FIRE in the news, liar, liar, pants on FIRE

Escapism seems to be the norm, people have got back from their hols and the rude awakening of life back at the office makes for good newspaper copy. It seems the Torygraph is working on this sort of thing, and let’s hear it from the Grauniad –

…the secret to never having to work again – but does it work for everyone?

Ah bless ’em. There are people who get to live in London and retire early. They aren’t the Guardian media types, though, who asked themselves this question and failed to detect yes in the echo from the walls of the city skyscraper canyons.

The ermine already established part of the dirty little secret to retiring early. You need to earn more than average for a decent amount of time, or massively more than average for a shorter time. The Times qualifies that as having £600k in the bank and a fully owned house, H/T Monevator for breaking down the paywall.They also say that Barney from Surrey managed this as a modestly paid accountant after 20 years. WTAF, guys, compound interest is irrelevant over a period of 20 years so there’s an implication this modestly paid accountant was on a screw of ~£800k * 2 / 20, assuming he had a savings rate averaging 50% and his Surrey place cost him about £200k1. That’s about £80k net pa, which is way over the average UK income. Now it’s possible he got lucky on the stock market, let’s face it the stock market probably worked the equivalent of three years of an ermine at the office, but there’s another little dark truth here. We are several years in to a bull run that is long in the tooth by historical standards.

Oh yes, and half our blessed fellow countrymen decided to devalue the pound in a rush of blood to the head a couple of years ago, which made the numbers bigger by roughly the same as the loss in currency value. It ain’t real guys, the tide’s gonna run out at some time, and much shorter than the 40+ years a fellow retiring in his forties and drawing down needs it to last… Let’s hope Barney has some other plans, eh?

I only earned a bit more than the British average wage compared to many others in the PF scene, but I did it for thirty years. Let’s get that into perspective, however, I earned getting on for twice the average national income for more than half my working life. Many PF writers earn a lot more than I did, but they are in industries where burnout is rife. So it’s pretty darned obvious  that it’s not going to work for everyone, d’oh. And we really shouldn’t be bullshitting people, if you are earning the average wage, and get up to the average level of spendyness and the average number of kids, there’s not a snowball’s chance in hell you are going to retire early. End of. Sorry about that. You might get it so you don’t have to wait to 67, but 40? Fuhgeddaboudit.

Let’s look at a poster child  – MMM. That was deconstructed by Flannel Guy a while back. It’s still an impressive achievement – most people who have a household income of $100,000 for ten years don’t end up retiring early, they rack their lifestyle up to spend that and then gaze longingly at the people earning $500,000 and wishing they were them. Yacht envy is a thing2, y’know.

So you gotta earn more, but that’s not enough. Not only do you have to do an MMM and know when to stop, you need to have a stroke of luck, or at least avoid some types of bad luck. The prime example is for God’s sake don’t have kids and get divorced before they all come of age. So the answer to the rhetorical question

but does it work for everyone?

Is even more a great big fat no. Not a prayer, Guardianistas. If you want to live an average life, do the things everyone else does, well, you ain’t gonna retire early, because that’s not an average thing to do.

There probably aren’t that many people who live in London and get to retire early in London. For two reasons. Just about everything about London, with the exception of transport and art galleries/museums, is dearer than pretty much everywhere else. So you need more to retire there, unless you bought your house 40 years ago on a teacher’s salary. Plus you’ll have more going out the kitty day-to-day, though perhaps that is compensated by the fact you can earn more in London. The operative word there is earn, which implies w-o-r-k.

