Retire Early or Live Fully? The FIRE Debate

0:00Yeah, it seems to start with this, the fundamental belief, the core belief of the people who adopt this movement is that work in a job, to be employed, that this is an inherently bad thing that should be eradicated. from your life as quickly as possible. And so, and again, so much of that, and I don't know, it seems to place leisure above all else in a lot of, and again, like you said, it's different. There's different brands of it, different flavors of it, but the fundamental kind of understanding, the fundamental belief is that work, working for somebody else, being employed by somebody else, this is a bad thing.

0:45And so we want to eradicate it from our lives as completely as possible, as quickly as possible.

0:55Hey, everybody. Another episode of Business Lunch. We want to welcome you to, I am your host, Roland Frazier, and my co-host, Ryan Dice, is here too. Ryan, how are you doing today? I'm doing exceptionally well. And I think today we're talking retirement. Is that right? Yeah. Yeah. It's grabbing that gold watch and riding off into the sunset. And I know it's something you and I've been looking forward to for a really long time. That's just so not true. I like that. I like that. Yeah. It's really funny. I always get a kick when I read or hear people who are retiring at 25 and 30 years old. And because life is long, and I guess it's just how you define retire.

1:39To me, the traditional definition is I'm leaving my job. I'm not going to work anymore. If you stop working at one job and that was your kind of main gig, whether you're 20, 30, 50, 60, 80, it doesn't matter. But if you are continuing to be in the workforce at all, to me, in my definition, you're not retired. Clearly, for a lot of people, retired means leaving whatever they're doing right now or whatever they have had to do to earn a living, which I think if you are doing something that you don't love for a living, then absolutely it makes sense to figure out how can I stop doing that and have enough money to survive and do things that I want to do.

2:20And we, I think you and I have had a talk about this before. To me, I kind of define it as if you can make money doing something you would otherwise do for free, even if it didn't pay you, then that's the ultimate thing. That's the holy grail of work. You agree with that? Of course. And so what we're talking about, I guess just to kind of set it up, we're talking about this whole FIRE movement, right? You kind of want to set that up. But like, what is fire? Yeah, financially independent, retire early. Financial independence, retire early. So fire, which is not at all a new concept. People have been trying to do that forever.

3:00But if you put the word fire behind it, then it can become a movement, which it has. And it's something that a lot of people are trying to do. And there's different iterations of it. There's regular fire. Then there's lean fire. We're basically going to starve ourselves. I would probably call that hellfire. And then there is the one where you are still living pretty large, but putting, you know, a bit of your income away. They call that fat fire. So I think it's kind of interesting because what the whole thing boils down to is save as much as you possibly can, throw the savings into diversified index funds, and then do side hustles.

3:45and then the level of how penurious you want to be like how how frugal am I going to be how much am I going to cut my expenses to effectively defer gratification by not spending money on things right now that I otherwise might and also and I think this is key and this is to me a very smart part of this defer major life events that are going to be very costly so having children would be a big one. It could be getting married, but getting married might give you two incomes and help you get fired faster. Um, so I think that, um, I think it's, it's cool to think about that, that even in the fire movement, there's a spectrum from, we're really, really, really going to challenge ourselves and live ultra lean all the way to maybe one of the people that I was reading a thing about is, um, is still is living off of about 250 ,000 a year, uh, which was 50 % of a 500 K income, you know, so that that's cool.

4:44I think if you look at classics like the richest man in Babylon by George Clayson, that says take 70 % of your income and live off of that, save 10%, uh, do fun things with 10 % and give 10 % to charity. Uh, those are all kinds of things to think about. But generally the concept is that they want to get out of having to work and particularly having to work in the job that they don't love as fast as possible. Is that kind of your take on it as well? Yeah, it seems to start with this, the fundamental belief, like the core belief of the people who adopt this movement is that work in a job, to be employed, that this is an inherently bad thing that should be eradicated from your life as quickly as possible.

