Downsides to FIRE? Important Article for Fellows

[drusso]

Millionaire Who Bought a Home at 26 Regrets Paying Off His Mortgage Early: ‘This Is the Biggest Downside No One Tells You'

If you’re trying to pay off your mortgage early, good for you. I bought my first home at 26 and did it in 12 years. But here’s the biggest downside no one tells you.

www.nbclosangeles.com

"I've definitely noticed that the closer I get to financial freedom, the less motivation I have to go above and beyond at my job," one person told me. "It's almost as if we need that monkey on our backs to keep us moving forward."

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[tmvguy03]

I saw this- if you require debt to motivate you to work and save, you’re doing something wrong and your vision for the future is too small

 

[SommeRiver]

What? Give me a break...

After paying off my student loan my desire to work hard INCREASED.

 

[Agast]

Can’t really FIRE if you have debt. Opportunity cost of paying off a lower interest debt instead of investing is a different story.

 

[hyperalgesia]

I think a lot of people, young and old, don't mentally prepare for retirement.

It's better to run TO something, than AWAY from something.

FIRE should not be the goal. It should be a pathway to something else.

 

[Laryngospasm]

Motivation for FIRE is not to do nothing but rather to be free to do everything I want..

 

[Ferrismonk]

A couple DINKs in California with no goals except to be workaholics and make money? No wonder they're miserable.

 

[anonperson]

Millionaire Who Bought a Home at 26 Regrets Paying Off His Mortgage Early: ‘This Is the Biggest Downside No One Tells You'

If you’re trying to pay off your mortgage early, good for you. I bought my first home at 26 and did it in 12 years. But here’s the biggest downside no one tells you.

www.nbclosangeles.com

"I've definitely noticed that the closer I get to financial freedom, the less motivation I have to go above and beyond at my job," one person told me. "It's almost as if we need that monkey on our backs to keep us moving forward."

The author of the article is a tool. He likes to make outlandish claims so he can pimp his website, Financial Samurai.

One of his articles from a few years ago

"When Earning $1 Million A Year Isn’t Enough To Retire Early"

Just clickbait.

 

[Ducttape]

this is the guy who is saying that FIRE is going to be replaced by DIRE just a year ago...

Forget FIRE: A man who retired at age 34 with $3 million says the coronavirus pandemic might replace the early retirement trend with a new movement

One early retiree thinks the economic fallout of the coronavirus pandemic will see a growth in the DIRE movement: delay, inherit, retire, expire.

www.businessinsider.com

 

[hyperalgesia]

this is the guy who is saying that FIRE is going to be replaced by DIRE just a year ago...

Forget FIRE: A man who retired at age 34 with $3 million says the coronavirus pandemic might replace the early retirement trend with a new movement

One early retiree thinks the economic fallout of the coronavirus pandemic will see a growth in the DIRE movement: delay, inherit, retire, expire.

www.businessinsider.com

This guy says, "The bear market will flush out 'fake FIRE' people, those who do not solely live off their investment income because they have a working spouse or simply switched careers to make money online."

Even as he promotes his website - obviously he's not retired either. He seems like a con artist to me.

 

[Agast]

$3 million is not enough for two people to retire on. Sounds more like a publicity stunt.

 

[clubdeac]

Yeah 3 mill aint nothin in this day and age. I think it'll take closer to 6-10 mil to retire comfortably. At least that's what I'm shooting for

 

[BobBarker]

They have supposedly $150k passive income so they would be fine if that was the case with $3M and a paid off home.

But rental properties make up a big chunk of that which is a bad deal If they have tenants who aren’t paying and they can’t evict with mortgages on the properties.

 

[deleted131481]

$3M x 4% withdrawal is 120k a year - that'd be plenty for me if home was paid off and college funded. $6mil at 100k/year would give you 60 years with zero appreciation (TIPS if you want inflation).

I don't plan to retire early but at $2-2.5mil I'd consider going to 4 days a week or part-time.

 

[SSdoc33]

$3M x 4% withdrawal is 120k a year - that'd be plenty for me if home was paid off and college funded. $6mil at 100k/year would give you 60 years with zero appreciation (TIPS if you want inflation).

I don't plan to retire early but at $2-2.5mil I'd consider going to 4 days a week or part-time.

2.-2.5 net worth, or just money sitting in the bank? does equity in a house count? 401k?

 

[Laryngospasm]

You can get by with a lot less with a paid off house and a little passive income.

 

[Ferrismonk]

$3 million is not enough for two people to retire on. Sounds more like a publicity stunt.

Yeah 3 mill aint nothin in this day and age. I think it'll take closer to 6-10 mil to retire comfortably. At least that's what I'm shooting for

It all depends on your lifestyle.

2.-2.5 net worth, or just money sitting in the bank? does equity in a house count? 401k?

House equity doesn't count, it doesn't pay your expenses. Only passive income or returns on investments you can withdraw count.

 

[deleted131481]

2.-2.5 net worth, or just money sitting in the bank? does equity in a house count? 401k?

I'm thinking 2-2.5 in retirement savings only (including 401k, Roth ira, taxable accounts, etc) on top of paid off house and 529s funded for the equivalent of 4 year in-state.

