and my wife was diagnosed with a long term chronic health condition and the future is relatively unknown - we may not get to spend retirement as intended if her heath goes down so why not live for the now.

 

[arknor]

You don't need high earnings from day one, you just need to start saving something. Of course most people only start to think about this stuff when they are a bit older and they have already missed 10-20years of compounding.

People could always learn the stock market it and risk it for the biscuit.
this was the year of fat gains.

Anyone whos 20-25now and already sinking money into trading212 or robin hood, I suspect in 30-40 years time people are going to luck at them like they do boomers now...


These are the generations that can get in the stock market for virtually free and start investing, it's basically becoming a ponzi scheme now and they are the early birds

They just need to start chucking a few grand a year in, this years gains would have had most people wanting to live frugal

 

[Bassmansam]

For average PAYE earners (median salary), a couple both working full time would get around £75k before tax. That's around £5k a month, after tax. Assuming they have housing costs and kids, they're not going to be able to save enough to retire significantly earlier, without burning through their cash pile.

For people below median, it becomes increasingly difficult.

FIRE is not a realistic prospect for the vast majority.

delete

 

[EvilRob]

It's basically our govt's economic policy to encourage high earners to FIRE at the expense of today's economy and at the expense of their current quality of life.

 

[D.P.]

If most people didn't spend what they earn, the economy would start to collapse. People spending on stuff you consider unnecessary above drives our economy, creates jobs and taxes, and funds the investment growth you need to do FIRE in the first place.

Your last point i think is very pertinent. If everyone didn't live their life based on consumerism and spending a majority of their earnings then the stock markets wouldn't experience the growth required for people to achieve FIRE

 

[D.P.]

You don't need high earnings from day one, you just need to start saving something. Of course most people only start to think about this stuff when they are a bit older and they have already missed 10-20years of compounding.

The problem is when you are young you likely don't have the salary that will generate the savings that will compound much and you need to save sufficiently to buy a house etc. (and caching out after 5-10 years adds risk) or to raise children.