What would happen if everyone in our society decided to pursue early retirement?
Today, we’ll run through an interesting thought exercise. There’s a new blogger in the Personal Finance space who I’d like to introduce you to. He’s had a fascinating life story, from “getting poor real quick” as a child to carrying $200,000 in student loan debt when he graduated from law school (yep, he’s now a lawyer, and he’s crushing it).
More importantly, he has a very interesting “voice”, as you’ll see below. His name? OthalaFehu. Enjoy.What would happen if everybody FIRE'd? Thoughts from @othala_fehu in today's Guest Post. Click To Tweet
3 Enemies Of Fire
The Year is 2037. The concept of FIRE has swept through this nation of ours. Upwards of 40% of the adult population consider themselves to be practicing some form of FIRE in their own financial lives.
Yea for Us!
Happiness is on the rise. We are living longer and looking better. Dogs and cats are getting along and nobody wastes money anymore. Our hero, OthalaFehu is on the Seventh printing of his Book ‘My Life at the Nutbar‘. His memoir sits at number #1 for the 40th straight week. (Fritz edit: Gotta have big goals, Othala! Hope you comp me a First Edition.)
But there are problems.
First, you should know that the position of Devil’s Advocate comes naturally to me. I have had to defend people and/or positions nobody wanted to support, let alone hear. So here is something you may not want to hear about a benefit at risk: The safety net of our economy, Medicare/Medicaid/Social Security. Provided you are a citizen, we as a country guarantee some minimal existence as a baseline.
But this system was designed at a time when there were way more worker bees for every retired person.
Too many retired peoples and not enough working stiffs puts a giant hole in our country’s system of “taxes coming in/services going out” model. Practicing FIRE is practically defined by large amounts of people achieving early retirement. Not good for what’s left of our New Deal. Government support would wither under the weight of the heavy burden.
However, this issue could be dealt with by adjusting what we consider to be acceptable tax rates and acceptable levels of service. We should be talking about that.
Today, I want to think about some consequences of widespread FIRE that are a little more nuanced than the obvious issues of Social Security.
Widespread adoption of FIRE principles would have THREE drastic, negative consequences and we should talk about them as part of this open discussion on the issue.
Problem Number 1
I have always found the story about the old woman who came to America after many years living in the Soviet Union to be a very powerful one. The story tells how she goes to the grocery store and breaks down crying, sitting on the floor looking at all the different types of toothpaste we have on our shelves.
We have a plethora of choices in this country, choices about anything and everything. We have high-end goods and luxury services, bargain basement generic and everything in between. Why? Because there is room in our economy for all of those different manufacturers and service providers to make a profit. They can all find a buyer.
But alas, in our brave new world, FIRE conscious people would not be buying sweaters for their dog, or springing for the heated leather seats, or a double shot of espresso in their latte. (Did I do that right? I am not a Starbucks type. I like plain black coffee). Editor Note From Fritz: Dunno, but it looks right to me. Then again, I’m a simple Maxwell House type of guy.
Point being, we would actually loose a lot of the fluff in the consumer market and would have a definite downturn in the breadth and depth of services provided for a fee.
Do we always want to fly coach?
Problem Number 2
My job is in the public sector. I like it, I really feel like I do valuable work and am part of a local judicial system my County can be proud of.
I work with many other people who are very professional and consider their performance to be part of their civic duty. They have also been there for thousands of years it seems.
But, if everyone is concentrating on stacking chips and getting out the game before 40, where does all of the workplace knowledge and experience come from? I did not feel like I really hit my stride until I had been lawyering for 10 years. Does too much FIRE Brain Drain the infrastructure?
There is something to say for our time honored institutions being run by well-qualified individuals who consider their position to be a Career and not just a Job.
What about occupations where people are not in it for the money, like teaching?
Having your workforce concentrating on an early retirement timeline just over the horizon doesn’t lend itself to steady or vested work environments. This is not good.If everyone's stacking chips for FIRE @ 40, who's going to become a 20+ yr expert in their work? Click To Tweet
I have a concern that targeting personal early retirement is by default a type of abandoning the collective society. There is already too much focus on the individual at the expense of the greater organism.
Problem Number 3
Lastly, my stated goal on my blog is to ‘retire early and leave some type of legacy for my children.’
That could go Two Very different ways. For what I need, I could be out at 45. I have already set aside 3 years of tuition for my kids to help them with college. I get to do what I want for 30 more years and watch my kids and grand kids grow up. No complaints.
But If I work til say 55, I leave my kids a couple million, easy at the rate I am earning/saving. What a leg up in life! But I did not exactly put myself first, I worked until slightly before average retirement age.
I wish somebody set me up as a young person with a distinct life advantage. Don’t I owe it them to do what I can as long as I do not hate my job or suffer from staying there a little longer? I fight with myself to find this balance point. It is probably not easily understood by anybody reading this without kids yet, but trust me you want to give them every advantage you can and it starts to feel selfish to stop working prematurely (is that even the right language to use for someone professing FIRE?). Editor comment from Fritz: Oh no, pls don’t attract the the FIRE Word Police to my blog. I’ll never invite you back.
These issues should be addressed in our FIRE community.
By and large, FIRE is an overall positive but to not admit it has shortcomings is a mistake.
As Devil’s Advocate, I thought it worth the risk to share some potential consequences for you to think about. Pursue FIRE if you wish, and feel free to “Fire walk with me”, but realize the potential consequences if the masses follow the same path.