The financial independence/retire (FIRE) early movement was popular years ago, but has COVID-19 derailed it? Here's a post-pandemic look at the FIRE movement.
The concept of FIRE—financial independence/retire early—has captured the imaginations of millions in the last few years. However, there are some concerns that FIRE might not be practical in a late-pandemic world.
Even though COVID-19 has provided setbacks to the FIRE movement, it still appears to be burning. FIRE continues to provide a backdrop for the dream of retiring well before age 60, and the pandemic has provided strong lessons in portfolio planning during tough times.
The FIRE movement is less about exiting the workforce permanently and more about creating a lifestyle that allows you to do what you want, according to Carl Jensen, who founded the website 1500 Days to Freedom with his wife, Mindy. “Your goal should be to move on to something else,” he says. “The money in early retirement is just the tool that you use to move to that next phase of life.”
Even if you have to put off that goal for a little bit due to unforeseen circumstances like a global pandemic, it’s still possible to stay on track. In the middle of the COVID-19 fear in 2020, the anonymous FIRE blogger “A Purple Life” wrote about hitting her FIRE number and moving forward with plans to retire. In 2021, she’s still retired and living her best life as travel begins to open up again.
Because just gathering money with the intent to sit around doing nothing isn’t the goal, many FIRE devotees plan ahead to help them weather ups and downs. Having a plan to get through the volatility while pursuing meaningful projects has helped many of those in the financial independence/retire early movement come out of 2020 intact. That’s why so many members of the FIRE community are entrepreneurs and investors. It provides them a way to escape the rat race while riding out the economic and health storms.
If you’re hoping to reach financial independence in your own life, many members of the FIRE community suggest investing as part of the strategy. They also focus on developing multiple revenue streams by starting businesses or engaging in other activities with the potential to provide some type of passive income.
Even with concerns about a new COVID-19 variant weighing on the stock market, a recovery is still expected to come at some point. In the meantime, many of those participating in the FIRE movement are preparing to ride out the storm.
Here are a few tips that might help you on your journey to financial independence and early—or not-so-early—retirement:
In the end, it’s about figuring out what matters to you and what you want your life to look like, and then using your money as a tool to make it happen. True financial independence means you get to spend your time—as well as your money—the way you want.
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