Is the FIRE Movement Too Good to Be True?
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- Опубліковано 17 сер 2023
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I think young people see "retirement" differently than boomers. Dave always talks about "doing nothing," whereas I think young people see it as an opportunity to do more if they are financially independent/retired. A stay at home parent is fine per the Ramseys, so how about 2 stay at home parents? Why hate on that?
Building wealth from nothing involves consistent saving, disciplined spending, and strategic investments. Begin by creating a budget to track expenses and identify areas for savings. Prioritize paying off high-interest debt and establishing an emergency fund. As you build a foundation, start investing in low-cost options like index funds, and focus on continuous learning and improving your skills for better income opportunities.
I’m 34 and this seems super extreme 😅 $25,000 a year?! he’s assuming he’s in perfect health for years and years to come and hardly any emergencies.
My wife and I save about half our income most months but take 3-4 trips a year, so we end up being able to take almost any trip at anytime. Once you have a good savings rate, you have so much freedom.
Same. We save about 40%, about 20% goes to taxes, and health insurance...another 20% goes to mortgage interest, home insurance, utilities, and groceries. The last 20% we can spend and donate... and we can travel and not feel a speck of guilt about it.
I hope he reaches his goal. Seems like a genuine guy.
It's better than the alternative aka 6 or 5 figure in debt like 80% of Americans.
I am retire at 35 years old this year 2023. The only way to achieve fire movement you have to give up every days luxury life style and start to invest as early as you can.
Coast Fire is where it’s at. Enough to not have to invest anymore money and let the compound interest do its work
100% that’s what I’m doing. My goal is to have the ‘option’ to retire (pretty comfortably) in my early 60’s.
Doing the hard work now, 60+ hours a week and stashing cash/investing.
I like the idea of coast fire, but I would still feel uncomfortable until we reached FI.
saved by the age 29..
shows a guy that looks atleast 49
I’m fire-ish. I worked a high stress/high paying job for 10 years in my 20s and early 30s as an offshore engineer in the oil and gas field. With no debt, no mortgage and a net worth millionaire between residence and brokerage account, I switched careers to become a personal trainer with flexible hours to be more available for my family.
Good for you. Way to use that oil rig job to do something positive with your wage.
They touch on this briefly in the video, but many of the FIRE people don't stop working, they stop working in the traditional sense of needing the paycheck. Most I've seen volunteer, run blogs, or one started working at a winery one day a week because he loved wine, so it gave him a discount on it, and it was something he enjoyed. Others use it as a way to stay home with their kids. It's about the freedom of not needing to work. I'm not sure how old this guy's video is, but I'm wary of his plan of trying to work on such a slim budget. Even with good planning, expenses will always come up and he's got a young family.
There is a subset of the FIRE movement called Barista FIRE, where people quit their professional jobs and take on a role that doesn’t pay much, but is much more fun and fulfilling than what they were doing before. That’s where I am right now, where I paid off everything including my house, and I have a reasonably good amount of retirement savings, so I quit my engineering career and I’m currently doing rideshare gigs until it stops being fun. At some point I might go do something else, but this is where I am right now.
If this makes him happy, that's great. It's his life! However, I don't think this is a normal FIRE story. I think this is on the extreme side. Plus he can always go back to work to earn money if needed.
Personality I don’t think work keeps you young. I noticed I’m just healthier and happier in my days off. I eat healthier prepare food sleep in get sunlight drink more teas hit the gym run outside hit the sauna and hangout with friends and family more because I’m not tired. It’s also easier to do a bit of fasting. I don’t think it’s fair to make fun of this guys appearance either
These folks are brainwashed that you have to live one way, by working your life away and trying to save gobs of money for retirement, because goodness knows you can’t live on 25k a year when the rest of the world lives on a whole lot less! (Sarcasm)
We did it by 28. Don’t regret a thing because you can still travel and enjoy life while on your fire journey you just get creative. The frugal mindset does have negative effect. Our “sacrifice” was house hacking.
