Out of the frying pan into the FIRE

Posted on Jan 25, 2019

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When we spoke with our retirement specialist Andy Smith recently he told us that he sometimes has to encourage clients to enjoy their money a little when they hit retirement. 

“People can be naturally cautious if they’ve been used to an income for so many years and then it stops,” he explained. “They worry about spending their retirement funds but I encourage them to take a balanced view and make a few memories if they can.”

Making memories is so important and, when we talk to clients who are still working, we would never suggest that they invest so much into their pension funds that they don’t have funds left to enjoy life a little in the run up to retirement. Live in the moment is something we should all aim to do – as we can’t predict the future.

We read with interest then an article on the BBC website recently which looked at the FIRE movement. This is a way of life standing for ‘financial independence, retire early’ which sees people living as frugally as possible during their working life with the goal of retiring as early as possible. 

Barney Whiter’s parents bought their home when he was starting secondary school in the UK in 1981 and he remembers how ‘scary’ it felt to owe the bank a lot of money.

So, for more than two decades, Whiter made sure to save at least half his salary every month for retirement. He saved money where he could, cycling to work every day for example and cutting back on eating out, and was able to retire at 43.

Interestingly, many of our clients though really enjoy working and, even when they have reached retirement, still want to do something, perhaps working as a consultant. 

People who are part of the FIRE movement say that the ‘retire early’ phrase can be something of a misnomer. Instead, it is more about financial independence and having choice – rather than chasing promotions. 

Some people are taking it to extremes though. One man in Denver used to rent out his bedroom on Airbnb and sleep in the living room… saving enough to buy a couple of properties, one of which he continues to rent out.

Somebody though has described this way of living as an ‘extreme version of the Atkins diet’. Living a financially sensibly life is a good plan – but giving up everything for a future none of us can predict is probably not a great goal. 

The media tells us to ‘live our best life’ but for each of us that means something different. We have clients who rank travel as their main priority, while others have different goals. 

The BBC article talks to Gwen Merz, who is 28 and has $200,000 in assets (mostly in property, stocks and a little cash). The American quit her job in IT aged 27 and now hosts a podcast for those interested in the FIRE movement. 

“I’m not retired,” she says. “I still have to work but I have the freedom to choose something that I really enjoy that maybe doesn’t pay so much.”

She adds though: “If you’re depriving yourself that much, you’re not going to be happy, and you’re not going to be able to maintain that. You should be able to live your best life, but that doesn’t mean you’re spending lots of money.”

It all comes down to the life people want to live and their aspirations. At The Goodman Partnership, every client is different. Some would rather ‘enjoy’ their life now, while others are keen to save as much as they can for their retirement. We pride ourselves on getting to know our clients well and finding out about their aspirations and then coming up with a plan which works for their particular lifestyle.

To find out more, call us on tel: 01892 500600 or visit out "Retirement Planning" page.




Goodman Chartered Financial Planners is a trading name of Fairstone Financial Management Ltd. Fairstone Financial Management Ltd., is authorised and regulated by the Financial Conduct Authority – FRN: 475973 Registered in England and Wales no: 05574120. Part of the Fairstone Group. Where you have a complaint or dispute with us and we are unable to resolve this to your satisfaction then we are obliged to offer you the Financial Ombudsman Service to help resolve this. Please see the following link for further details: www.financial-ombudsman.org.uk.