The other reason is that of sample bias – if you are the sort that flourishes in London and earns shitloads of money you are probably driven, and would find doing without the finer things in life a massive privation and you’d feel out of kilter with your peer group. You’re more Wolf of Wall Street than the Good Life. Jeroboams of champers and fine dining don’t grow on trees. If you want to stop working and enjoy that, then you either need to have earned stratospheric amounts of money, in which case hitting the off switch early may be tough though necessary, or you need inherited money. Take Petra Ecclestone, for instance. A great way to retire early is to get Daddykins to earn the money 😉

Petra Ecclestone – one way to FIRE. They still can’t mend the holes in their clothers, or in her case get shoes that fit [irony off]. It’s a tough life at the top, eh?
Wikipedia says about herPetra Ecclestone (born 19 December 1988) is a British-born heiress, model, fashion designer and socialite.” I’m guessing here, but probably the modelling and fashion designer income wasn’t quite enough for a 29-year old to buy the $90M Chelsea place and the 57,000 sq ft LA place. Thanks, Dad, is probably the order of the day, here…

The Times did a feature on FIRE where apparently 900 good people from London piled into a pub to hear about how they could retire early. Several things vaguely disturb me about this –

  1. London
  2. In a pub – you’ll find it easier to be an introvert if you want to retire early, because to be different you have to do different 😉
  3. but the #1 thing that worried me was if they were paying to hear how to retire early, because they’ve started off on the wrong track. Retiring early is usually about spending less, and spending to find out how to spend less has a delicious irony of its own. If it was a general shindig to chinwag and you got to cover room hire, fair enough, but if it’s like one of those make-money-fast trading seminars then it’s wrong foot forward, people.

Update 30/9/2018 – it was a Facebook meetup and the only cost was the price of your beer, see Luke’s comment below. I am getting too much of a cynical S.O.B. I’ve been punted too many payable London events but I should roll back my guns in this case. There’s everything good about the extrovert wing of the FIRE clan getting together and drinking beer. I’m all for it. Mea culpa

The Times headline is modest earners find formula to retire in their 40s, which should be banned under advertising standards regulations. If these are modest earners in London they are stuffed. Has anybody told these poor saps that we are ten years into a massive bull run fluffed up by funny money? You don’t have to be clever to have made money on the stock market in the last 10 years. Weegee’s quip on how to get a great picture applies – f/8 and be there. The f/8’s irrelevant, it’s the be there. Where you gotta be clever is holding on to that wedge over the next 10 years – and if you’re retiring at 40 then you need to accumulate and hold on to that for the next 40 years.

How do you make a small fortune on the stock market? Start with a big one, or start when it looks like it’s going to hell in a handcart. That time is not now, dear modest earning office workers, so if you want to start your FIRE journey on your modest earnings, then don’t start with the stock market, start with racking back your spendy ways. Some of your spendy life choices have probably already been made, but don’t add to ’em.

So no, the ermine is not going to add to this pipe-dream. If you’re on a modest income in London looking at a bull run that’s one of the longest in recorded history and you are looking back at what would have happened if you had invested along with Monevator in March 2009 then stop right there, breathe in deeply and remind yourself that it was all a dream.

I’m not saying you can’t retire a little bit earlier than normal, if you invest sensibly and consistently, and control your spending, and you have reasonable luck. But look at the sort of privations RIT had to put up with to retire in his 40s – and he was an above average earner, again. But if you are looking at the stock market to do the heavy lifting, then forget it. If you are beginning to aim at retire in your forties, assuming you have started work, you are between 20 and 30. You can’t retire on a modest salary from a standing start in 10 years without having given it any thought beforehand. Really you can’t.

Take it from me – at 49 I wanted to retire early, from a standing start. By then I owned my own house almost (bar £1000) mortgage free, had a decent built up pension and I was earning a decent salary. Plus I was starting in a stock market swoon otherwise known as the global financial crash. Try as I might to munge the figures to give me a shorter timescale, I had to work another three years saving as much as I possibly could, living on less than the national minimum wage after all the saving. That really wasn’t any fun at all. 3

30 year-olds on a modest salary in London probably haven’t paid off their mortgages and you’ll have 20 years less pension savings than I had. You’re unlikely to cross the finish line in 10 years, and you have to stretch it for 15 years longer. And whatever you read about the magic of compound interest, forget it. Over a 30 or 40 year working life, compound interest sort of doubles the real value of your pension savings, as long as you leave them  alone to grow. Over 10 years, not so much. If you don’t believe me, listen to RIT. There is no snowball in FIRE.

