If you’re thinking of joining the FIRE movement, you might want to read Suze Orman’s advice.
- FIRE stands for financial independence, early retirement.
- It is a movement that prioritizes cost reduction and financial independence.
- Finance guru Suze Orman has spoken out against it, pointing out that those who retire so early can end up with regrets and end up in financial trouble.
The FIRE movement is an online trend and a way of life for many. It stands for Financial Independent, Retire Early. It promotes extreme saving and frugality, often involving much sacrifice to minimize living expenses. The purpose is to enable investment and reduce the cost of living so that you can retire at a very young age and be financially independent.
While living frugally to retire early may sound like a good thing, finance expert Suze Orman has stated unequivocally that she actually hates the FIRE movement. This is why.
Suze Orman’s big problem with the FIRE movement
In a 2018 interview with Afford Anything’s Paula Pant, Orman was asked what he thought of the FIRE movement. His answer was unequivocal. “I hate it. I hate it. I hate it,” he said.
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This may seem like a surprising answer to a question about a movement promoting saving for early retirement. But Orman had plenty of justifications for why he doesn’t think taking this approach is a good idea.
The big problem with the FIRE movement, according to Orman, is that retiring at a very young age, which most people in the movement aspire to, can leave you with very little money to support yourself throughout your life. That’s true even if he thinks he’s well prepared and has enough funds to cover what he needs.
When you retire too early, there’s a lot more time in your life for something to go wrong and drain your savings. And if that happens, you’ll have many, many more years to support yourself, but it can be hard to get back into the working world after a long absence.
“If you only have a few hundred thousand, or a million, or two million dollars, I’m here to tell you… if a catastrophe happens, if something happens, what are you going to do? You’re going to burn alive,” Orman warned.
Orman also noted that while many people in the FIRE movement may want to retire in their 30s, they may seriously regret it. “The FIRE enthusiast is going to retire at 35. And that’s the biggest mistake a person could make in his lifetime.”
Orman is right?
Orman is absolutely right that retiring at a very young age leaves you extremely vulnerable.
It can be quite difficult for people in their 60s and 70s to plan for every expense they will face over the course of their lives and make sure they have the funds even for unexpected costs like unexpected medical bills. Someone retiring in their 30s, on the other hand, could end up trying to rely on their investments for 60 or 70 years, and it’s almost inevitable that big surprises will happen during that time that can affect their ability to do so.
Of course, not everyone in the FIRE movement wants to stop working so young. Some people just want the ability do so, but will continue to earn income even after achieving financial independence. While that’s not necessarily a bad goal to set, if you’re hoping to retire really early, you might want to heed Orman’s warning that doing so could set you up for disaster later on.
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