So far this year I’ve read hundreds of personal finance blog posts about the wonders of FIRE (financial independence/retire early).* It seems to be an accepted truism that working toward FIRE is enviable, laudable, ethical, and just all around better for the planet and human beings as a species. Some folks gently resist and say that FIRE is a personal choice; see Ben Carlson’s recent post as an example. But few bloggers actually question the merits of FIRE as a personal choice. A couple of recent exceptions are posts from “Tired, Broke, and Over It” and “Ninja Budgeter”. If you’ve read any of my blog, you know that my delusion detector is fully activated when everyone seems to agree on the same thing. Contrarian thinking is a hallmark of prudent investing, and it’s also a mindful way to approach personal finance and life in general. The best method I know to understand whether accepted wisdom equals truth is to look at both sides of the argument.
FIRE Is Bad for the Planet
Maybe FIRE is good for you, but is it good for me? Is it good for society? I can cite numerous reasons why FIRE may light your fire, but doesn’t do anyone else much good:
- Since when is being unproductive a good thing? Great, you get to go travel hacking and witness poor people around the world. What happened to the sense of helping to better the world?
- If everyone is on FIRE, living frugally, and paying the minimum taxes possible, what happens to all those wonderful government services we all use? You can name your favorite poison here: Social Security, Medicare, Medicaid, Obamacare (or what ever replaces it), infrastructure, schools, protecting the environment, immigration and law enforcement, services for the poor, medical/scientific research, defense, veterans benefits, food safety, disease control, etc. Perhaps your politics disparages some of these programs, but almost everyone sips from the government punch bowl occasionally for some reason.
- Economic growth and development are the hallmarks of a healthy civilization. Make your favorite criticisms about democratic capitalism (and all its variations throughout the world), but the combination of regulated free markets and representative government still seems to be the best social system yet devised by man. (It certainly beats a long list predecessors that now reside firmly in the trash bin of history.) Who’s contributing to economic growth if most of us are on FIRE? Did you like the way the last recession felt? What do you think a real depression will be like?
- Getting paid to do good work produces good outcomes. There are certainly numerous mindless 9-to-5 jobs that are harmful to society, but I’d argue there are likely many more 9-to-5 jobs that improve life either for a few or many.
- If you give up regular pay, what’s the incentive to do good in the world? In my case, I could get paid working on reducing pollution (my day job), or I could tootle around town visiting people on my bike all day because it’s good for my health and doesn’t cost anything.
FIRE Is Good for the Planet
The FIRE aficionados counter all this with the numerous benefits of FIRE including:
- Those working toward and living the FIRE life generally use fewer resources, which causes less pollution and green house gas emissions, which creates a greener, better world.
- FIRE counter balances the senseless lifestyle inflation and consumerism culture rampant in developed economies. If enough people are on FIRE, the whole culture could shift to something more sensible and sustainable.
- People on FIRE are not under the pressure of stressful and depressing regular jobs. More people on FIRE means a less stressed out population with fewer mental and physical health problems, which would have the added benefit of reducing health care costs.
- FIRE is an ethically superior way to live. People on FIRE have more freedom to choose ethically sound activities. They aren’t forced into sometimes ethically questionable situations and work just to feed their families.
- For all the above reasons, there is greater human dignity in FIRE than most day jobs.
I’ve probably missed a few pros and cons, but these lists are reasonably sufficient for our purposes.
People will balance these pros and cons differently and reach opposing conclusions that are largely a matter of personal preference, experience, and outlook towards the world. I won’t sit here and call you “wrong” if you come out on either side after considering all these arguments, although I will call you wrong if you fail to fully consider them.
A False Assumption
However, I would say none of these pros or cons are the key to this debate. These things simply take with one hand what was just given by the other hand. For example, going FIRE arguably causes less pollution, but if everyone ends up living in caves, is that really a net benefit? For me, there is an unstated assumption causing FIRE to be not only acceptable, but a net benefit for society. But first, a corollary example might help illustrate my point.
You may have read that multiple experiments with “Universal Basic Income” have been started recently. The idea behind UBI is that some or all citizens would receive a relatively small payment from the government regardless of whether they work or not. It’s a FIRE seekers dream come true! There are many variations on this idea, and I won’t go into those details or attempt to discern which versions might work best. The central concept is that some of everyone’s income would come from the government with no strings attached. This stipend would not be determined by how much you work in any given month or year. I won’t take a side on the conservative versus liberal view points on such an idea, which you can probably guess all by yourself. The question from this debate that most interests me is whether UBI would remove the incentive to work, lower productivity, and give us a society of lazy and unmotivated people. It’s basically the same question I have about FIRE. Does FIRE generate a society of couch surfing do-nothings?
In one Canadian experiment in a small town in Manitoba in the 70s, the addition of basic income reduced working hours for men (the main work force back then) by only 1%. People didn’t suddenly stop being productive just because they got a stipend from the government. It will be interesting to see the results of the other ongoing experiments in UBI. Even without these results available yet, some proponents hypothesize that UBI could create the freedom (there’s that word again) and economic security for people to be more creative, seek out new opportunities, become entrepreneurs, and be more productive, not less. Others call these claims wishful thinking.
Would the expected benefits of UBI pan out if it was applied on a large-scale? I have no idea. Maybe not, and maybe there would be some unexpected side effects. But the existing evidence and potential societal gains are tantalizing. It gives me hope that:
- There is something larger in the human spirit than the going rate for hours labored.
- Humans are not entirely (although perhaps fundamentally) animals driven by the incentive to collect more food, goods, and services.
- Given some space, time, and freedom to think, most of us will gravitate to doing something more creative, productive, and good.
- Life can progress beyond punching a clock to feed our families.
So, the pros definitely outweigh the cons if we assume and expect that people on FIRE really do more than just sit around, count their pennies, and distract themselves with tourism and sports.
Make Sure You Deserve FIRE
To me the answer is crystal clear. You don’t deserve FIRE if your main post-retirement goals are to live as cheaply as possible, make the minimum possible contributions, and aspire to nothing beyond a life of ease. You deserve FIRE if you plan to give something back**. I define giving back in the widest possible terms including anything from spending more time with your children to starting a new charity. The examples of “giving back” are too numerous to even scratch the surface here.
You could wrangle all day over the absolute best way to spend your time in early retirement, but that’s largely a waste of time. Instead, just pick something productive, large or small, apparently trivial or potentially monumental. The point is that you are giving instead of taking. You are a source of positive flow instead of a net negative. The FIRE movement could create a whole new definition of what constitutes a productive member of society that goes way beyond the amount of money and possessions a person collects. If everyone who wants FIRE makes a commitment to deserve FIRE, then the FIRE movement will fundamentally transform society for the better.
*That’s not hyperbole. If you want to see why I’ve read literally thousands of blog posts just this year, then take a look at my “Guide to Personal Finance Blogs” project. I explain my lunacy on this page describing my methods.
**Obviously, there are exceptions. For example, if you are mentally or physically ill or disabled, a goal to simply achieve enjoyment in life is reasonable. I don’t find anything dishonorable in that. And there are certainly other valid reasons to set more moderate retirement goals.