SHOULD YOU PLAY WITH FIRE?
As originally appeared in The Jerusalem Post on November 16th, 2018.
Retirement kills more people than hard work ever did.
-Malcolm Forbes
Currently the hottest topic in the personal finance community regards the merits of the FIRE movement. What is FIRE? FIRE (Financial Independence, Retire Early) is a lifestyle, also referred to as a movement, aimed at reducing expenditures and increasing investing in order to quickly gain financial independence and the possibility of retirement at an early age. Much of what FIRE adherents believe in are concepts that I have written about hundreds of times. Living within your means, saving, and investing are concepts that I preach and are the foundations of FIRE.
Stories of twenty or thirty-somethings deciding to exit the workforce as soon as possible can be found all over the internet. Living a life of uber-frugality, saving and investing as much as 70% of one’s income all to live a life of leisure at a very young age is something that bothers me. The New York Times ran an article by Steven Kurutz about the movement. He tells the story of Jason Long who retired at 38. He was a pharmacist making decent money. He complained that he was working 12-hour shifts and it was so busy he had no time to eat or go to the bathroom. He decided to become gung-ho and really cut back on spending and invested. After achieving the amount of money he felt would be necessary to retire, he did.
Kurutz writes, “Mr. Long acknowledged it was possible that he’d simply burned out, that all of this FIRE stuff was just a needed break until he found a more satisfying career. When he was recently offered a job back in the pharmaceutical field, it induced a mild panic attack. That morning, he’d woken up on his own, “not when an alarm clock told me that I had a responsibility.” He’d read the news online for 30 minutes, went on a seven-mile run, took a nap and “watched the ceiling fan spin around for a little bit.” He had been watching the movies from They Shoot Pictures, Don’t They? a website that ranks what it calls the 1,000 greatest films. He’d watched 600 or so. He had work to do.”
Is that what we were put on the earth for? To sit around watching movies? Why take your productive years and do absolutely nothing? There needs to be more to life than that. Many FIRE subscribers have no children, which certainly makes saving a good chunk of a salary very doable. Others decide to retire to spend time with their small kids. What I guess they don’t realize is that as the kids grow up and go to school and have extracurricular activities, spending lots of time with mom and dad isn’t so high up on the priority list. Then what?
While I subscribe to some of their principles, i.e. budgeting, saving etc., I also believe that there is nothing wrong with enjoying life. To spend 15 years being miserable in order to retire seems counter-productive.
I was wondering if a movement like this would ever take hold in Israel? I doubt it. On the financial side, we still live in a country where the culture isn’t based around budgeting and saving. My wife and I are in the process of buying a car. We spoke with a few car brokers and we gave them our budget. Inevitably they got back to us with cars that were 30-70% more than the amount we had stipulated. When pressed as to why they are not showing us cars within our budget, we kept hearing, “why not get financing? Everyone takes a loan.” In fact, the people we are buying the car from are spending 160,000 on a new car! I can’t fathom spending so much, it’s not an apartment it’s just a car.
The second reason I doubt that the movement will gain steam in Israel is because it’s not the nature of Israelis to just quit life and play shuffleboard. Being productive and trying to help out society is in our blood. In many ways, the FIRE movement is an “I” movement. It smells of selfishness. I am not at all opposed to making a lot of money and living within your means, I just think it needs to be done in moderation, while still being able to enjoy life, and most importantly, being a productive member of society.
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates.
Aaron Katsman is author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing (McGraw-Hill), and is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. (www.prginc.net). Member FINRA, SIPC, MSRB, FSI. For more information, call (02) 624-0995 visit www.gpsinvestor.com or email aaron@lighthousecapital.co.il.
