Saturday , April 10 2021

FIRE, a movement promoting retirement for 40 years



Barney Whiter's parents bought his house when in 1981 he started studying in Great Britain.

"They made British classics," he says, "a great home, a great mortgage."

Soon after, there was a big recession, and interest rates increased to 17%, so his parents had to cut expenses to earn some mortgage repayments that were paralyzing: leave days are canceled.

Whiter's father stopped buying beer and made his own. And the attitude of man to money has changed forever: "It was terrible to owe the bank a lot of money"he says.

He spent his adult life making sure he did not end up in the situation his parents had.

Barney Whiter graduated in economics and trained as a public accountant, a profession he did as an expert in the language of money, and worked for 20 years in finance.

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But when his salary increased from an initial £ 12,500 ($ 16,000), he earned after graduation, His lifestyle is not.

For more than two decades, Whiter has saved at least half of his salary each month for retirement, and the bonus received immediately went into savings.

He rode a bicycle to the office instead of using the subway and also reduced the consumption of alcohol.

Whiter, currently 48 years, managed to save so much retire at 43

But it was not until a year before he retired that he met with Mr. Money Mustache, a blog written by Canadian Peter Adeney, a celebrity among young retirees.

Whiter realized that he was unconsciously part of the movement, which gained popularity among the youngest employees around the world.

It's called FIRE: financial independence, early retirement, or in Spanish "financial independence, early retirement".

Starting a fire

The basic model is similar to this: participants Live as sparingly as possible, saving half of your income or more in the process from 20 to 40 years old.

The goal is to retire before age 50.

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Many FIRE enthusiasts do not plan to spend their 50-card cards or travel on cruises.

Se concerns financial independence: the goal is to have a sufficient savings fund and live in the simplest way.

So they can devote themselves to doing something more than to look for income and promotions in the company, or to worry about the fact that the bank has a large mortgage.

And although these ideas have existed since then, online communities have allowed FIRE to really consolidate in the last decade.

Currently, they subscribe to thousands of people around the world podcasts (one of the most popular is called Firedrill), blissful and take part discussion forums about how to live a stern life.

Not like others

The communities of these young people who are obsessed with retirement savings contradict one trend: the majority milenialsi They do not save enough for retirement.

The milenialsi in Great Britain, they save an average of 4.6% of retirement pay. Laxis supportersThe FIRE movement allocates half of its income or more, at the same time spending as little as possible.

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Craig Curelop, a 25-year-old financial analyst, is guided by philosophy "own everything, do not use anything."

He is the owner of the car, but he never runs it, but he rents it in a place called Turo and uses a bicycle instead: "I did it and I made a few hundred dollars more a month," he says.

This resident of Denver in the United States rented his bedroom at Airbnb and slept in the living room.

He spared so much that he was able to buy another house in June this year (his first duplex was bought in April 2017), where he lives in one room and rents the remaining ones.

"At the moment I am saving from 3,000 to 4,000 USD per month"He says.

"It's likely that I've saved $ 60,000 to $ 70,000 in 18 months since I started my first income at home," he says.

This way of life is not relieved of criticism, some point out that there are high savings targets that are not achievable.

"They have many positive aspects and good roots in financial planning, but I think this is an extreme version that is not necessarily right for everyone," says Damien Fahy, a financial consultant in London.

Mathematics of life

Another controversial aspect of the FIRE movement is: how much money do you need to retire at the age of 30 or 40?

Critics say so FIRE supporters very much underestimate how much they have to save.

Many (but not all) move according to the 4% rule.

If a person withdraws only 4% of the investment, their income will consist mainly of interest and dividends and will not spend any capital.

The golden rule is here save 25 times the necessary expenseFor example, for someone to spend $ 39,000 a year, they would need $ 77,000.

But this principle has its drawbacks, especially when it concerns young people. It is widely used for those who retire to their 60s who They probably will not need money for over 30 years.

Mathematics does not give, says Holly Mackay, founder of the Boring Money website: "If you retire down 30 years, you can live 70 years longer. I think it's a bit naive. "

Cutting, not cutting

Gwen Merz is 28 years old and has assets worth USD 200,000 (mainly in real estate, inventory and cash).

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The American resigned from work on March 27 and now presents the Firedrill podcast: "I'm not retired, I still have to work, but I have the freedom to choose something that I really like, maybe not too much"

She hopes that her investments will ensure her a substantial income every time she decides to stop working. For her, FIRE is not only finance, but also community and camaraderie.

"There are more people who can go out and do not look bad, having a car for 13 years," he explains.

He says he would like to have a Nintendo Switch, but he thinks it's unnecessary. It also eats less than before and does not travel so often.

You should be able to live your life better, but that does not mean you spend a lot of money, says Gwen Merz

He advises reduce unnecessary expenses until you feel uncomfortable, and then go to the next higher level: "You should be able to live your life better, but that does not mean that you spend a lot of money."

Whiter agrees. "You do not have to go to an expensive bar in the city center," he says.

"There is no point in living miserably for 20 years just to be able to live miserably for the next 20 years after work," he says.

Work in freedom

Although some FIRE "RE" moves are to be retired early, it is not Merz and Whiter's job to leave and do nothing until they die.

"We are not meant to sit and drink Mai Tais all day long," says Merz.

"Human beings have an inner need to work. We must feel valuable members of society, and this will not end because you have a certain amount money in the bank"He added.

Rather, it gives them the flexibility to do what they want.

"You must live to understand how powerful it is," says Whiter.


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