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The Goal is to get FIREd

It's the rare workbeast that doesn't want Financial Independence & to Retire Early. But you have to choose your flavor of FIRE, and there's quite a menu.

To some, retirement is not just a goal--it's an obsession. And the center point for most modern retirement discussions is the concept of reaching that nirvana-like state of being FIREd. That is, to reach the equilibrium state where your investments pay you enough every year to support your lifestyle indefinitely, such that you no longer have to work.

What is FIRE?

The vanilla flavor of FIRE assumes that over the course of your career, steady investment into broad-based ETFs and low-cost index funds will double your money two or three times and that once you reach a sufficient principal balance, then from there you can draw down three or four percent per year without drawing down the principal. FIRE people are generally obsessed with their "savings rate" and try to save as much as humanly possible during their productive years.

I worked with a guy named Matt a few years back who was a FIRE guy. He was religious about it, to the point where he would not engage in activities that reduced his savings rate. He had a schedule for his meals that he adhered to religiously. Monday was tacos. Tuesday was breakfast for dinner. Wednesday was Mac n' Cheese, and so on. By doing the same thing every week, he kept his spending steady. Movies and bars and dating--that was right out. But the guy wanted to retire at 35, and my guess is that he made it. The last few years of index growth probably put him over his goal early, and I expect that he's now done working forever.

Matt is not alone. But there are variations on Matt's theme, all of which can be found in the appropriate subreddits. The vanilla FIRE subreddit can be found at r/Fire. Here you can find people in their teens planning for their retirements commenting along with people in their 50s planning their own exits. Here you'll find people talking about their "number" (target principal) and their plans to get there, and it can be inspiring to read through peoples' various successes and failures.

Alternative FIRE Flavors

For those who don't make a ton of money or who want to retire with less than their neighbors, you can turn to r/LeanFire. LeanFire describes itself thusly:

For those that want to approach the problem of financial independence from a minimalist, stoic, frugal, or anti-consumerist trajectory. If you want to retire before 60 with less than $45k in planned yearly household expenses ($22k individual), this is the place to discuss it!

I tend to aim a bit higher, and so I find myself browsing r/ChubbyFire, where the "basic outline is a retirement portfolio target of ~2.5MM-5MM, think of it as the upper-middle class of retirement." I find ChubbyFire to contain interesting wealth strategies as well as helpful stories from people who have successfully made their exits from the workforce in this range.

The concept of r/CoastFire is less focused on leaving the workforce and more focused on building a life that can be played on easy mode. To wit, according to the subreddit:

Coast FIRE is when you have enough saved and invested that with no additional contributions, your net worth will increase with compounding growth to support a traditional retirement. Coast FIRE is all about using your savings to unlock freedom before hitting regular FIRE.

Finally, r/FatFire is the place to go to talk to some legitimately rich people about their wealth. FatFire describes itself simply as a place to discuss retiring with a "fat stash." This may be one of the wealthiest subreddits on the site, and it's therefore fascinating from an anthropological/gawker angle in addition to being a useful place to discuss wealth strategies.

Real Estate is Greater than Equities, IMO

Give these sites a read and you may find yourself being inspired to make some new moves with your investments. What I've noticed is that a lot of people in recent years have hit their retirement goals through massive appreciation in the stock market. But that does not inspire me to go put even more money in the market.

In the long run, I strongly believe that real estate is the best asset class to take into retirement because of its steady and predictable returns. I have observed in these subreddits that even people with $10m+ net worth can find the concept of owning real estate to be daunting, and they therefore have essentially all of their wealth allocated into different market holdings.

I think it's nuts, to be honest. I'm scarred and I'm scared because I've seen the market blow off twice in my lifetime. What happens if you decide to FIRE, and you're all set to draw down your 4% per year in living expenses, but then the market takes a 2-3 year dump on your plans? Say you had $3mm in the market and over two years it falls down to $1.5mm, which is totally possible in a bear market. All of a sudden, you're selling your positions at a massive loss just to make ends meet. I'm totally uncomfortable with that level of risk.

Real estate does not have this same level of risk exposure during retirement. Even if the underlying value of the asset declines, it still pays rent and you don't have to draw down the equity to make ends meet. This is why my plans are so heavily weighted towards real estate--because in the end, when we FIRE, we are going to have solid and predictable returns for the rest of our lives.