5:34And so, and again, so much of that, and I don't know, it seems to place leisure above all else in a lot of, and again, like you said, it's different. There's different brands of it, different flavors of it, but the fundamental kind of understanding, the fundamental belief is that But working for somebody else, being employed by somebody else, this is a bad thing. And so we want to eradicate it from our lives as completely as possible, as quickly as possible. Yeah, I think the other interesting thing is that there are people that said, like a few of the interviews that I've seen are somebody that they never got to see their parents.

6:17And their parents worked all the time and they never really had any money. And they've decided that with their kids, they want to be there. And so they wanted to, prior to having the kids, they wanted to get in a place where they wouldn't have to be in a nine to five or a nine to nine job and that they could actually take the time to have a rich family life. Obviously, what we teach with Scalable is that if you have a business and you get people to run it and you've got the right systems, then you can have it all. Right. And I think that I think that's that's part of the challenge that I have with fire is is this, too, is I've seen far too many people who deferred gratification and a life event happened.

7:10Family illness, personal illness and health, disability, death, bankruptcy, economy collapsing. You can, you know, name it theft, you know. And my one of my ones I just heard that I couldn't even believe when I was reading a book about the synthesizer guy that I like is that he had somebody that was going to invest in his company, which was going to totally save him and put the deal together and everything. And the investor was a very, very wealthy person who didn't trust the government and so had all of their wealth,$125 million in bearer bonds. Bearer bonds are generally owned by whoever holds them.

7:52They were deposited in the World Trade Center. the day that the planes hit the world trade center 9-1-1 the courier who was supposed to pick them up to put them on a plane to london to go get the financing facility with them as collateral was late getting to the building good for the courier because the courier lived bad for 125 million dollars of assets that literally went up in smoke right so like you You talk about anything can happen. Anything can happen. So to me, this complete starve yourself of joyful uses of money to get to some place where you feel that you now are free is very often illusory because things come along.

8:45Life doesn't have a plan like your plan always. And so I think that's something to be careful. So that's a philosophical bias that I have. Well, similarly, like when you think about kids, I mean, we've had friends and my heart goes out to them. My heart goes out to anybody listening to this right now who's in the situation where they wanted to wait to have kids until they were more financially ready. And by the time that came around in their mind, they might have been financially ready, but they weren't biologically as ready as they were before. And now they're needing to basically spend all this money in additional fertility treatments that have wiped out all the savings that they had built up.

9:21that, you know, if they'd had the kids before. And again, this is not a, again, my heart goes out to him. I don't want to make it come off at all. Like I'm like blaming them for anything. I think everybody's making the best decisions that they can. And it's of course a balance. You know, I've also had friends who they went out there and bought, you know, Lamborghinis because they had a good year. Second homes, because they just thought that the ride would never end. And they wound up having to, you know, sell those at the worst possible time and lose lots of money. it's hard but i think if you just adopt the mindset of we're not going to do this thing until we have the money you need to know that that just default setting isn't perfect in and of itself my wife and i were having this conversation while we were you know together in europe because we were you know we were gone for a bit it's got we're gone long enough we actually started to miss our kids um which takes about like a week or so um with four kids like we're usually happy to like get a little bit of break but we're now and and we were just talking about how, because we have a beach house, as I know, you know, and when we bought that beach house, it was a stretch.

10:25Like somebody on paper could make the argument that this is maybe not the best financial situation. We had enough of the down payment and things like that, but it was definitely, you know, a stretch. I'm so glad that we did it because we've had so many amazing memories there with the kids that had we waited until we were quote unquote ready, we would have missed out on. Now we would have had plenty of other things. And so that's fine. But if you just say, um, you know, we're not going to do any of this stuff until we are quote unquote retired, you, you run the risk of life happening. You run the risk of it happening longer than you thought.

11:02And you run the risk of missing out on a lot of pretty cool things along the way. And, and it just, it's the default setting to me of, of, I can't have both. And I think that's what, what irks me the most. Like, so what would you say if somebody, one of your boys, right? Comes to you and is like, yeah, I'm going to be, you know, we're doing this fire thing. What would you say to them? What would your advice be if somebody that you knew and trusted young person, young couple said that they were going to go an all in on the fire movement? What would you say to them? What questions do you have for them?

