A few weeks ago, a major MarketWatch article on early retirement was published: How much does financial independence cost? It depends on your retirement philosophy
The article features four bloggers, of whom two regular readers will recognize: Justin from Root of Good and Tanja from Our Next Life. Jillian's Montana Money Adventure or Millennial Boss's J's are not as familiar.
I was interviewed for the article. I could not connect with a phone call because the author had another deadline, so I offered to answer any questions I could via email. Unfortunately, my story did not make a difference. I am disappointed, but at the same time, I realize that not everyone can be included. You gain a little, you lose a little. I'll have it next time. (Am I missing other pictures here?)
As I have put a lot of time and thought into my answers, I share it here. It's not MarketWatch, but my logo is green, white and black, so it should be pretty good.
First of all, the reporter wanted basic information about his profile. (I've provided a full name if she wanted to, sometimes they need it.) Apart from that, the questions and answers are exactly as shown here (I do not want to put as much text in a box of quote that it is difficult to read):
Website: Lazy Man and Money
Age: 42 years old
How much do you think is enough to complete the fire?
I do not think there is a firm number to accomplish the fire.
It depends on expenses that can vary considerably depending on where you live or how you choose to live, such as having children or not. If I had to give a number, I would say $ 2 million. This assumes that $ 2 million is reasonably able to provide $ 80,000 a year by applying the famous "4% rule".
Why do you think that's enough?
It's not enough for everyone, but I think that's enough for most people in most cases.
Why do you think there is a spectrum of FIRE, such as "fatFIRE vs. leanFIRE"?
I do not know if it's a spectrum. It's usually two different types.
LeanFIRE people seem to want to get to FIRE sooner. There are tax benefits and subsidies for health care for those with low income (leanFIRE). The fatFIRE crowd seems to have more high-income people who might be used to living with a 6-figure income. I think you find more doctors and lawyers in the fatFIRE group.
What advice would you give to people seeking to perform FIRE in the same way as you?
Save money and invest it … the sooner the better, as it will leave time for compound interest to work for you. For example, if you have a portfolio of $ 1 million invested in stocks and the market goes up by 10%, you have earned $ 100,000 doing nothing.
For us personally, my wife has almost 20 years of active service and will receive a pension. Because of that, we will be part of the fatFIRE camp with the rest of our savings and investments. It's a bit of a unique situation and I understand that others can not do it the same way.
And that was the end of my answers. The author thanked me for the answers and I let him know that I was happy to follow up. I have never heard from her since.
Two weeks after the answers, I saw people tweeting about the article that seemed to result from the interview. Of course, I was curious to see if I was included, but I was also curious to know what others had to say about it.
It seems that the fire is surprisingly standard. It's so standard that I basically covered almost everything in the article in about 17 sentences. Let's explore the article in MarketWatch and see what new things we can learn. (This time, I will use quotation marks.)
"One of the camps, known as Fat FIRE, estimates that retirees should have enough savings to have an annual budget of $ 75,000, while the other , Lean FIRE, estimates that a budget of $ 40,000 a year would suffice. "
I guess these are really just two different types and not really a spectrum.
[Justin at Root of Good] Tell yourself that a basic rule that people could use is to multiply your expenses by 25.
This is the mathematical inverse of the 4% rule.
Jillian Johnsrud of Montana Money Adventure, 32, has taken a thrifty approach to her financial independence. She and her husband looked at their expenses and their cash flow and found that they had enough passive income through a military pension and investments, as well as cash, to cover all their basic needs.
Pensions and military investments look exactly like our plan, as I wrote in the last paragraph. Again, I do not know Jillian's story, but when I have time, I'll have to look a bit more on her site or maybe try to talk to her at Fincon. I thought my wife receiving her pension at age 43 was ahead because of her 20 years of service. (My wife joined the school right after the pharmacy school.) I imagine Jillian has a unique situation in a unique situation. I suppose there are not many 32-year-olds who retire with a military pension, unless it is due to a disability. It's something I do not want to think about or wish anyone.
Financial independence ultimately rests on a very personal strategy: what people want in their lives, how much they need to finance those goals, and a commitment to save enough to do it. … Everyone is coming to early retirement at different times in their lives – some are younger and have more years to accumulate returns and interest on their assets, others can live in cities very economic centers (such as New York and Los Angeles) …
This seems to be close to my first answer in which I mentioned your place of residence and the lifestyle choices you make (for example, choosing to have children or not). Many commentators mentioned that some of the profiled people did not have children, which made it easier for them. Justin and Jillian have several children and managed to get out of it.
J, the personal finance blogger behind Millennial Boss and the FIRE Drill podcast, said she thought $ 2 million was enough, and that she and her husband had enough income to achieve that goal. Using the so-called 4% rule, which removes a large portion of your assets each year, would be more than enough for the average person, especially if they pay their home as they plan to do.
It turns out that the exact figure is $ 2 million, according to the 4% rule that I mentioned. Am I psychic? Barely. The $ 2 million figure based on the 4% rule goes back a long way. For example, I read the Personal Finance blog of 2 million euros since 2006. You can literally follow 13 years of almost monthly net worth updates in its archives, the amount going from 184,000 to 1.8 million. dollars.
At first, when I read Marketwatch 's article, I was frustrated. Why has none of my answers been successful? Then, as we thought about it, it's because there really are not a lot of ingredients in FIRE's secret sauce.
Perhaps most importantly, the author focused on people in their thirties (although Millennnial Boss is in his twenties on the website). Maybe because I am a 42 year old, I missed the cut.
I also noticed that, although leanFire and fatFire were mentioned, it does not seem that fatFire is represented among the bloggers. Justin and Jillian are ahead of their frugal lifestyle. I think Tanja is too, but with some secret financial figures, I can only assume that she is also part of the LeanFire group. Millennial Boss's J wrote about repaying a $ 100,000 debt and being in her twenties, so I can not imagine she currently has the millions to be fatfire. (Maybe there was a big win in the lottery that I missed.)
In the FIRE community, I have often heard that "you can not escape your way to FIRE". Yet when you look at people who are FIRE, it seems that frugality is a very noticeable trait.
On the other hand, it is extremely difficult to reach a FatFire in your thirties. You almost certainly need a combination of a very lucrative job (such as a doctor or a lawyer) and a very frugal experience. Or you could be extraordinarily talented as a professional athlete or famous artist. This is usually a very unlikely situation that few readers could use as a model.
Just like snowflakes and fingerprints, everyone has their own financial journey. Although there are no two identical people, it seems to me that there are many common practices and plans.