Yeah sure, you'll be back at work by 40.
I'm sorry you feel that way towards people who get ahead.@@HermannTheGreat
My guys says he is 29 but looks 35 already. Hope he reaches his dreams for him & his family.
What’s up with the Ramsey show being so down on people saving TOO much?
My hats off to him but he is definitely playing the definitive game of his plan will work without any obstacles. But when you have young kids that innately brings unexpected costs.
Totally embrace saving. But as a widow at age 51 I’m so thankful we took advantage of travel opportunities and spent some money. We’re not guaranteed the future we dream of. Balance is key and enjoying everyday- is so important
Very true. It's great to save for the future, but you have to enjoy your youth also. People die in their 30s, 40s, & 50s every day. So there is no guarantee that they will make it to retirement age. You still have to live when your younger also and enjoy life.
Yes, I LOVE this! Definitely have to find that perfect balance of saving for the future and allowing yourself to spend appropriately in the present bc we aren't guaranteed tomorrow!
Both my parents past in 2022, both unexpected and in their early 60s. Glad they lived a very fulfilling life and didn’t wait till they retired. Agree, balance is definitely key to most things in life.
💯 this is why we decided to start traveling now that we are in our late 30’s. We still save at an aggressive rate but we need to enjoy as well.
Yeah. Don’t wait to enjoy your life until Ramsey says you’re allowed to.
What these folks have nto considered is if they retire at "35", they have 30 years of pension contributions that they will never draw on. That is a lot of social security, CPP, whatever it is where you are from.
I thought this was about Mark Zuckerberg...
Haha me too! 😂
He has a goal for age 35 with a dollar amount in mind to have in savings.
He’s no doubt going to reach that savings goal but just the fact he buys second hand running shoes AND is a runner - he’ll never give up making money.
He’ll, in his mind, be able to retire at 35 but he is the kind of guy who will work until he physically can’t.
Good observation
I love my job & I could retire now if I wanted to live frugally but I am happy so I don't look forward to retiring at this point. I have been doing the same job for 24 years now & it's such a big part of my life that I will always work some till I am unable to work.
My Grandfather paid off his home in his very early 30s and has always been frugal to the depths of his soul. He celebrated his 90th birthday in January and still works multiple days a week to keep him from boredom.
That's the goal, to be so bored that you want to take on a job, not to be so broke that you need to take on a job lol
Retire in the Philippines. Live like a king on $2,000/mo budget.
I appreciate his focus but I couldn't do it. I want to retire one day but I also want to enjoy my life before then....
He just seems stressed and I don't think 25K is enough.
Thank you for your channel!! I’m on baby step 2. What do I tell my family and friends that I can’t afford certain things? Thank you.
Just say no. It doesn't matter if people understand or not! It's an amazing thing what you're doing! Don't feel ashamed or pressured to participate in things that don't go well with your plan right now. Just be careful not to become anxious about any of the baby steps. Remember you're going to get to your goal and then you will be able to afford more, save more and be more generous. Everyone's journey is different.
That's pretty cool! Although, I do know I want to do art and Deaf Ministry for as long as I'm able. Even if it doesn't currently pay me much. I'm still working a part-time job and working as a substitute for Deaf Ed. I'm still going to try to pay off our student loans by my birthday next year in September. I've paid off nearly $41,000 in the past two years, and we have just over $20,000 left.
We currently are able to live on about $2,500 a month with our budget. That includes mortgage, utilities, and all the necessities like groceries. Anything extra goes towards student loan payments. I've been able to throw just over $2,000 a month at them since January. Although, our income is going to be decreasing significantly with me transitioning into Deaf Ministry. But I felt like God was moving me towards that instead of Deaf Ed. 98% of the Deaf community has ZERO access to the gospel. I'm beyond desperate to change that.
Tanner seems super stressed and anxious about money, feel sorry for his kiddo. This is an extreme just like too much debt, etc. Instead of retiring early, I'd want to work as long as necessary to make my kids life easier, not force everyone to live off poverty level money.
