Financial Independence vs. Retire Early

Ahhh, the FIRE Movement. For the unanointed, that’s the Financial Independence/Retire Early Movement. As I’ve covered before, when I first heard about this cult denomination of personal finance enthusiasts, I was ready to drink the Kool-Aid.

I’ve since exited the honeymoon phase, but the relationship remains strong. Sure, we have our disagreements, but as my great-grandmother used to tell my father “If two people never disagree, then one of them isn’t needed.”

At first blush, “Financial Independence” and “Retire Early” appear to refer to the same thing. You could be forgiven for assuming that it was just a cute way of making a memorable acronym. But is that all there is to it?

Nope

While these two “sides” of the moniker are closely related, in some ways they represent starkly dissimilar philosophical approaches. For some people, they are identical in practice. For others, vastly different.

First, it’s important to clarify what I’m even talking about. Bear in mind, different people will define these concepts in different ways. I’ll try to step on as few toes as possible for these definitions.

Financial Independence (FI)

Financial Independence is the state of having achieved enough economic success to no longer make money the central feature of the way you spend your time. In strict terms, it is having enough savings to make work optional. In looser terms, it is having enough money to choose a career you wouldn’t choose if your economic back were against the wall.

Retire Early (RE)

I don’t think I need to spend too much time on what this means… But, for completeness, Retiring Early refers to halting your career to move on to the life you want to live after your career is done. Typically, this means quitting your job well before your mid-to-late-60s, with some even achieving this feat in their 30s or earlier.

Why It’s So Appealing

Almost regardless of who you are, if you see those definitions, there is something to like. Who wouldn’t want to decide on the day’s activities without being constrained by earning money?

However, if you view the “FIRE” name pessimistically, there is plenty to question.

Why It’s Bad Branding

In the minds of those who are unfamiliar with the FIRE movement (and particularly those from earlier generations), the thought of “Retiring Early” smacks of entitlement and a shirking of duty. “Wait, so we worked hard, 9-to-5 until we were 65 so you could stop producing at 35 and enjoy the fruits of our labor?”

Not even close. But I can totally understand the misunderstanding. The word “retire” comes with a lot of baggage. What’s the first stock photo imagery it draws to mind for you? A beach? A golf course? A recliner that gets just as much usage as its owner’s bed?

Is that really the lifestyle to which we should aspire?

The Schism

Some within the FIRE movement are ready for a divorce from the other half of “FIRE”. Some are embarrassed enough by the original nomenclature to ditch the last half and just say “FI”, even pronouncing it like a word. These types see virtue in work, and any retirement as just an enabler for the redirection of one’s hours to a different form of work.

Some on the “other” side see compensated labor as inherently evil, and have the explicit goal of ceasing all paid productive work at the earliest possible moment. For them, Financial Independence is identical to retirement.

While I tend to favor the FI “side,” I think the emphasis is better placed on what these two sects have in common.

Reunification

Both of these camps align with one central principle: that there is a better way to live than to sell all your time for money because it’s what everyone else seems to be doing. Whether you aspire to kick it on the beach, volunteer, or seek fulfillment in your career, there is room for you under the FIRE tent.

How It Worked for Me

Personally, a big moment in my FIRE journey was when I realized that a week and a half into vacation, I felt a strong pull toward productive labor – even when I wasn’t loving my job. Acquiring that self-knowledge unlocked a new way of thinking about my goals.

Before that, my plan had been to get a big pile of money and live off the investment returns. Picture Scrooge McDuck bathing in treasure. Once I realized that the optimal steady state of my life would contain a non-zero amount of work, it unlocked a lot of opportunity.

My Bias

So, when I personally approach the FI vs. RE “debate,” it’s clear to me which side I’m on. Since Retiring Early in a conventional sense holds no appeal for me, I’m with the FI crowd. However, that doesn’t make the other side “wrong.”

While I like to tell myself that my innate desire to work makes me manly, respectable, and good, I’m not sure that it’s all feature and no bug. I could stand to get a lot better at just enjoying the way things are here and now without always needing to put my shoulder to the plow to feel good about myself.

Regardless, this innate desire is a part of who I am. I do feel fortunate in the sense that it would be a lot harder to get all I want out of life if the actions performed to acquire money were purely instrumental. The fact that there exists a class of actions that for me are both remunerative and intrinsically satisfying is a huge boon for the amount of satisfaction I can get out of life as a whole.

History

At one point in my career, though, the existence of this class of actions was not self-evident. I had yet to stumble on a form of work that I truly loved. I could feel the itch to work, but it was like a phantom limb pain; an expression of a thirst I had yet to properly quench.

Staying on that path without finding a form of work I truly love could have led to disillusionment with work in the abstract. This leads me to suspect that it’s at least possible that the urge to produce is universal; that everyone has it and those who deny it just haven’t found the right outlet. But who knows, I’ve only ever been me.

Caveat

It would also be negligent not to acknowledge that for some people, their blissful form of work is one that doesn’t pay the bills. For them, a hybrid format may make more sense. For example, selling insurance during the week to enable them to garden on the weekends, while saving up for a future of gardening full-time.

Retiring Early (Again)

If we are willing to massage our definition a bit, we can retain respect for “Retiring Early.” If we recast “retirement” as the cessation of a stage of life that is only about accumulating wealth, then even with my preferences, “Retiring Early” is a perfectly laudable goal. However, in my opinion, the usage of the term is at best redundant and at worst misleading and off-putting.

My mission is to reallocate human capital to its highest and best use. In order to make that happen, we need the biggest possible tent. The universally appreciated parts of Retiring Early are already entailed within Financial Independence, so the inclusion of “Retire Early” within the name serves more to alienate than to include, and runs the risk of mistaking the process for the goal.

Financial Independence is something that would benefit everyone, so let’s pursue that. Whether that involves Retiring Early is totally up to you.

The Goal

Financial Independence is not the goal. It is a tool to be used as a springboard toward living your best life, whatever that means for you. There’s no hurry. If you can sustainably live your best life right now without achieving Financial Independence until later, you should do so.

Together we can create a world that encourages people to find vocations that are meaningful, with value that is not only instrumental, but also intrinsic. Let’s get to work!

Ben Miller

Founder of ChroniFI

December 2021

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The foregoing are the opinions of the author and are for educational purposes only. They do not represent professional financial or investment advice. For financial advice, please consult a licensed financial professional.