At that point I'd be comfortable saving substantially less but letting the retirement savings grow untouched.

 

[Baron Samedi]

The second I am able, I'm ditching medicine and going full-time into pottery or maybe applying to Hell's Kitchen or something.

 

[SSdoc33]

I'm thinking 2-2.5 in retirement savings only (including 401k, Roth ira, taxable accounts, etc) on top of paid off house and 529s funded for the equivalent of 4 year in-state.

At that point I'd be comfortable saving substantially less but letting the retirement savings grow untouched.

2 mil doesnt seem like enough. Especially if you have a family

 

[Agast]

The second I am able, I'm ditching medicine and going full-time into pottery or maybe applying to Hell's Kitchen or something.

That's cool, what kind of pottery do you do

 

[hyperalgesia]

I think if I had a billion dollars I would still be thinking of how I can try and earn more.

But it definitely wouldn't be looking up icd codes and doing procedures.

I'm happiest when I feel productive and useful and I don't expect this to change.

 

[Baron Samedi]

That's cool, what kind of pottery do you do

None yet, but might look into a class.

 

[deleted131481]

2 mil doesnt seem like enough. Especially if you have a family

Agreed, especially if there's a market crash soon after.

2 mil (+house, 529s) is not my number to retire, but one I'd be comfortable going part time like 3-4 days a week. Still would be plenty to cover all expenses and save a little to let that grow larger into retirement.

Realistically my kids would be a bit older in school at that point so the appeal of part-time might be less. I thought about working less now and then more in the future, but the transition of scaling up would be tough.

 

[SandmanMD]

2 Million does not seem like enough.
Everyone has their own way of calculating what they will need and be comfortable with.

My calculation is 3% of X should be able to cover all your needs.
-Mortgage if you have one, or maintenance and future upgrades on your current paid off house and vacation homes
-Healthcare expenses accounting for increased cost of healthcare in the future.
-Travel and vacations
-Cars
-Gifts
-All the normal stuff

Most portfolios should be able to return more than 3%. For my personal goals the excess of 3% would be reinvested for further growth.

 

[Ducttape]

i thought the purpose of FIRE was to retire early and to live frugally on their savings.

i thought one of the major components was frugality, both now and in the future.

 

[Laryngospasm]

I agree.. FIRE... doesn’t mean retire rich... my parents do very well on a few thousand a month. Granted they aren’t globe trotters and don’t drive Ferrari’s.

 

[hyperalgesia]

If you discount the wild card of cancer or other major medical issue, we could all be happy on a few thousand a month.

But if you get cancer and there is an emerging immunotherapy that will save your life and it's not covered by medicare or insurance, you're not gonna be happy any more.

 

[Laryngospasm]

Yes but such a thing would possibly require millions anyways... with more and more cancer treatments for the common diagnoses I don’t know that you should worry about such a thing.. of course if you can save that much great.. but that will be impossible for most of us.

 

[pmrmd]

Has it ever been mentioned that overly frugal people are just simply not as much fun to hang around? Part of life is enjoying it while you can IMO.

 

[ateria radicularis magna]

Has it ever been mentioned that overly frugal people are just simply not as much fun to hang around? Part of life is enjoying it while you can IMO.

Define “overly frugal”

 

[Mad Jack]

$3 million is not enough for two people to retire on. Sounds more like a publicity stunt.

It's enough to net you $120,000 inflation adjusted per year for life using the 4% rule. That's plenty for most of us

 

[bedrock]

It's enough to net you $120,000 inflation adjusted per year for life using the 4% rule. That's plenty for most of us

Agree with this. 120,000 in real money, not taxed, is plenty for most people who already own their own home and kids are on their own.

Maybe some others on this thread have some very costly hobbies?

3 million should be enough. Better than working forever and dying without enjoying yourself.

 

[Mad Jack]

Agree with this. 120,000 in real money, not taxed, is plenty for most people who already own their own home and kids are on their own.

Maybe some others on this thread have some very costly hobbies?

3 million should be enough. Better than working forever and dying without enjoying yourself.

Usually it is taxed at 15%, but still, not bad

 

[clubdeac]

Agree with this. 120,000 in real money, not taxed, is plenty for most people who already own their own home and kids are on their own.

Maybe some others on this thread have some very costly hobbies?

3 million should be enough. Better than working forever and dying without enjoying yourself.I like

Problem is if you take $120k out of your retirement account you'll probably only get 90k of it after taxes, right?

 

[SSdoc33]

Agree with this. 120,000 in real money, not taxed, is plenty for most people who already own their own home and kids are on their own.

Maybe some others on this thread have some very costly hobbies?

3 million should be enough. Better than working forever and dying without enjoying yourself.

I dont know if my kids will ever be 'on their own'. Not for a long long time at least

 

[Ronin1]

Problem is if you take $120k out of your retirement account you'll probably only get 90k of it after taxes, right?

If you are retiring early you are probably going to be accessing funds that you have already paid taxes on. So no tax to be paid on draw down. Leave the tax deferred ones for later