Tuesday 21st May 2024

Why I think the “FIRE Movement” for financial independence is unrealistic

As a blogger I read a lot of online posts and articles about personal finance. A newish trend that has popped up a lot is people writing about financial independence, the FIRE movement. FIRE = financially independent retire early.

There are many stories of people who have built up enough savings/investments to generate passive income that covers their expenses. These people are debt free, mostly own their own houses and often live an incredibly frugal life.

And I think it’s a hugely unrealistic goal and not something that we should be encouraging people to do.

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The FIRE formula

Consider this formula, take your annual expenditure and multiply it by 25. This is the amount of money you need set aside to be ‘financially independent’. Our annual expenditure (including a mortgage) give or take a few pounds is around £42k.

So, I would need just over £1m set aside earning decent rates of return to provide me with enough passive income to cover my expenses. This is based on a 4% withdrawal rate.

Hmmm that’s A LOT of money that we absolutely do not have set aside in investments. The stories I have read are mainly people in their 40s who are now financially free. I am 42 and to be honest these stories make me feel a tad inadequate.

Unrealistic goals

In my view this is a completely unrealistic goal. Who, particularly in the south east, can afford to have their mortgage paid off by the time they are in their 40s? And who has earned that much money to have that much savings set aside?

If I think back to my 20s, I graduated with a 2:1 degree in maths and went straight into a job aged 22 with HSBC training to be an accountant. It was a good job, I was earning a great salary and I had prospects to develop my career and grow my earnings significantly. By the time I was 27 I was earning £40k a year.

I bought a house and started putting money into investments. And I enjoyed living my life. I had nice holidays, experienced beautiful food. Okay I probably (read as definitely) spent too much money on handbags but I wanted to live my life. Not scrimp and save and put aside 50% (as I have seen some FIRE people doing) of my earning into savings. Putting aside 50% would have been impossible, my mortgage has been £1,000 a month for as long as I can remember.

Life is for living

Particularly in your 20s when you maybe have fewer responsibilities and have the freedom to do whatever you choose. This view is not conducive to the FIRE movement. You must be frugal to extreme levels, spend very little money on yourself. You will be spending your spare time working a second job, side hustling to generate as much income as possible.

When I hit my 30s, I was earning a good amount of money, but was also working in London and living in the expensive south east. The mortgage has never been within reach of paying off. Even now at the age of 42, I still have 200k outstanding on my mortgage (I do have a very nice chunk of equity, more than the outstanding mortgage). I had three children, probably the most expensive thing I have ever done. I did very little during my 30s to add to my wealth.

Aged 37, I made a huge change to my lifestyle to enable me to spend much more time with my children. I quit my well-paid corporate job to set up my own business. I valued my time more than my earnings and of course this has impacted my financial position.

Most people are not able to get anywhere near this FIRE aim and I think it’s irresponsible to promote that goal. Surely, we should be encouraging people to start saving, encourage people to pay off expensive debt, to save money on their energy bills, to put money into a pension, rather than talking about an unobtainable financial position for 99.99% of the population.

And life must be for living. There must be a balance in enjoying life and saving for the future. Why restrict yourself in your younger years of 20s and 30s to allow you freedom when older? Choose a balance that is right for you.



Lynn James

Winner of UK Money Blogger 2017 best parent and money blog. Radio presenter on SG1 Radio. Author of Blogging Your Way To Riches. Seen on BBC, ITV, HuffPo.

  1. Works for us. We have never had to be as frugal as you make out either or start saving early, had the kids and the holidays, you can keep your handbags and living down south though, I’ve mostly worked part time since the kids were born too, We bought our house 37yrs ago and are still there, wonderful victorian 4 bed semi, but you guessed it we live up North where property is cheap. I was fifty six and my husband sixty one, the company pensions are now kicking in and will see us along with savings until we reach state pension age and we still have holidays every year. Time is the most precious commodity.

  2. Yeah, buy another handbag and throw the last one you bought on top of a dusty wardrobe if you want. But this author has squandered an opportunity to be different and this article potentially drags others down to her level. She works for “the man” but hasn’t realised it yet, and revels in her powerlessness. Here’s an interview with “the man”, which elaborates the point for anyone willing to read…

  3. Thank you for sharing. Everyone has their own ideals and values in life. I just turned 30, with a large mortgage (however no other debts) living in London. I have found the financial independence trend useful and quite refreshing in the current environment of materialism and everyone trying to one up each other on social media. There are so many temptations out their, especially with colleagues in the financial services world that I work in are buying expensive designer watches, cars on finance, houses that they can’t afford etc. I do agree that retiring in the thirties is a very aggressive target, especially when life expectancy is rising dramatically. I would personally want to get to a place of financial independence by the time I’m in my mid to late 40s (I.e. live off passive income or only work if i wanted to a couple months of the year.) By living on a written budget and being intensional with where my money is going, I believe this is achievable. (E.g. overpaying on mortgage, keeping an eye on bills/ living costs, investing a proportion of income into an ISA/ pension, factoring in a couple holidays a year etc) Reading through the personal finance blogs and people’s experiences, it provides great inspiration that this is possible.

