Ask HN: What do people think of FIRE (Financial Independence, Retire Early)?

I think its stupid. Retirement is boring, youll end working anyway just to have something to do. Id rather have an enjoyable job and lots of sparetime now that im young rather than slave away my youth so that I can retire early.

My interest in FIRE can really be boiled down to this scene: https://www.youtube.com/watch?v=rJjKP8vYjpQ

I'm on board and actively pursing FIRE. I'm not sure if I'll actually choose to retire when I hit the magic number (~20x your yearly expenses), but it does provide me with a sense of satisfaction and stability.

I think a lot of the FIRE community over evangelizes the "RE" portion of FIRE, but that may just be a reflection of the high stress/high pay types of jobs that many FIRE pursuers find themselves in.

It's a reasonable approach.

From my perspective it's not so much about the "retire early" but rather about the "financial independence" part. Even if you don't intend to retire early approaches like FIRE are extremely useful for establishing or restoring financial sanity.

If you think about it it's really not (or at least it shouldn't be) all that novel an idea: Consistently spend less than you earn.

It's just that industrial societies at large have become used to a rampant consumerism that favours spending more than you earn.

More traditional retirement plans also disproportionately benefit banks and insurance companies.

I'm actively pursuing FIRE. On pace to reach it in 2023. I think every software developer who wants to write code their whole career must actively be trying to reach FIRE by age 50. Ageism is rampant in this industry.

If you want to be a manager or founder or whatever I think you can work past 50 but FIRE is still worth pursuing.

And if you love working on projects that matter to YOU there is nothing better than achieving Financial Independence.

Based on the salaries of people who comment here, I assume most can retire in about 5-10 years of work.

For the rest of us, I don't think we'll ever retire.

I find it fascinating and very condusive to my personality.

However, the amounts of income you need to be able generate to truely get there seems to be... ambitious.

I see lots of people saying they do this on the blind app but i've never met anyone yet who seems to actually be getting there. best way to get wealth as a software engineer is working consistently at high paying jobs, save your money and invest it, don't try for riches at startups.

i don't get the "retire early" part. who wants to be a retiree for ever? But financial independence is sweet freedom

Employers love it because it encourages their workers to keep their head down and work hard. Retirement is just around the corner.

I don't come anywhere close to making enough money to attempt it. Sounds awesome though.

Clearly, a passing fad.

https://en.wikipedia.org/wiki/FIRE_economy

I think some of FIRE's basic mental models provide a useful perspective to help make some decisions, but like many things in life, it's not great to focus on one perspective myopically, to the exclusion of everything else.

While accumulating and investing savings it is reasonably useful to keep in mind your savings ratio:

  savings_ratio := (income - expenses) / income

If you choose to focus on growing investments, make decisions to maximise the savings ratio, subject to other constraints. You can try to reduce expenses, or increase income. Or both. Sometimes you can find win-win decisions that increase your savings ratio while also giving you some other benefit (e.g. start riding a bicycle to work instead of commuting on public transport -- this saves money and can be more enjoyable, provided conditions for cycling aren't too foul and you live close enough).

Focusing on maximising savings ratio assumes that your expenses while saving will be similar to your expenses once retired. This may or may not be true -- for example, maybe you have high-paying work in a higher cost of living area, but you can move to a lower cost of living area when you no longer need a reliable day job.

Once retired, we want our investment income to cover our expected expenses:

  cash_flow_in + cash_flow_out >= 0

  cash_flow_in = capital_invested * (expected_nominal_return - inflation) * (1 - effective_tax_rate)

  cash_flow_out = expected_annual_expenses_when_retired

We can calculate our progress by the ratio cash_flow_in / -cash_flow_out .

For example, let's plug some numbers in:

  expected_annual_expenses_when_retired = -20,000 USD / yr

  capital_invested = 200,000 USD
  expected_nominal_return = 6% (say we're 100% invested in the US stock market)
  inflation = 2%
  effective_tax_rate = 5% (complete guess, i don't live in the US)

So

  expected_investment_income = 200,000 * (0.06 - 0.02) * (1 - 0.05) = 7600 USD / yr

In this example, our progress to covering our expected annual retirement expenses with net real investment returns is 7600 / 20000 = 38% .

There are calculators to estimate the time until retirement. Here's a simple one: https://networthify.com/calculator/earlyretirement?income=70...

All that said, real life is unpredicable and complicated, it might be good to leave a bit of margin in there to handle unpredictable events such as stock market crashes, large one-off expenses to repair a house, contingency for emergency medical expenses, etc. It's arguably not a great idea to be 100% invested in stocks at the moment, let alone US stocks.

Potentially useful resources:

  http://www.efficientfrontier.com/
  https://www.bogleheads.org/