There’s a general rule about investment. By the time you read it in the papers, it’s too late. Beware Greeks bearing gifts. It’s going to be a tough ask for somebody starting now to replicate RIT’s work of retiring by 40. Oddly enough your greatest hope of doing that is for the greatest humdinger of a stock market crash to occur ASAP, provided you get to hold your job. But remember Weegee. You gotta get in there and stay there, and stay the course.

Passive investing aficionados will no doubt tell me that’s market timing, to which I would say yep. You want to retire in only 10 years, you need a bit of market timing on your side to get yourself a place most have to work for more than 30 years to get to. RIT reached the finish line using passive investing. But he sure started at a reasonably good time, too, like me. Methinks he earned more than that average British wage for much of that time, too. RIT also highlights some very serious social costs that will be more of a load on younger people – to wit:

The vast majority of my friends and certainly my indirect family are still from my pre-2007 days.  This means that over time a big shift between our once reasonably common values and beliefs has occurred.  […]

At the same time I have found it very difficult to find “new” friends with common interests to my new self (it really is amazing once you have shunned consumerism to see how much it dominates people’s lives).  They really do seem to be few and far between.[…]

my day to day contacts and colleagues have changed and because their standard of living matches the salary they receive today I am now starting (if I’m not there already) to be seen as very obviously different.

The social contact is more important when you are younger. I didn’t experience these issues because I didn’t really rise through the ranks as I was saving to escape, I did that from the high-water-mark of my career. So while I experienced a much more dramatic adverse change to my lifestyle than RIT, I didn’t have so much of a drift away of common interests.

Beware newspapers bringing you promises of freedom from The Man through the stock market. It’s doable, but as a marathon if you start now. The starting pistol for the sprint probably fired over five years ago.

The stock market gets all the attention because of the promise of free money if it goes right. The other things – getting out of debt and reducing your spendyness are the Mr Boring of the FIRE world but they are reliable. They will deliver dividends just as they always did. FIRE wannabees should start with those first – get out of debt and spend less.

Don’t believe all you read in the papers…

  1. I know, you don’t get to buy a garage in Surrey for £200k. Let’s assume Barney got lucky at some stage in the housing market. It’s what the asset cost Barney when he bought it that matters, not what it is worth now. 
  2. I wrote that before googling the supporting reference because a lifetime of studying the human condition taught me yacht envy would be a thing ;) 
  3. The fellow who introduced me to using pension contributions to save the loading of 40% tax, who opined that you have to be mad to be working here after 50? He’s still working there as far as I know. Absolutely nothing wrong with his theory. It was selling the lifestyle to his wife and kids that was too hard. Let’s face it, there’s nothing in it for his kids but privation, they don’t have to earn the money for their nice middle class lifestyle. I can see their point ;) 

93 thoughts on “FIRE in the news, liar, liar, pants on FIRE”

  1. The other possible route is to have worked as a middle manager in a high street bank accumulating 16 years on a final salary pension, take advantage of SAYE schemes, get made redundant taking a year’s salary lump sum to pay off remaining mortgage, go contracting investing in a SIPP, take advantage of pension freedoms to transfer old DB pension at stupidly high multiple into a SIPP….Worked for me. Everyone has their own path!

    Liked by 1 person

    1. Usually enjoy your blog and find myself agreeing most of the time. On this occasion please have a look at Barney’s website

      Barney’s writing is incisive, challenging and funny and I think you’d enjoy it.

      The tone of this post does Barney a disservice and I’d urge you to have a look at Barney’s posts and maybe have another think

      Liked by 1 person

      1. Oops, I have a fair amount of respect for TEA although I don’t always agree with him, but I absolutely agree with you his style is fun and incisive. I hadn’t pictured him as an accountant TBH, I had assumed he worked in the City from his blog. That’ll learn me for being too tight to read the original Times article and relying on a precis.

        FWIW his site is and is good stuff

        Point still stands, though – TEA is not your average earner, very, very far from it, and the paper bigs it up somewhat. But that’s probably not TEA’s fault, they need to pump up the copy to flog papers/subs.

        Oh and damn. I opened with Escapism seems to be the norm, but that was simply a turn of phrase, I wasn’t referring to TEA or particularly thinking of him!

