In Spite Of Coronavirus Crisis, FIRE Movement Continues To Woo New Fans

The coronavirus crisis has crushed global financial markets and put a dent in many retirement plans. Nonetheless, those who have set out on a FIRE path remain resolute in the face of growing questions.

F.I.R.E. stands for “Financial Independence, Retire Early,” and those who set out on the path intend to save and invest very aggressively—somewhere between 50–75% of their income—so they can retire sometime in their 30s or 40s. It’s a movement filled mostly with Millennials and Gen-Xers, who have taken advantage of the historic, 11-year bull market.

But with the onset of the coronavirus pandemic and ensuing economic crisis, many are wondering if the FIRE movement has seen its end.

While this is certainly a reasonable perspective, we only need to look a short ways back to see why the trend seems to be pushing forward at a faster pace. After the 2008 financial crisis, many workers flocked to the FIRE path, feeling burned by the economy. It seems the same idea is happening now as more young workers look to become self-sufficient.

Made For The Moment

A majority of those pursuing the FIRE path have the means to do so and are strategically set up to whether tough economic storms. They have well-paid jobs, are financially disciplined, and have a large amount of savings. Even though they do take on a lot of investment risk, they tend to have large emergency funds, low living costs, and well-diversified portfolios. 

FIRE tends to attract those with disciplined mindsets. They live below their means and have saved a considerable amount to live off of in case of a crisis. In fact, they are probably better off dealing with the current state of affairs than most Americans.

The Fight Ahead

Nonetheless, the downturn of global markets will likely put a strain on those on the FIRE path. Those who are early in their FIRE plans will need to take a look at the advantages and disadvantages when it comes to pulling out from their investments now, rather than waiting for the market to return. The choice to pull out funds now will have an amplified effect on future retirement savings.

Those who were close to their savings goals may have to put plans on pause, as the market crash will have likely affected their savings. Those who are short on cash probably shouldn’t start pulling from their investments either. Instead, it’s probably better to pare back expenses or fina a side gig.

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