Welcome to the Weekly SUMmary - 07/02/2021
You may have heard about this FIRE movement lately. If you have not looked it up yet, it stands for Financially Independent Retire Early.
Pretty self explanatory. If you do a simple browser search you’ll have more information than you could ever want from articles, calculators and more.
Many people are not interested in pursuing this because there is a misconception that one has to live on a shoestring budget to accomplish FIRE. Others may be anchored to the traditional retirement age of 65 (when one can begin Medicare). Let me clarify. There is no “official retirement age.” Retirement is simply when one decides to stop working. Let’s look at Merriam-Webster’s definition:
“withdrawal from one's position or occupation or from active working life.”1
Now…although most have not considered what it would take to retire “Early” (it’s tough to say early as there is no official age), some younger generations have created a term for the concept for retiring as early as possible.
In my experience, there are basically three retirement mindsets:
- FIRE - retire as early as financially possible.
- 65 - make it to Medicare age so one of the largest potential bills is covered.
- Never retire - this could be due to a myriad of reasons, but examples would be that costs continue to rise and income will always be necessary OR there is some thought that boredom would set in and work gives one a purpose.
What does it take to accomplish option 1 or 2?
Income from a source that allows expenses to be paid into perpetuity.
How would one accomplish this?
Create an income source that is secure and sustainable, eliminate expenses, or some combination.
One could argue that Financial Planning is FIR - Financially Independent to Retire. (I don’t think that is going to catch on.)
The ultimate point is, if one has enough income to save large amounts of money and can eliminate as many expenses as possible, anyone can be FIRE. Traditionally though, income has been rather set. We live in an interesting age. Think about the business world now versus 70 years ago (I’m using an era that I believe has been documented fairly well on screen). There were stereotypical roles for men and women, large corporations that had a hierarchy and the American Dream was a house in the suburbs with a family of 4. Now, stereotypes are being worked on, a kid can start a business in their parents basement making millions of dollars playing video games, unwrapping boxes, blogging, testing products, etc, and people want to retire as early as possible.
Although my day job is helping people achieve whichever goal my clients’ choose, I personally feel more aligned with option 3 from above. This is not to say that I want to have “the daily grind” forever. Let me explain.
What happens when one achieves FIRE? I have heard many stories of those that are able to achieve this through rental properties, or residuals from business as well as their savings. Whether one is still managing the properties that they are renting or paying someone else to manage for them, this could be viewed as a business regardless if it is set up as such, technically (Partnership, LLC, Corp, etc). That person is not fully retired, they still need to manage their business on some level. Therefore, I do not believe I will ever fully retire.
There is a title that I would like to be able to use, but regulators are extremely cautious of these things. My goal is to become akin to a Family Chief Financial Officer (CFO). Although this title is not compliant in our industry, this is essentially what happens when a Financial Planner works with clients. The job is to help clients achieve Financial Independence regardless of when they Retire.
This is the message I try to convey to clients and the mission of my business. I can always make time for a conversation about how I can help you achieve Financial Independence. Feel free to book time at the bottom right of my page to discuss more: https://www.sumfsg.com/
In the meantime...
Do SUMthing smart with your money.
The content provided is intended to be educational in nature only and not to be construed as investment advice. Investments referenced are for example only and should be considered strongly prior to selecting for your portfolio. Investors should research or seek professional advice prior to buying and selling securities.