Last year I read several articles how several 30 years old saved a million dollar and decided to retire for the rest of the lives. These retirees follow the FIRE – “Financial independence, retire early’ movement that has proven to be popular among burnt-out millennials wanting to quit the corporate rat race. They want financial freedom to do what they want to do without following the norm.

The FIRE concept pique my interest. My initial reactions were that it was a good idea and I’m amazed how they are able to save a million dollar in such short time. Retiring early seems fun and I wouldn’t mind doing that. However, one of the articles has a photo of the retiree in simple attire wearing sandals relaxing on a lawn chair. And therein lies the problem, the “retiree” looks like a hobo.

As I research further and start thinking the “ifs” and “buts” I realized that FIRE lifestyle is unattainable and unsustainable. There are too many things could go wrong and there are too many potential pitfalls.

Let’s start with what we have today. Since the end of World War 2, there were numerous progress made to assist Americans when they reach their retirement age. Without going into details, essentially we need to work for 40 to 50 years after graduating from school until we reach retirement age (current retirement age is 66). From that point on we can start withdrawing from Social Security, pension plan and any retirement savings we have. I agree that the current model needs revisit as the market conditions today are not what they were 20 years ago and the Social Security is running out of funds to sustain the next generation of retirees. The question is will FIRE method be better position to replace the current retirement model?

My answer is very simply, NO. There are several reasons working against this method and I will list them with my arguments. Let me know your thoughts in the comments below if you agree or disagree.

We Are Materialistic

To be able to save a million dollar by the time you reach 30 years old, you need to save at least 70% of what you earn for the first 10 years. Once you reached the “retirement” age, you are supposed to retire by slowly withdrawing the money you saved. But in order to sustain your lifestyle, you MUST live frugally. There will be no big spending and no unnecessary spending. Essentially, you are living on the edge so you can stretch your savings. The problem is we are so used to the materials around us that for anyone of us to cut all these spending for the next 50 years is impossible. Of course there is the possibility to make passive income to supplement the expense, which I will touch upon below. There will be no more cars, no vacation and maybe reduce your reliance on smart phones. Personally, I would rather work 60 hours a week and then take 2 days vacation and spend time travelling.

Don’t Get Sick

The health care cost in the US skyrocketed several decades ago and it continues to go up as of today. Various administrations and politicians attempted to control the cost for decades but without any results. The likelihood of health care cost to come down will not likely to happen. So to be able to sustain a FIRE lifestyle, you better not get sick. Seeing a doctor is an expense and living frugally won’t allow you to spend that kind of money. We are not even talking about hospitalization! Seeing a doctor can easily cost $100 and above on one visit. Staying in a hospital for one day can cost up to $10,000 a night! You may wonder that the cost can be covered by health insurance. Unfortunately, that is no longer the case. Depends on the policy, insurance may cover up to 80% of the cost but first you need to pay an annual premium at least $8,000 a year. If you work for a company that offers health insurance coverage, you know you are covered. A FIRE retiree would not have that luxury.

Don’t Have Kids

Being FIRE, you need to be very selfish. You are living off your savings and having children will not help at all. The cost of raising a kid can easily cost up to $250,000 from birth up to 18 years old. On average, it costs $234,000. And this does not include college cost and inflation rate. I have 3 children and I can tell you that raising kids is not a cheap venture. To retire at 30 you are not allowed to have kids because they eat in your retirement really quick. Maybe this is not a problem for millennials because they tend to be more selfish than previous generation due to materialistic behavior.

Living Easy or Living Aimlessly

Humans are curious animal and we thrive by learning. Not working for the rest of 30 years is like life sentence for us as human beings. The real reason our civilization continue to evolve because we continue to learn new things and continue to make our lives better. Retiring at 30 means no big spending, no working and no exploring. You basically have to live near your backyard aimlessly because you constantly keep thinking how to cut expenses and how to stretch your dollar. Since you are no longer working, you are not being challenge by daily challenges. You are no longer looking forward to what will bring in the future because you are “happy” with your currently easy living. If you are lucky enough to live until you are 80 years old, as a FIRE you need to live like this for 50 years. If you don’t think this is a life sentence, I don’t know what is. Personally I will not be retiring when I reach my retirement age. I will likely start a new venture to make extra income or I will be volunteering my time helping those in need. Working is one way to continue to keep our mind sharp and active.

The Math is All Wrong

A million dollar is not a lot, by any means. Assuming a 4% return in interest rate for 50 years, you are able to grow it to about 3 million dollar. But that is a big IF. That assumes that you won’t be spending that million dollar; that assumes the market continues to provide 4% return annually; and that assumes there won’t be an inflation. Unfortunately being a FIRE you are withdrawing the million dollar every month. Assuming you are spending only $2,000 a month your million dollar will lose $300,000 in 10 years, which will diminish the return of your original million dollar. That brings back to my first point, how many of us can live frugally only on $2,000 a month? That is like living almost at poverty. If we continue to work, we can continue to supplement our income while we continue to let our money grow.

Rely on Passive Income

There is another movement that is going strong. There are a number of successful people who are able to gain income passively. Active income is define as work and getting paid through employment. For example, I work full-time at a bank and I get paid on a bi-weekly basis. Passive income is defined as you grow your net worth without your active involvement. Example includes dividends you received from your stock or royalty you receive from your songs you published on iTunes. You may think generating income passively is easy but the truth is it does not always work. Not many of us can be a successful influencers on Instagram or YouTuber. Not many of us can gain a foothold in making music or gain an audience by selling ebooks. There are some who are extremely lucky but for the majority of us is like dropping a bomb in a barrel. Would you want to take that chance by being a FIRE hope you will have a steady stream of passive income?

Let’s be real, we are jealous beings. Sitting idly and looking at other around you driving the latest cars or living in a nice house would not sit well with our jealous selves. Or lounging in your cocoon while you hear the kids in your neighborhood having fun because you can’t afford it because you are planning on how to manage your expenses. We need to continue to keep our brain active by exercising it and continue to have objectives or goals that we can strive for. That’s what makes us human. Retiring aimlessly is just not the way to go.