Misconceptions Surrounding FIRE (And The Truth Behind Them)

The state of being Financially Independent Retired Early (FIRE) is something that individuals the world over aspire towards. And it is a perfectly reasonable aspiration to have. But most people aspiring to attain FIRE today are doing so with a number of misconceptions about the concept. This invariably leads to individuals approaching the goal the wrong way. This invariably leads to people feeling unfulfilled even after attaining FIRE. Therefore I will be addressing some of the most common misconceptions individuals tend to have about attaining FIRE. I will also be revealing the truth regarding each of them. 

FIRE = The Only Way Out Of The Corporate Rat Race 

FIRE is often seen as the ultimate antidote to hectic professional lives and/or toxic work environments. But FIRE need not necessarily be the only answer. Let me explain. When someone looking to exit the corporate rat race is asked why they want to retire early, they usually offer reasons such as :

1. My boss/team/work environment is extremely toxic. It's getting to be too much for me to take. 

2. I don't want to retire as such. I just like the idea of being able to work on my own terms.

Early retirement is not an aspiration for such people. It is merely an escape route. Stepping into early retirement would most probably leave them feeling unfulfilled over the long term. It may therefore benefit them to prioritise a better work life balance. A more flexible professional life could of course come at the cost of lower remuneration and financial rewards. But the incremental peace of mind that a more flexible schedule offers is likely to be well worth it to such people. I have discussed tips to achieve a better work life balance in my earlier article Early Retirement Or Better Work Life Balance : Which One Is Worth Achieving?

FIRE = The Key To Everlasting Fulfillment 

Most people aspiring to attain FIRE tend to associate a disproportionately high degree of satisfaction with attaining it. This is because most people tend to have an overly romantic idea of what life post FIRE would look like. But attaining FIRE only means that one has enough money to provide for the remainder of their lifetime. An effective plan to attain FIRE must therefore also solve for time in retirement. Studies on human psychology have shown that most individuals require two things to genuinely feel content with their lives. These are 

A. Healthy personal relationships 

B. Doing something that they enjoy and/or are good at

For most of us our jobs play a significant role in fulfilling these needs. Therefore once we retire, both these needs may not be adequately met.This means that we must have a clear plan in place to spend our time post FIRE. Attaining FIRE would make a lot more available time each day. This is because the part of our day that was spent at work would now turn into leisure time. We must therefore have a clear plan for what we would do with all that extra time. Therefore solving for time is as important as solving for money. Clear plans for our oney and time are the actual keys to a fulfilling early retirement. 

For most of us the plan centers around one activity (say going on vacations or pursuing a hobby). But this simply isn't sustainable. Our plan must translate into a daily routine we can follow consistently. Retiring without this may leave us feeling unfulfilled even though we can financially afford early retirement.Those who have a clear plan for their time can safely step into early retirement. Those who don't can consider delaying early retirement until they figure one out. A good way to do this would be to take a sabbatical for a year or two. During the sabbatical, we can simulate the post retirement lifestyle we may have imagined in our heads. If we find it to be sustainable and fulfilling we may transition into early retirement. If not, we may consider working until we figure out an ideal plan.

Aiming For FIRE Means Living A Bare Bones Lifestyle 

This is one of the most popular misconceptions around the idea of attaining FIRE.  Frugality is definitely an essential prerequisite to attain FIRE. But this does not mean giving up satisfaction and gratification completely. The concept of frugality is centred around the idea of mindful spending. It involves thinking through all aspects of a spending decision carefully before acting on it. We would therefore be more likely to spend only on those things which genuinely add value to our lives. A bare bones lifestyle would almost completely prohibit spending on everything apart from the bare essentials. But attaining FIRE does not demand this from us. 

Anything Less Than FIRE Is A Failure 

Investing for retirement on the basis of Zero Real Returns shows that a 30 year old needs to invest 3 times their monthly expenses to retire comfortably at age 45. And this would need to be sustained for at least 10 to 15 years. So the fact is that only a trivially small number of people would have the financial and emotional resources required to attain FIRE. Making an honest effort to attain any variant of FIRE (FIRE, Fat FIRE, Coast FIRE, Barista FIRE and so on) is commendable in itself. So not being able to attain FIRE on our own terms should not be construed as a failure. 

The name of the game is to live a reasonably comfortable lifestyle within our means at all times. Frugality, consistency, and constantly leveraging opportunities to increase our income are the actual catalysts that help us achieve FIRE. Beyond that, financial independence will come when it has to. If it comes early, we have every right to celebrate FIRE. If not, we still give ourselves a fair chance of retiring comfortably at a reasonable age (say 50 or 55). And this too is absolutely an acceptable outcome. 

Parting Thoughts 

Attaining FIRE is a perfectly reasonable aspiration to have. But the aspiration should never turn into an obsession. Fixating on the end goal of attaining FIRE takes the focus away from the journey and our evolution along the way. And not being able to enjoy the journey makes the destination feel a lot less desirable. This heightens the likelihood of feeling unfulfilled even after we attain FIRE. We must evolve past these misconceptions discussed today so that we can enjoy an achievement that is truly worth celebrating (if we get there).