        Liked by 1 person

    2. Jon, I’m in a not too dissimilar situation from yourself, aiming for a retirement age of 55. Another eighteen months to two years of life on a North sea oil rig stands between myself and getting out of the rat race.
      As usual Ermine brings up some very valid points regarding FIRE, not least the sobering fact that we are still in a bull run on the stock market and I do sometimes have doubts as to whether or not everything is going to pan out. After all, the old SIPP and oil company pension depend on the performance of the stock market. Ive taken advice along the way and all the eggs are not in the one basket. A drop in one investment should hopefully not lead to disaster, just a pruning back here and there, and if I manage to make it to sixty then the old armed forces preserved pension should even out any bumps in the road ahead.
      I always have in the back of my mind the scenario that happened to a good friend some years back when one third of his pension pot was wiped out by the financial crash.
      At some point I’m going to have to take the bull by the horns and retire. All things considered whats the worst that can happen? I have to go back to work either part time or full time? I guess there are worse things in life.


      1. > one third of his pension pot was wiped out by the financial crash

        Owww – did it not come back after a couple of years or did he need to erode the capital to keep his income steady? If you’re going to be heavy on the stock market in retirement you really need ot be able to vary your spending/withdrawals somewhat, else you need ot carry a big cash float of several years.


    3. Sounds vert similar to my situation. 18 years final salary. 1 year pay off when I was made redundant 4 years ago just before my son was born. The payoff enabled me to have a year at home with my son. Returned to work for 3 years and now just about to start a new job which will enable me then to go contracting on 100k . I think you and I have had a fair bit of luck to get to our respective positions.

      Liked by 1 person

  2. Your post hits the spot. The reality is that you need some edge to FIRE. Earning far more, saving far more (or inheriting) or investing far better (by good timing, say after a crash, or by a strong willingness to take risk). Or some combination of those three levers. By construction this rules out the bulk of the population. The idea that anyone can FIRE and that it just requires some discipline is an illusion.

    My gripe (sorry) is that elements of the FIRE blogosphere have evolved into a strange amalgam of self-help “gurus” and a cult of zealots. These blogs seem determined to tell us how you could join them on their pedestal overlooking the great unwashed. But if you can’t save 80% of your net salary, handle 100% in equities, and be whip-thin running 5k a day whilst practising Stoicism; well, you’re just a pathetic wimp. Like a bit of consumption? You’re a tool of the neoliberal elite.

    Barney is a case in point. He must have earned millions over a 20 year career at KPMG and McKinsey. He has a six-bed house in Farnham. He lectures at the School of Life, does coaching and sells his equity porfolio. Basically he is a self-employed lifestyle consultant. I’m not implying people can’t improve aspects of their lives by embracing some of the mantra he spreads but he also pushes a lot of “Cargo cult” science. As someone who has suffered from GAD (generalized anxiety disorder) all my life, his recent statement that “weight training is one of the greatest hacks for eliminating depression, anxiety and fear” is a ridiculous answer to a complex medical issue.

    So recent comments in many media articles may be sneering, but when that is mirrored by sneering coming from parts of the FIRE community toward everyone else, what do they expect?

    Liked by 1 person

  3. He’s back and with a splendid rant! 😉 Don’t agree with all of it as ever (*compound interest* *cough*) but love the passion, and am envious I didn’t write the line about the Guardianistas and the echoing skyscraper canyons. (Is that an allusion I’m not getting? It’s a brilliant image!)

    Thanks for the links… one thing, you have March 2007 as anchor text at one point, but of course we both know you mean March 2009.

    (March 2007 was a diametrically opposed kettle of numbers! 😉 )

    Liked by 2 people

    1. > March 2007

      Thanks – my bad entirely. March 2007 was around the time the fellow who is still working at The Firm told me I was mad if I were working there after 50. I should have listened to him them – HMRC would have shouted me most of the suckout into the GFC with the 40% tax bung. Maybe I am still sore at my younger self for not listening up hence the Freudian slip.

