Does The financial independence retire early [FIRE] formula really work?

I’m going to say No.

Before I go into why, I could be considered Financially Free today if I wanted to shack up in Iowa, upstate NY, Thailand, etc.. But I like living in New York City for many reasons, not the least of which is opportunity. I was a successful freelancer for many years, saved up 25% of my gross income (gross includes taxes), and made some good investments. (I’ve also made some bad investments…)

The reason FIRE doesn’t work for most people is you’re not really free. See my comments to other posts below, for starters. The 4-Hour Work Week approach worked back in 2005 (before the book was published). Now, not so much. Even Tim Ferriss is not doing that stuff anymore, today he’s a VC.

Other reasons FIRE doesn’t work is it doesn’t account for personal health insurance & doctors bills, proactive health & wellness costs, social life with brunches, dinners, and romance, rainy day funds such as taking care of a sick mother, child-rearing costs, and living life expenses (I am currently writing this while on vacation in Nepal. It ain’t free to fly out here).

All of that said, I have been close to five people who retired at age 37 or before:

  • One was an international model who worked hard from 16–25, owned her house free and clear, and had a rich uncle who showed her how to invest her earnings.
  • One worked at Goldman Sachs starting age 22 or 23, got laid off at age 35, had gotten promoted regularly, owned her condo free and clear, didn’t drink, preferred free afternoon museums over expensive restaurants, etc.
  • One worked on Wall St. until age 35, bought a condo in Washington Heights NYC and another in Weehawken NJ, and had a rich uncle of her own who taught her how to invest her salary.
  • One was a lawyer at a pharma company, bought 2 houses that he rents to college kids, met a girl from Cape Town South Africa, his company had layoffs and offered retirement at age 37, he + gf traveled the Eastern Hemisphere for 8 months, they got sick of each other, he moved back home, and now he works as a lawyer again so he can buy more real estate.
  • One grew up on a wine farm and learned early how to handle herself among successful types, skyrocketed through wall st. in her 20’s, bought a house in NYC suburbs before 9/11 hit, then after 9/11 she decided she’d had enough of corporate life, sold the house for a huge profit (everyone was fleeing NYC at that time), and moved to Arizona to relax—all by about 31.

Do you see patterns here?

For one thing, none of the above 5 made money by selling a program.

For another, they all had traditional, income-earning jobs. Bankers, Lawyers, Modeling. (I’d include tech, except most tech people suck at money)

Most got laid off (quitting modeling at age 25 counts, because age starts to work against you at that point).

They all bought a property.

Most had financial mentors, usually within the family.

Most were frugal (the lawyer is a buddy of mine. We once drove from NJ to Boston with the goal of spending no more than $20 each for the weekend including gas. It was the late 90s, and we stayed with another friend, but still we accomplished that goal).

(Also note I did not include inheritance cases, lottery winners, or Silicon Valley early-stage employees whose stock turned into jackpots. All of that is more luck than skill…early stage employees are usually smart and driven, but still they’re lucky)

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