11:28Yeah. I mean, I think I would, I would say that's awesome. What, what is it that appeals to you about that? And then listen to what they said. I have learned that it is very important to support first because people want, I wish I could use some examples, but if I did and the people were listening to this podcast, they'd know that I was talking about it. But there are a lot of people that come to us doing things that don't really make financial sense. Your beach house, to me, let's say that you came and said, you know, hey, buddy, I'm thinking about doing this beach house, it's a stretch. What do you think?

12:06I would encourage it because I'd say you're smart with your money. I'm a buckets of money person. I think you are as well. It's like, so as long as you've got money in the bucket of not income producing, but probably decent investment long-term capital appreciation, and you can put that there and you've still got your emergency money and you've still got the money to do good things for other people and the other things you want to do, then I think you should do it. I am a very, I am very much life is short and life is long and you never know which is going to be right. So just in case it's short, have some fricking fun.

12:49And also, as you mentioned, and my favorite story from my own personal is listening to the guy behind me in the Southwest airlines flight that was talking, He was like 70-some years old, and he's talking about how he had deferred and had crappy things all his life. So now he just bought a really nice car, and all of his other friends who had nice cars when they were in their teens, 20s, 30s, 40s, 50s, and 60s had nice cars. Now they can't afford a nice car, but he's got like a Corvette or Mustang or something. I'm like, so now you've had 50 years of not having what you want and you're in kind of this different place in life.

13:28Who do I feel sorry for? Do I feel sorry? I mean, personally, I would rather be 80 and not able to afford the sports car and had it when I was younger than, you know, the other way around. So to me, it's like, I don't want to be eating dog food when I'm 80 years old, but I want to have enjoyed my entire life. I want to have helped our kids and other people. I want to have done the things that we even look at that with travel. We do the far away hard trips now because we might not be able to do those later. My wife wants to go to Alaska on a cruise. I'm like, you know what? A lot of 80-year-old people on those cruises.

14:05I'm pretty sure we can do that then. Not a lot of 80-year-old people tracking through the jungle to go see gorillas in Africa. Let's do that first. Um, so I guess to me, it's, it's, I like that it is a thing people can rally around. And if that's what you need to be, you know, for, for a system and you like it, this is what I would tell my kids. If that's what you need, um, to do that, and that will get you on the track to having the life you want. I support you a hundred percent. Uh, I want you to sprinkle in a thought about about be sure that you have time to enjoy things now because maybe tomorrow doesn't come, but maybe it does.

14:48And so if you can balance that, you know, and then that to me is a great way to get what you want all along, to have a great, rich life all along. And the easiest way to do that, in my opinion, is the buckets of money. You know, if I've got my bucket of money for retirement and I've got my bucket of money for let's go play and do some stuff. And as long as I don't tap one for the other, then I'm probably going to be okay with both. But if I put everything in, and this is something that I think can happen to the fire people, is you put everything in and then it's 2007, 2008, and you were all in on real estate and you get just demolished, or it's 2000 and you have a market crash, right?

15:31Those things happen too, historically. Now, Now, historically, if you hang on to them forever, you will do well. But I think it's just important to know that if you have all your eggs in one basket in terms of investments, that's not necessarily good. But if you have all your eggs in one basket in terms of time of your life, that also can be not good. Yeah, I think it's good. Sorry, what were you going to say? What do you tell your kids? They come to you and say, we're fired up about fire. Yeah, I think it's important to separate. Like the thing about about FIRE is it combines two things that I that I think actually have very little to do with one another.

16:14And the first is financial independence and the second is retirement. And you can have both of them differently. And I think that they need to be I think in attaching them, that's where maybe some of the the that's where maybe you can get a little bit astray. So what I would say is let's first talk about what does it mean to be financially independent? That's basic good financial management, good financial planning. What that also means is spending less than you make. So, you know, you talked about about buckets. Yep. I teach my kids. You're going to have some kind of income, whether, you know, it's from babysitting or whether it's like grandma, grandpa, like giving you like Christmas money, whatever that income comes in.