    I wouldn’t say that I am restricting myself from buying/ enjoying the things that bring true happiness in my life, I’m just looking around at the rest of the people that are in my immediate environment, the pecimism in newspapers/ mainstream media and believing that I can do better than living paycheck to paycheck.

    I do appreciate your balanced view. Hope this doesn’t come across as a rant, just nice to see people in the financial independence movement taking control of their life/ future.

  4. Whilst I would accept that reaching FI/RE is not possible for everyone nor is it for everyone, I disagree wholeheartedly with your view that it is a completely “unrealistic goal”.

    The aim of FI/RE is to educate and provide people with the ability to make-work optional so that they can pursue other passions. It is about valuing their precious time over consumption. It is a matter of priorities.

    Rather than it being “irresponsible to promote that goal”, I actually find it irresponsible and selfish to keep such life-changing knowledge secret. Isn’t it irresponsible to claim, without evidence, that it is an “unobtainable financial position for 99.99%”? I agree that maybe, 99.99% of the population will not reach FI/RE, but not because it is unobtainable. It is because they have chosen to through the life decisions they have made. That is fine if done intentionally.

    In relation to your feelings of inadequacy. All of the FI/RE bloggers I know do not write with the aim of making anyone feeling inadequate. In fact, if you ever choose to look into this a little more deeply, you will learn that it is far more than being about money. The journey for me so far has helped me learn to stop comparing myself against others. I still have some way to go that respect, but have reached a point where I don’t care whether someone has a bigger house, nicer car, dresses better, earns more, saves more or is better at this FI/RE thing than me. What matters is that I know what I want to do with what relatively little time we have to live and what I am doing about it, even if you and many others believe it is unrealistic.

    I make no judgement on how anyone chooses to live their lives. Everyone is entitled to spend how they like – we’ve earned it. Whilst I appreciate your candid views, I take issue with the unbalanced approach you have adopted in writing this post. The tone of your post has a degree of judgement against those who have chosen to have a different relationship with money than you do.

    I wish you all the best.

  5. “…I quit my well-paid corporate job to set up my own business. I valued my time more than my earnings and of course this has impacted my financial position.”

    You have gotten to the crux of the FIRE movement with that statement. “Retirement”, to these folks, doesn’t mean sitting on the couch watching daytime TV. It’s building a cushion to live the life they want. Much like you have done.

    Congrats on being financially independent and welcome to the movement!

  6. So because you didn’t try to become financially independent and didn’t miraculously manage it anyway, it’s unrealistic? That’s kind of like saying it’s impossible to get a six pack because you don’t have one, despite never doing any exercise.

    I too live in the South East and work in London, but at 27 I was earning in the region of 22k a year. I’m now 31 with a young child at home, and while my mortgage isn’t paid off yet, my target is to be able to pay it off if I want to by 36, and be in the position to “retire” at 42.

    Being on the FI path has actually meant that I’ve been happier to take lower paying jobs that are more fulfilling and haven’t had to chase that corporate pay cheque. My baseline spending is relatively low, so I know that any pay rise will only add to my savings rate, not my lifestyle. Just that knowledge alone is surprisingly liberating.

  7. “Life is for living” – but is it for buying handbags?

    “Who, particularly in the south east, can afford to have their mortgage paid off by the time they are in their 40s?” – My partner (not interested in FIRE) has nearly paid off her London pad and she is not yet 40. She just doesn’t like being in debt and for many people not having a mortgage doesn’t mean scrimping and saving, it really does mean cutting down on the handbag collection.

  8. “By the time I was 27 I was earning £40k a year.” – I was earning about 28k/year at that age, discovered the FIRE thing around age 31 and am well on the way now to acheiving it* whilst working part time, living in the South East and having a child. We go on about 5 holidays a year and I could not think of anything I would like to buy that would improve my life that I don’t already own or have the means to buy at the drop of a hat.

    So saying this goal is unrealistic, perhaps understandably seems odd to me!

    Also rather than feel inadequate by any of the above I would hope that people would feel inspired but maybe I am just a hopeless optimist 🙂

    Especially, you should not feel inadequate as you’ve actually followed a lot of what us FIRE lot are preaching any way, you quit the corporate grind for a more balanced life, so in that sense you’ve proven the point of your article here erroneous from the offset 🙂

    Maybe there is a lot of confusion about definitions of FIRE and all of that, I personally think that’s all nonsense and not what we should be focusing on. The underlying advice is just the same as what any sensible finance blogger tells you:

    “we should be encouraging people to start saving, encourage people to pay off expensive debt, to save money on their energy bills, to put money into a pension”

    Amen to that! What people then decide to do with those savings is up to them.