That stress and anxiety seems to have aged him far beyond 35.
Yeah, he does seem ill
“Seems?”
Look at his body.
The guy clearly looks malnourished.
Wouldn’t be surprised if he’s suffering from some type of mental disorder.
That’s not a healthy way of living at all.
He looks starved
He's not 35. He said he's 29 years old (2:20 into the video)! He said he wants to retire when he gets to 35! My question is: if he is so anxious about spending $$ now when he has a $135K/year salary, how is he possibly going to spend $$ when he has NO income and is living off his investments? Especially when a bear market hits?
I remember watching this. $380K to retire? Unfortunately that's not going to cut it for us.
His goal is $625K by the time he's 35 (he's 29 now). Still, his assumption is that he can pull $25K/year from a $625K investment portfolio. That's a 4% withdrawal rate over what might be 50+ years. I dunno....
I am all for saving money, and retiring early, which in my mind is age 50 or so. But becoming anxious about spending money-groceries or clothing, is disheartening. Living on twenty five thousand a year is not a good recipe for retirement.
For you. He seems happy
Totally doable.
Rachel Cruz is suuuppper beautiful. I’m 35 and able to retire from hard work and sacrifice I still work part time but doing very well for my age and hit the everyday millionaire status
I think there is something to be said for piling up a good amount of cash early in your life. No debt, no mortgage payment and you will be insanely wealthy over your if you can do that in the first decade of your career. "retirement" often doesn't mean retiring, it might mean pursuing a lower paying job you actually find fulfilling. I work with a guy that does this. He's single, lives with parents, wants to build his own house with cash. I'm paying off debt, but I also had a child young.
He doesn’t run often then, I workout daily and a year is the most my shoes last and that’s because I have two pairs I alternate with each other and are any of these people Christians and tithe? I’d love to see a video of how they break it down and reach the goal while giving the minimum 10% at least. And how you do more than 10 I’m even more unsure of
Is that food donation program for those in genuine need? Not for those who have a $100,000+/year income? Also, did he mention how he planned for his kid’s college plans on $25,000/year?
Highly likely he'll change his mind sometime over the next 30 years. Often, what we plan to do in our younger years is different from what we actually do after we turn 40. This young man is saving money, paying his debts, raising a family, keeping fit and has a roof over his head. That's pretty balanced compared to others who are more radical on FIRE. BTW, millions of people live on $25K/yr. Not everyone needs a lot of money to live well.
25,000.00 to live off. You never know what life is going to throw at you.
My gaol is to be FI by 35 then enter recreational employment. I work if i want to, not that i need to. My foundation will be 3 rental houses and 250 k in stocks
USED RUNNING SHOES! 🤮
I’m 29 years old, and I’m no where near that 😅
Wished I could go back 25 years and be a Tanner.
This is not repeatable unless you're in an extremely high paying field like this guy. 125k salary is low-end software engineer, he may have tens of thousands in stock options also. Most of these positions also provide unlimited time off, so it's strange he wants to retire early. FIRE movement is misguided but understandable, work is hard and stressful. If you opt out of the workforce early you won't contribute or be as involved in the betterment of society in most cases. Many would rather opt out as fast as possible and "travel the world". Most will return to work when they experience the boredom that comes with not working at a younger age and having decreased purpose and contribution for humanity. This guy may need money just for the surgery to fix his bad posture in a few more years, but at least he's working out. Guaranteed he will be doing a side job or freelancing 20-30 hours per week and still making 6 figures as he's got indispensable skills and is in the best field in America. He will have millions by 40, won't need to worry about the low living FIRE movement.
I could get behind it if you didn’t have to retire and try to live on 25k a year. That’s poverty level in the US. If you can retire early and still be able to enjoy your money and travel and spend time with family then awesome. I plan to retire early but not that early. I’m hoping for 10 years early so we aren’t strapped for money monthly and just surviving.
He has had no “bumps” in the road yet. What about healthcare etc. He’s also taking food out of the mouths of people who really need it so he can live out his unsustainable dream. I wish him and his family good luck.