16:52You need to have some buckets that this money goes into. A certain percentage can go into. I want to spend right now fund. and it shouldn't be the majority of it, but maybe you do put a certain percentage in, this is my fun money fund. This is the money where I wanna basically be able to do that thing that I wanna do because God dang it, it's fun and life, like you said, is sometimes short. That's a bucket. You also need to have a savings bucket. This is where I'm putting money in my future bank. And you said, George Clayson, that 10%, whatever that number is, the more that can be, the better, but I don't know that you necessarily want to do that at the complete expense of the fun money fund.

17:33The fun money fund should be less, certainly if what you're saving is less than 10%, but it should be something. Even if it's just, I'm going to use this to go, you know, and buy that little, you know, that little ice cream cone for myself or something. And then there should be the, you know, a good chunk of it is for spending money today. And so as long as you've got some money to put in the savings bucket and some money to put in the fund bucket, then you're practicing some good, solid, basic financial management. Now, let's say we've checked that box. I think the next thing that you want to tackle as any just adult, how can I make sure that my vocation is something that I find meaningful?

18:19Because I do believe that it is very, very difficult in life to... Can I go one thing in between those two? Yeah. So the first one, which I like, is that you separated the difference between living a good life and retirement, right? Yeah. So for retirement, the FIRE movement uses kind of the same thing that most of the financial planager, plan, plan, and financial planagers use, which is, um, that you should have 25 times the income that you, uh, you should have 25 times the net worth or the savings that you want to have, um, of your retirement income. So let's say you can live off a 4 % interest, which is kind of the low average, which is the same thing, right?

19:09It's two sides of the same coin. So either the 4 % rule, you can withdraw 4 % a year to live off of assuming a 30, 30 year retirement, if you're trying to retire at 20, hopefully you're going to live more than 30 years. So that number might have to be higher. But, but generally, so if you want a hundred thousand a year, you need to have two and a half million. If you want, you know, 200 ,000 a year, you have to have 5 million. And, and so that's the retirement side, which to me is different from the living, enjoying your life stuff. So you want to think about that. How do I reverse engineer my, my retirement?

19:38If you want to use that rule, just say 25 times my desired retirement income I should have now in I should get to that before I feel I am ready to retire. I should also have a bucket so that I'm living, enjoying living my best life. And then we get to what you're going to talk about now. Yeah. And I think the question you have to ask when it comes to retirement is not what am I retiring from? But what am I retiring to? And the most miserable people in the world that I know are people who have retired from something they didn't like into nothing. And so now they have no vocation. They have no calling.

20:13There's no area of their life where they're adding value. And by the way, this doesn't have to be something that makes you a lot of money. I know very happy people who retired from high paying jobs into essentially volunteer work that they love and brings them tremendous fulfillment and they continue to add value. And so my thing would be, OK, let's check the financial planning box and make sure that we're being responsible, that we're living on less than we make, that we're saving for the long term, but that we're also providing for some fun money today because life might be short. Check, check, check.

20:40Got it. Now, how do we make sure that we're adding value to this earth? Because that is where fulfillment is going to come from. Now, that could come in the form of being a stay at home mom, which last I checked doesn't pay very well and is incredibly exhausting and a tremendous amount of hard work, but can also be very fulfilling. My wife tells me, right? Like it can be that for a season. Maybe it is. No, I want to continue to work in this job because I love the work, you know, that I'm doing. But I think especially if you're a young person, asking the question, not just saying, not just operating under the assumption that work is bad, work is life sucking, work is something to be avoided.

