As the COVID-19 pandemic rages on, it’s looking like it could go a long way toward extinguishing the FIRE (Financial Independence, Retire Early) movement that had been spreading like wildfire through the Millennial community during the long bull market run.
Sam Dogen of Financial Samurai, who retired from his Wall Street job 8 years ago at age 34 with $3 million, told Business Insider recently he thinks the FIRE movement could be replaced by what he calls the DIRE movement, which stands for Delay, Inherit, Retire, Expire.
Dogen said the economic impact of the coronavirus pandemic will send many early retirees back to work, “and many people who have not yet reached FIRE will probably have to extend their working careers by three to five years to make up for their equity losses.”
If the U.S. enters a yearlong recession, Dogen said he thinks the DIRE movement will supplant the FIRE movement “as people get much more realistic about their finances.” A recession would likely make it difficult for many to save for retirement, thus causing them to delay retiring.
“A lot of FIRE folks are putting on a strong face,” Dogen said of the current health and economic crisis. “But I can assure you that behind the scenes, there is a lot of devastation.”
Indeed, unforced or voluntary early retirement is about the last thing on most people’s minds these days, as 401k and IRA balances have taken a beating during the pandemic-fueled market downturn, people are being laid off or furloughed at unprecedented rates, and small businesses everywhere are struggling to survive.
Ironically, many people today are making dramatic lifestyle changes that align somewhat with FIRE principles, such as taking extreme measures to minimize expenses (especially when it comes to discretionary spending), looking for side-hustles to increase income, and becoming more socially isolated.
For someone who is struggling with the isolation or the increased amount of free time, it’s important to realize that it might be similar when they quit working and days might have little structure.
Grant Sabatier, Millennial Money founder and author of “Financial Freedom,” told CNBC Make It recently he thinks the whole idea of retiring early will disappear because of the economic instability due to COVID-19. “It’s just not going to be as easy, even for people who have been saving up, and it’s not going to be as attractive of an idea.”
Sabatier says in the article that could be a good thing. In this time when people are quarantined and have a lot of time to think, he says they should think about why they really want to retire early. “Do you still want that amidst the increasing uncertainty of our times?”
Sabatier encourages people still interested in the movement to focus less on the “retire early” part of FIRE and more on the “financial independence” aspect: “At its core, it’s always been about using money to build a life you love and being intentional about your spending so that you have more time and options in your life.”
FIRE blogger facing challenge
“Retire By 40” blogger Joe Udo, who retired from his engineering career to become a stay-at-home dad/blogger at 38, recently posted a blog, titled, “Will COVID-19 Kill the FIRE Movement?”
In it, he admits 2020 will be a serious challenge for the FIRE movement. “My blog traffic dropped way down in March. Lots of people are working from home, but few want to read about early retirement right now. We have too many other things to worry about.”
Udo notes that the stock market crash is a big setback for anyone looking to retire early.
“It’ll be a big challenge for us too. My main goal for 2020 is to generate enough passive income to cover our living expenses. This goal will be difficult to achieve in the economic meltdown. Even if I include my blog income, it might not help much. Let’s hope we can bring Covid19 under control by summer. That will give everyone a chance to catch up financially. Anyway, this is a good test for us. If my early retirement can survive this 2020 recession, it can survive anything.”
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