      Come on, even you can’t be that up on compound interest if the accumulation phase is only 10 years before drawdown starts. It takes time to do its job 😉


      1. Over literally 10 years I agree it’s not making a huge impact…

        … although that said even over literally ten years, a high-earner FIRE-seeker / couple saving £40,000 a year and getting 7% returns (ignoring volatility etc for simplicity) would earn MORE FROM THEIR MONEY than they saved in their tenth year! 🙂 (£45K I make it with some hasty maths).

        Liked by 2 people

    2. > echoing skyscraper canyons

      It really does happen. When I was working on London 2012, I sat in St Paul’s Cathedral gardens to have lunch, and heard the church bells like this

      sound of St Paul’s at lunchtime

      where you get a half-second echo from the skyscrapers of the financial district ~ 0.5km away. I don’t think that’s quite how Sir Christopher Wren intended things to be.

      On the subject of London sounds, the London Sound Survey is an interesting cornucopia of the sounds of the city.


  4. I also enjoyed the rant!

    Recruitment consultants tell me that £80k is a “normal” salary for an accountant with a bit of experience and some managerial responsibility in the south east these days.

    If you or your readers want to know more about Barney, his website is theescapeartist dot me. He mentions corporate finance and London so he could well have earned a lot more than that.

    He definitely has other plans as he provides “financial coaching” and sometimes does minimum wage jobs like pub work. I seem to remember reading that you could pay to know what’s in his portfolio.

    He’s also one of the organisers of a regular FI meet up event, the next one being in London on 19th October.

    Agree with the Flannel Guy article you’ve linked to – there’s definitely more mileage for bloggers in implying that everyone can reach FI/RE even if they can’t.


    1. I’d agree since it transpired that Barney was TEA (which I didn’t know when writing this) that he has earned a lot more than the accountant rate – the 6 bed house in Farnham was probably more than 200k for all of the last twenty years, and if you retire in your forties then your entire working life is probaly ~20 years.

      There’s absolutely now’t wrong with financial coaching. But it probably still counts as work, and changing career at 40 is a much easier job that quitting work at 40!


  5. It’s good to see Ermine’s passion back with a good old rant! I hope you won’t be offended when I say you remind me of my parents with their everlasting fear of going anywhere near the stock market whatsoever.

    I do have problems with the way modest is used by the press – I’m pretty sure I and most others would class Barney’s income as a solid professional income, not modest! It would not be considered modest anywhere outside the city, and it seems kinda disingenuous to use that terminology.

    I was looking at UK income percentiles the other day and a £40k income puts you in the top 20%. Hence I would not call anything over £40k modest.


    1. Mine isn’t everlasting – I was chilled about getting into the stock market in 2009, although perhaps not ambitious enough. I’m still in there, and expect to be truly soaked on a networth bases in the forthcoming crash. But I can be OK about that because much of the number on the bottom of my ISA doesn’t represent the sweat of my brow, about 1/4 is funny money from QE and Brexit IMO, both of which post-date when I built most of it up.

      But if I were starting now, and expected to quit in 10 years’ time, yeah, I’m absolutely with your parents 😉 I have to force myself to contribute ot the ISA as it is now, because I expect that contribution to be blown to pot sometime in the next five years. The only consolation is a lot of it came from my SIPP, so it also got the funny money boost in 2016.

      Now is not the time to get into the FIRE game from a standing start with a time horizon of 10 years to drawdown IMO, although it’s a fantastic time to write about how easy it is because people that started 10 years ago were investing into the teeth of the GFC, so they did well.


      1. > Now is not the time to get into the FIRE game from a standing start with a time horizon of 10 years to drawdown IMO, although it’s a fantastic time to write about how easy it is because people that started 10 years ago were investing into the teeth of the GFC, so they did well.

        In a nutshell, thank you.

        Besides income, timing is the other rarely mentioned secret of doing very well over short periods of time. You can’t get there from here.

        Liked by 1 person

  6. What a beautifully epic rant. You went the full “grumpy old man”, love it!

    Your point about average incomes trying to deliver extraordinary outcomes without enduring extraordinary compromises is well made.

    A lot of folks (try to) make money selling that particular dream! Has ever been thus…


  7. Oh man, I know MMM likes to punch in the face but your method is more kick in the teeth. I am that 30(1) yr old aiming for a retirement by 40 on a modest salary, not quite a standing start but probably not miles off it.