21:19I don't want to be in somebody's employ. I must be doing my own thing at all times as though that's always better. Spoiler alert, it ain't. Been plenty of days where I know both of you just wish we had freaking jobs working for other people. But I think asking the question, how can I truly enjoy my work? how can my work both pay me and to be fulfilling and if that's the question that you continue to ask and if the answer is well it's not today okay what would need to be true for it for that to for me to have both of those what i need to shift into a new field does that mean i need new skills mean i need new different relationships uh does it mean that i need to um ascend within this company or jump to a new company but if you just ask the question what would need to be true for me to put in, you know, 40, 50 hours a week, if necessary, and love it.

22:08Not necessarily every day, but enjoy the work that I'm doing and have it pay me. Because if you can have that and you're practicing good financial management, you get it all. Because the most terrifying thing in the world and my biggest fear and what I would say to my kids, if you want to retire, what are you retiring to? Because if you're not, if you're merely retiring from, but you're not retiring too? And the same question that I ask, you know, friends, colleagues, clients of ours who are thinking about selling their company. Oh, you want to sell your company? Great. What's next? Because if the answer is, I don't know, then figure that out before you sell the company.

22:42I think the same is true when it comes to retirement. How do we make sure that we can have both? What would need to be true? If you're six, if you just ask the question, you're going to come up with an answer. Um, I think that's going to be far more impactful, far more, um, interesting, far more fun and way more lucrative and less risky than just saying I'm willing to grip my teeth and bear it and have a sucky, miserable life to suck it all away for that day, magical day when I get to retire. To what? Yeah. I think that makes a lot of sense. And I will also say that I have watched friends who are older retire and pretty much wither away.

23:18I've watched friends that are younger retire and feel completely lost for years. And, um, that retiring too is really, really important. And I, and I would say, you said you thought the most miserable person would be the person that, that left something they hated and didn't know what to do. I'll tell you what I think even more miserable are the people who love what they do and then cave to the pressure of people saying they should retire because that's the, that's the goal. But the people don't get that the person gets so much fulfillment out of what they do that they, they really probably shouldn't retire.

23:52I would do it if they wouldn't pay me. You know, I really, really want to keep doing it as long as I possibly can. And so I would be very, very unhappy. It would be like, you know what? You really love golf. Uh, you really love golf and everybody's telling you, but you know what? you've played a lot of golf for years you should probably stop now yeah it's time it's time right yeah no you're you're so right you're so right yeah far more miserable than the person who left something they hated to nothing is the person who left the thing they loved and i think that's true whether it's a job my dad um my dad loves the work that he does he's you know worked in the same job you know forever you know for almost as long as i've been alive and we were together i was like when do you think you'll retire he's like hopefully never i like what i'm doing i like that i can show open, add value.

24:42You know, my dad's in his seventies. Um, and, uh, and, and, and I, and that's why he's so dang happy and it's why he's so vibrant. And, um, and, and I, and so that's true if you have a job. And I think it's especially true if you have a company, sell your business on a good day, sell your business because you're excited about the next thing, more excited about the next thing than the current thing. Um, but if you think that you have to, you know, live in misery, running a business that you hate, you don't, you don't, please don't. I like that as a place to kind of wrap up. Anything else you want to say?

25:12No, I think that's, I agree. I think that's a good place to wrap. So our fire friends out there, you can have both. You can have both. I love to do the financial independence part, but you don't necessarily have to retire early unless you know what you're retiring to. Yeah. Or at least do fat fire. You got some stuff that you're going to enjoy. All right, guys. Hopefully that is helpful to you in thinking about finances and fire programs and all that stuff. And we'd love to hear your thoughts on it. And we'd also love to have you share this with a friend and see you next time on Business Lunch.

26:00Hey, business owners. I've got a quick question for you. Do you feel like you're missing the data you need to make strong business decisions? If so, it's probably time to build a CEO dashboard. It's an easy way to get everyone in your company literally on the same page, focusing on the numbers that matter. So the Scalable Company put together a free spreadsheet template that will give you everything you need to deploy your own dashboard. And to make it even easier, Ryan Dice recorded a short training on how to use it. If you want to get your hands on the template, go to businesslunchpodcast.com slash dashboard.

26:29That's businesslunchpodcast.com slash dashboard and you can download it for free.