- The FIRE movement has gained significant media attention over the years.
- In spite of this, certain misconceptions about the FIRE movement still exist.
- A recent study showed some surprising revelations about what really matters to individuals pursuing FIRE.
Anyone who spends time reading personal finance blogs or listening to podcasts has probably heard of the FIRE movement — Financial Independence, Retire Early. The movement has gained traction among millennials, too, not just older workers.
It’s easy to understand the wide appeal of the FIRE movement. But a recent study from TD Ameritrade shows that most financially independent people have views on retirement that might be surprising.
3 Things You Should Know About FIRE
In the last five years, Google searches for “Financial Independence Retire Early” have increased by 94%. But in spite of the increased awareness, there are three things that most people don’t understand about the FIRE movement.
1. Early Retirement Isn’t Always the Goal
The phrase “retire early” is one of the biggest hang-ups most people have about the FIRE movement. How realistic is it to retire at age 30? After all, the average life expectancy in the U.S. is 79, so what do FIRE followers plan to do for the next 50-some years?
Well, for more than 70% of respondents, financial independence is their main pursuit instead of retirement itself. And over 60% said they would prefer to retire at a normal age so they can live more comfortably. Just 32% of respondents said their goal was to stop working altogether.
2. It’s About Saving and Investing, Not Pinching Pennies
For some people, a FIRE lifestyle conjures images of people living out of a camper or cooking rice and beans for dinner. Surely it would take an extreme level of frugality to achieve that type of long-term financial independence.
For some, this might be true. But the Ameritrade study found that extreme lifestyle sacrifices are actually less common among FIRE devotees. In fact, 67% of participants said that if they had to live like they’re broke, the FIRE movement wouldn’t be worth it.
Some critical actions toward becoming financially independent include saving, investing, sticking with a budget and avoiding high-interest debt.
3. Freedom Is the Goal, Not Money
Ultimately, freedom is the real goal of the FIRE movement. Over 90% of financially independent individuals say that happiness is more important than money. They want the freedom to do what they want, spend more time with loved ones and pursue their passions.
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