Jun 19, 2024
The FIRE Movement has led to plenty of red-hot debate since it gained popularity in the 2010s.
The somewhat controversial money-saving strategy centers on the belief that, if you invest about 70% of your income, you can retire as early as 35 or 40.
Advertisement
The FIRE acronym stands for “financial independence, retire early,” with the idea being that, if you make significant lifestyle changes, you can enjoy the fruits of your labor sooner than others.
However, many who have tried it have found it unsustainable — which is exactly what happened with Matt, who called into an episode of The Ramsey Show seeking financial advice.
The 40-year-old admitted he was battling severe burnout — which isn’t surprising given that the Seattle, Washington, resident revealed he’d been working three jobs for the past five years.
With workdays that last more than 12 hours, Matt admitted that he barely sees his kids and his health has deteriorated. When he revealed that he once abided by the rules of the FIRE Movement, Ramsey jumped in with some choice words for the once-popular retirement blueprint.
“The FIRE Movement burned down, did you notice?” he quipped. Here’s why Ramsey doesn’t count himself a fan of the financial strategy.
Ramsey weighs in
Matt admitted he was initially inspired by the FIRE Movement and pushed himself to put in as many work hours as possible in the hopes of generating more income.
It certainly worked — at the age of 40, he has already amassed a $2 million dollar net worth, which includes three rental properties and $350,000 in an IRA.
Despite all this, Matt is worried that, if he scales back by quitting two of his three jobs (as Ramsey recommended), that he’ll be living “paycheck to paycheck.”
Advertisement
“That’s a bogus, emotional response,” Ramsey said, incredulously. “What you’re doing is not sustainable. You didn’t build a life — you built a financial portfolio.”
What Matt doesn’t seem to realize is that he’s well above the household average when it comes to net worth. As of 2022, the median American household had a net worth of $192,900, according to the Federal Reserve — and that's after a 37% surge compared to 2019 data. Ramsey thinks the FIRE Movement is a dangerous route for people to take for generating retirement savings.
He pointed out that Matt has a net worth of $2 million dollars and he’s only 40 years old. “Ding, ding. You rang the bell. You’re done,” Ramsey said. “Go build a life.”
Ramsey added that Matt will be worth $20 million by the time he’s 65 thanks to his substantial investments — he just has to step back and let them grow. “There’s no need to panic here.”
In the end, he advised Matt to use logic and try to get past his emotions and fears in deciding whether or not to quit two of his jobs to free up more time for himself and his family.
Must Read
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — are you doing the same?
- Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how
- Robert Kiyosaki says this 1 asset will surge 400% in a year and begs investors not to miss this ‘explosion’
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Why the FIRE Movement may not work for everyone
While the premise of the FIRE movement has good intentions — work hard now so you can retire early — it can result in severe burnout and neglected family members and friends.
Advertisement
Those faithful to FIRE say it's simple: make more money, invest properly, and don't spend money on anything outside of absolute necessities.
It’s underlying principles include:
- Live below your means
- Invest as much money as possible
- Seek out other sources of income
- Plan for retirement early
While that certainly appears to be sound financial advice, the movement’s detractors point out that it results in a lifestyle that’s all work and no play.
Instead, you may find it less stressful to aim for a better work/life balance. You can certainly prioritize saving and investing a percentage of your income, while still enjoying some of your hard-earned money in the moment.
Retiring comfortably at the traditional age of 62, or even 65, isn't a failure, Ramsey said. As he told Matt, "people working and enjoying their work… and having meaning [in their careers] as long as they're able [to] is not bad."
Early retirement also isn’t a reality for the majority of Americans: 57% of survey respondents said their retirement will most likely include working — at least part-time — in order to keep up with the cost of living, according to Fidelity’s 2024 State of Retirement Planning.
If you’re worried about financial security in retirement, or are early enough in your career that you want to consider early retirement, it’s a good idea to sit down with a financial adviser to review your finances and map out a customized plan.
You May Also Like
- Turning 50 with $0 saved for retirement? Most people don’t realize they’re actually just entering their prime earning decade. Here are 6 ways to catch up fast
- Inside a $1B real estate fund offering access to thousands of income-producing rental properties — with flexible minimums starting at $10
- Vanguard’s outlook on U.S. stocks is raising alarm bells for retirees. Here’s why and how to protect yourself
- Here are 5 easy ways to own multiple properties like Bezos and Beyoncé. You can start with $10 (and no, you don’t have to manage a single thing)
Maurie Backman has been writing professionally for well over a decade. Since becoming a full-time writer, she's produced thousands of articles on topics ranging from Social Security to investing to real estate.