    I take on board your point about compound interest not being a saviour we have all been lead to believe and to be warey of the stock market right now but, honestly, theres not much else I could be doing. Expenses are already at a minimal, house mortgage overpayment limit gets reached on Janurary 1st every year and I’ve never had a Starbucks in my life.

    It’s good to see alternative paths of finance and lifestyle getting more media attention, but youre right that it will be beyond to reaches of many despite what the lifestyle coaches may say.

    Liked by 3 people

    1. Ah, but you started in 2009. That’s not a standing start in 2018, you heard the pistol go off several years ago. You bought your stock market investments at a better price than someone starting now after reading the success stories in the paper 😉

      I am in awe of the marathon runners is this game, I only stuck it out three years of saving well over half, and that was tough enough as it was!


      1. “I am in awe of the marathon runners is this game, I only stuck it out three years of saving well over half, and that was tough enough as it was!”

        Which, with respect, is why I think you tend to see things from your perspective of “compound interest is near-useless and you should do all your saving late”.

        I’m now fully into my 40s (I can’t bear to write “mid” 😉 ) and the added snow to my snowball in a good year dwarfs my annual savings of 10 years.

        Accepted I’ve been a saver since forever, so that part of the critique stands.

        I wouldn’t say I’ve been stingy though. Through @TA’s lens, he might say some aspects of my life have been profligate. And I was too dumb to even buy a London property a gazillion years ago!

        Point being there’s a middle ground where pretty early FIRE is doable without too much carnage I feel, at least (we’re agreed) if you don’t have kids.

        If I may be permitted another link, this is relevant here:

        Liked by 1 person

      2. @TI thanks – I missed that one, it’s a lovely post. Some of it resonates though I have seen more time pass. I am not sure I have learned to spend enough either 😉

        > if you don’t have kids.

        I have never, ever, ever, dared go there in any post 😉

        We have had a difference in experience of compound interest. You started early. In comparison, for the first fifteen years of my working life (taking me roughly to your age, at a guess) my net worth was between zero to negative if my house were marked to market and set off against the mortgage. Imagine you were starting now, from nothing.

        I was lucky in two important areas – being continuously employed, and having a final salary pension scheme. My experience is also atypical because I had fairly steady career progression, if anything escalating in the second half of my working life. I believe career progression is much more front-loaded now, people get most career progression in the first half of their working lives. Just as well, if they are in any of the typcal FI/RE industries where burnout is rife.

        I get more win from compounding now – I have parlayed my SIPP across six years now, when I thought it would run into the ground in three. But then arguably I am ten years from the starting line, having saved at a higher rate because my mortgage was largely discharged, and benefiting from 40% tax win on the SIPP/AVCs. My younger self didn’t have a prayer of doing that even if he had been less wasteful, and less of a muppet in the housing asset class. Perhaps the modern career pattern is more FIRE-friendly – as someone said earlier, FIRE is savings for millenials.


      3. @ERG – but the difference is you have significant capital in the mortgage, my housing networth was probably negative at your age. I was in my late 40s when I discharged my mortgage. I would venture that if you are still carrying yours by then it is to enable investment a la TI.

        Resources are shorter in the first part of your working life compared with the second (assuming you haven’t been a financial muppet). I spend too many hours of my 20s in the Broadcasting House bar asking myself why the greybeards had all the frickin’ money and I couldn’t buy a house.

        Now I am that greybeard and I know how. Only a little bit of your earnings sticks to the sides every year, but it does add up…


  8. I’ll make two points not mentioned yet – that is that FIRE isn’t a ‘succeed/fail’ binary outcome, but a spectrum. Many of the FIRE websites focus on encouraging aspects of our lifestyles that result in additional income or additional savings, which are applicable to all. So, ok, you’re probably not going to retire at 40 pushing trolleys around ASDA car park, but if you’ve managed to take your savings from 0% to 20% in the effort, that might mean the difference between being ‘JAMS’ towards having a bit of a safety cushion for comfort.

