We asked 7 experts: Does FIRE prepare you for retirement?

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Hanna Horvath, CFP®

Hanna Horvath, CFP®

Managing Editor & Certified Financial Planner™

Hanna Horvath, CFP®, is a certified financial planner and former managing editor at Policygenius. Her work has also been featured in NBC News, Business Insider, Inc. Magazine, CNBC, Best Company, and HerMoney.

Published October 8, 2020 | 3 min read

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The growing Financial Independence, Retire Early movement, known as FIRE, combines extreme saving, frugal living and passive investing to reach a goal of early retirement, typically in 10 years.

The idea of quitting your day job in a decade may sound enticing but establishing financial independence takes diligent planning and significant lifestyle adjustments. Followers defer up to 70% of their salary to savings and severely restrict their lifestyle. Once retired, savers live off small withdrawals, typically 4%, from their portfolio before reaching traditional retirement age.

FIRE is not a foolproof plan. Large unexpected expenses may come up, or you may underestimate savings needs. If stock markets fall, like they have during the pandemic or in the Great Recession, FIRE savings may fall short.

We asked seven certified financial planners if FIRE could prepare you for retirement. Here’s what they said.

Q: Does the FIRE movement adequately prepare people for retirement?

Why some experts think FIRE can prepare you

“If the numbers are good, there’s no reason FIRE couldn’t work. But people need to be prepared for how to spend their time and life in retirement. That is easier said than done. Be careful about increasing your standard of living once you retire, because it’s hard to ratchet it back down. But it is very possible!” Bart Brewer, certified financial planner at Global Financial Advisory Services

“FIRE might prepare people financially for retirement. Investing the majority of your income will build a nest egg and by living on less while saving, you by default have become accustomed to a lower standard of living. But, retirement success is often less about dollars and more about behavioral choices. Will you panic if the market drops? Did you adequately prepare for "free time,” or are you going to go crazy without something to do? Are you just seeking autonomy and flexibility or full retirement? FIRE helps to address some of those issues, encouraging you to save massive amounts of money, which is part of the retirement puzzle.” Brandon Garrett, certified financial planner at BentOak Capital

Why some experts think FIRE won’t prepare you

“The FIRE movement seems to be applicable for those who don’t see any long-term value to a career or work. Independence seems to be defined as freedom from work. It also only focuses on money as the arbiter of freedom. I totally agree and support the concept of delayed gratification but FIRE seems to bring it to an extreme level. There are more lifestyle concerns than retirement concerns.” Daniel Galli, certified financial planner at Galli & Associates

“Anything is possible, but preparing properly with FIRE is not likely. Investment returns look to be muted going forward, inflation and taxes increasing, as also with life expectancy. Clients who retire in their 50s, even with pre-Social Security and pension benefits kicking in, are anxious about their funds, let alone someone in their 30s or 40s. I would not recommend it. Balance having life experiences with saving money.” Dennis Nolte, certified financial planner and vice president of Seacoast Investment Services

Interested in early retirement? Learn how to create a FIRE plan here.