Comments: I think FIRE is a great movement, but Tanner has made a common FIRE math error. He is assuming a 4% withdrawal rate on his projected $625,000. In fact, that 4% number comes from Monte Carlo simulations of people retiring aged 60-65, and is based on U.S. stock returns only and uses a time period where market returns were unusually good (Bengen 1994; Cooley, Hubbard, Waltz 1998, 1999). Also, the 4% rate ignores transaction costs. Aiming for retirement at age 35, and using a globally diversified portfolio, and with a retirement period twice as long as used in these earlier studies, however, Tanner should be using a *2%* *withdrawal* *rate.* So, his minimum investment balance goal should be $1,250,000 (unless he can live on $12,500 per year).
As a software engineer, Tanner can likely download enough data and code his own Monte Carlo simulation to confirm these numbers.
Risks: If Tanner stops accumulating when he has mistakenly saved only half of what he actually needs, he runs the risk of having difficulty getting employment later when his money runs out (ageism and a stale CV may stop him getting a needed job). Also, U.S. Social Security is based on your highest 35 years of earnings, and your age when you start drawing it. So, if Tanner works, say, only 15 years, then his eventual U.S. Social Security check will be _significantly_ reduced, potentially when he really needs it. Also, I did not mention healthcare costs, but I could have.
Bottom line: FIRE is great, but understand it better and plan more fully before jumping into it.
you can get 30 year bonds higher interest rate than your withdrawal rate, this is a nonsense suggestion
@@James_36You are correct about bond yields (even T-bond yields), but you are comparing apples and oranges. The 30-year bond interest rate is fixed for 30 years. The Bengen 4% rate is just for the first year. After that, the dollar withdrawal increases with inflation, so that withdrawals are constant in real terms. Those T-bond coupons, however, are dropping in real terms every six months, because of inflation. Your recent experience with inflation at the supermarket and gas pump should serve as a warning about its biting effect on your wallet/budget.
Bengen (1994) assumes you retire at 60-65 and quotes 4% as the safemax withdrawal rate. If you want to retire at 35, but you use Bengen's 4%, you risk "money death" (i.e., your money dies before you do) 25 years years before your physical death.
@@mathematician1234 even with this inflation I have managed to keep shopping costs pretty much the same, so tbh it has been a good exercise for the future. 2.5% is way too risk adverse and serves no purpose - 4% is fine
@@James_36 Well done on keeping costs down in the face of recent inflation. I have tried to do the same, but with only limited success.
It becomes increasingly difficult, however, to do that over several decades, when inflation compounds (like the return on a bank account compounding). It gets to the stage where inflation will be unavoidable.
Yes, 2.5% _is_ a risk averse withdrawal rate. Yes, you can go with a 4% rule instead. Just be sure to understand the implications.
For example, I just ran a quick Monte-Carlo simulation. Assume steady inflation at 2.5% per annum, assume a 7.5% simple rate of return per annum on a 50/50 stock/bond portfolio, and assume return volatility of 12% per annum. If you retire at age 35 and use a 4% rule, you have a 9% chance that your wealth will be exhausted by age 65, a 16% chance it will be exhausted by age 75, a 22% chance it will be exhausted by age 85, and a 27% chance it will be exhausted by age 95. (Roughly speaking; plus or minus a percent or two either way.) So, roughly one chance in 10 your wealth is gone by age 65, and a one in three chance it is gone by age 95.
Higher assumed volatility worsens these probabilities but higher assumed returns improves them.
If you use a 2.5% rule, however, those wealth exhaustion probabilities drop to 1% (age 65), 2% (age 75), 3% (age 85), and 4-5% (age 95), respectively.
Of course, there are many different versions of FIRE. If you are still working, and bringing in an income, and/or worked enough years for Social Security to kick in to a noticeable degree, then you do not have to rely on your savings 100%, and you will be just fine.