    *Admittedly later than most with a projected FI date when I’m about 55. But you know, part time working and starting the savings later on etc…

  9. The glaring issue here is that Lynn has taken out a mortgage on a property which is too simply big for her. If she’s happy to pay to it, including tens of thousands of pounds in interest, then all power to her. But nobody forced her to buy a massive house. If she wasn’t keeping up with the Jones’ then she could have purchased a smaller house, paid the mortgage off early and be sitting on a large lump of savings doing what she wants in life without being chained to the office desk.

    Likewise with her 25x estimate spends – if she wasn’t paying off such a large mortgage, her amount wouldn’t be 40k a year, it would be more like 20-25k – a much more reachable sum.

    So easy to slate people who don’t outspend their means as if it’s somehow wrong to do so. Classic baby-boomer.

  10. I’m doing some reading on the FIRE movement, and I came across this post. I think of myself as loosely pursuing the FIRE strategy. I appreciate your skepticism, but I think it’s unfounded. I don’t think the FIRE movement is irresponsible/unrealistic based on what you are saying. (That’s what I’m currently searching for….a skeptic with a good point. I wouldn’t be a very good FIRE movement member if I just joined up without doing a lot of research, would I?) As someone else said, starting your own business is PRECISELY the point of the FIRE movement. It’s to give people choice and mobility. I’m not going to judge what you deem essential. I love handbags, and I have many. However, I’ve cut back on purchasing dramatically, too. In my house, we’re not even saving a quarter of our earnings, but, as you said, kids are expensive, and we’ve got two little ones with child care as both of us parents work.

    What we have done is a) purchase a forever home that was at least £120k below the amount the bank would allow us to borrow (easily done as we don’t live in London) and we’re working towards paying it off in our forties (we’re currently in our late 30s). We have old iPhones and old cars. We take frugal holidays and live frugal lives. (Easily done for me as I’m also really into minimalism.) We’re going to retire in our fifties….probably doesn’t sound early to most FIRE folks, but I discovered the movement later. The upside is that if we’re made redundant in our fifties or replaced by younger/wiser workers, we can easily survive it. The downside….there is no downside: we do not consume in a greedy way and we certainly aren’t deprived: we live in a 4 br house down the street the our city’s river/green space and my kids are in one of the town’s best schools.

    If the plans do wind up being unrealistic for some reason I’m not seeing, the only thing that’s going to happen is I have to scramble for more funds. But I’ll be doing that with a big financial nest egg and a paid off home. Not bad.

    I think we should encourage EVERYONE to live like this.

  11. Great article Lynn, I agree and lets be honest the extreme FIRE lifestyle will not suit everyone.

    I think you are well on your way to FI, you mentioned you had enough equity to pay off the mortgage and you have been able to leave the corporate job and start out with your own business.

    FIRE to be is a journey of financial improvements, rather than a destination. Thank you for sharing your story 🙂

  12. It seems to me like you really don’t get the principal of how this works. In reply to your comment ‘Most people are not able to get anywhere near this FIRE aim and I think it’s irresponsible to promote that goal. Surely, we should be encouraging people to start saving, encourage people to pay off expensive debt, to save money on their energy bills, to put money into a pension, rather than talking about an unobtainable financial position for 99.99% of the population.’

    It not irresponsible at all to promote saving money. The first part of the process IS to assess things like prioritising paying off credit cards and reduce energy bills, any bills for that matter. A pension is all part of your net wealth and due to the tax advantage putting money into your pension is the best thing you can do next to having some investments. It seems like your article presents a frustration that all this is too unobtainable. However with a balanced view, a little planning and some discipline making a start is not as bad as it seems.

  13. Just wanted to say I totally relate to your post even to the extent of changes in lifestyle at 37 and the mortgage balance you have! I am currently 41 with a child living in the South East too.

    I am excited by F.I.R.E because it offers the possibility of financial freedom using easy but well researched maths I.e. the 4% rule. However, I think the demographic it is aimed at are millennials without children who are in jobs they probably hate but pay well.

  14. I politely disagree. I think that people can live on a lot less that over 40k. One of the principles of fire is to live frugally. If you spent half of what you do at the moment your time to retirement would shrink a lot.

  15. I think you may have missed the whole point of why would one want to pursue FIRE. First of all being FI gives you freedom of choice as to what you want to do with your time. Secondly on your salary it was definitely possible to save 50% of it and load it up into low fee index fund. You would have probably be around your 1 million mark around now 🙂

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