Incidentally, with an 8% withdrawal rate, those wealth exhaustion probabilities jump to 75% (age 65), 80% (age 75), 85% (age 85), and 90% (age 95), respectively. Actually, a couple of percentage points higher; I rounded down. So, only one chance in four your wealth lasts until age 65.
It is extremely insulting that you all believe you cannot live on $25,000 a year. I have lived on $25,000 a year for about 20 years now. And yes I have gone on cruises, trips, movies, dining out etc. What I do is use the internet to the fullest potential of saving you money and I don't pay full price for anything.
I also raised children on $25,000 a year. It's all about what you choose to do with your money. I know people who makes $75,000 a year but still can afford he go on trips or experiences because their house is outrageously expensive or their car is outrageously expensive. No Debbie inside going from 135000 dollars salary and only using $65,000 of it to $25,000 a year in retirement is going to be a lifestyle change.
Looser
Whatever you’re smoking, please pass it around because most rents total that amount alone.
To live the lifestyle you’re describing without sweating bullets requires at least $150k/year household income.
I own my home and I buy used cars which are the two biggest expenses. And I don't smoke anything which also saves money.
@@shirleysymon2160 Well you’re definitely on something…
No way you bought a house and traveled on $25k/year.
That’s a closing cost for most homes, not even a down payment.
@@shirleysymon2160 Do you have any other advice? For example, are you in a less expensive, possibly rural, area? Do you grow and can your own fruit and vegetables? Do you barter? Anything else you have to say on the topic of living with low expenses would be interesting. Thank you.
No one woman can enable early retirement..they consume and consume and consume..imagine Rachel being told not to buy a new outfit one week 😂
why would anyone retire? your life needs meaning. do what gives you meaning in life.
35 years old is too early. Has he taken into account inflation? 25000 now is not the same thing as 25000 in 10 years.
I don’t know how he plans on living on $25k. He would need at least half that for Insurances life health, car and homeowners. Utilities and property taxes will take another big chunk. He won’t be able to fix his house or replace his care. I think he is grossly underestimating how far $25k will go.
He is naive to think: he'll never get sick, or have an emergency, child expences are LIFETIME, be able to rely on charity, his Stocks will still be there. If he becomes a multimillionaire, he can retire.
He is very young to make these drastic choices. Why retire at 35? Work is good for a person. And what about giving? It is a sad state of affairs to take food and making 6 figures annually. I am all about saving, etc., but he is stressing over this. I see no true joy. However, maybe he is going to do great things for others in his retirement! I would love to see how he feels about it all at 45. I'm 65 and going to work part time, and I can't wait to start!
Who wants to live just to work?
He’s still very young and will go through more life changes, especially healthwise. Healthcare costs can break the bank so it’s important to account for that in the retirement plan.
Are you joking?
The way he looks, he’s lucky to even make it to 30…
Malnutrition is not the way to go to get to retirement early.
Everyone should be on some sort of purpose in life that contributes to society. You should dedicate your life on fulfilling that. Why didn't Elon Musk retire in his 20s when he sold PayPal? It's because he is dedicating his life to get us off this rock to save us from an extinction event.
Extinction event? 🤡 🌎
A person must work as long as possible. Retirement does not make people stronger or smarter. I am convinced people must not retire.
📌Nice video, love how you take your time to educate your viewers. You gave me the mindset to invest my savings now I have made profits over $120k Right now and still making more , I am enjoying a good life with what I made investing. Indeed ‚building a Portfolio income (investing) through a licensed investment adviser is one out of many ways to earn passive income.*
Quite impressive but HOW!!?😊 I know it's possible, my colleague at work got her first investment return of 40K after two weeks and she quit the job , I would appreciate if you show me how to go about it..
tanner is about 10 pounds soaking wet
I think he is starving 😥
@@jenniferspisak he does look like he is starving himself.
He should spend $15 on a good cheeseburger. Might do him well.
He could easily turn that 625000$ into 50000$ yearly income with the right portfolio
And with the wrong portfolio he can turn it into $312,000. Stay with index funds.