    2nd point – I believe MMM ran an article with a huge list of jobs that you could earn a relatively high amount in without a ‘college/university’ degree, in recognition that you do need higher incomes to FIRE realistically, so he’s not totally ignoring the issue.

    Btw, although i benefited from it greatly a few years ago, I no longer read MMM – repetitive, smug and far too culty for my taste now.

    Liked by 1 person

    1. Personally I think by far the greatest win is simply in not spending more than you earn, and if you must, then do it on non-wasting assets. That’s yes to a house, no to a car and any other consumerism. The whole world is set up to give you a fail on that. For the first 20 years of my working life, that was me. I spent roughly what I earned, but I never borrowed money for more than a month othere than the mortgage and did my damnedest to avoid paying interest anywhere else. Where I did borrow on credit cards for longer than a month that was at 0% and the money went into savings accounts, when it was worth it. For bigger ticket items I saved up first.

      That’s a pretty poor savings rate, but it wasn’t less than zero so I wasn’t carrying the beast of negative compounding, which sadly seems to kill you faster than it’s more benign cousin gets you ahead 😉

      I took a look at his 50 jobs over 50k post. An awful lot of them need smarts and/or capital – in the form of practical experience or the ability to not really earn a living while you learn on the job.

      I’m not dissing the value of practical experience. In a former life every so often I’d get on a roof and rig antenna installs, they were always specialised and oddball experimental stuff. I went on a aerial install course, and while I was by far the most intellectually biased guy there – some struggled with the arithmetic to avoid spacing their TV signal allocations by mulitples of 3, 5, or 9, but as a rigger I was the slowest of the lot, and TBH my work sucked compared to theirs. So most of his jobs associated with trades or real estate need a lot of experience to deliver fast enough and good enough to get to that 50k line. He even acknowledges you need to run your own business to make some of these work, which is another not so common skill.

      Sure, some people have the smarts, get up and go or sheer persistence in the face of adversity. But i don’t think anywehre near 25% of people clear the bar. FIRE is not for Mr Average!


  9. Veering between rant and revelation – that was a great read.
    It chimes with thoughts that I had around how simple decisions like not getting a car for my first 5/6 years of work has probably saved me around £30,000 then which I can tell from my records would be worth about £60,000 now – that’s compound interest for you 😉
    With all this media attention, the lift had been lifted off FIRE, but maybe it’s really just going to become “saving for millennials”.
    I’ve been on the path for over a decade and now I can see that the end is nigh – brought on by family pressures and out of no great hate for my job – but I see that it might not be possible on the average level of spendyness and the average number of kids.
    It does make me wonder, what’s the point? If you can’t FIRE due to lack of funds but Frugality means you don’t desire a Ferarri when a Ford will do, aren’t you just being cheap for cheapness sake? Or saving money on the car so you can spend it on a boat – and buy a cheap boat so that you can buy a horse too – or buy a Shetland pony so you can afford a dog too.
    My feeling is that it’s best to not go public with FIRE and treat it like Fight Club – it’s nothing for the masses anyway and breed either ridicule, hatred or more likely, you get sucked back into the world view of the consumerists who will slowly get you back to your old spendy ways.
    FIRE is not Average and Average is not your friend.

    Liked by 2 people

    1. 3652days has done that first rule of FI post for you 😉

      Interesting angle, the FIRE is saving for well paid millennials. There’s something to it – their jobs and investment in education will have shorter half-lives than previous generations. Somewhere I read that millennials get faster career progression in the first 20 years of working life than previous generations (provided they don’t bear children but that’s a different issue). So early retirement may well be a rational response to these factors. I’d say if you want to retire early (as opposed ot downshift to a lower paid less stressful job, should such a thing exist in 20 years time) you really do want to be earning about twice the average wage. Plus do all the frugality things, liked by some fellow to living like a celibate monk in a brothel

      Liked by 1 person

      1. Anecdotally – a lot of early retirees or people following lifestyle careers have tended to have worked in London and cashed out and moved to the country – certainly not everyone can do that.
        Potentially anyone who bought property in London 20 years ago has made mad gains but more recently, people may find house prices go down as well as up. If property is your main asset – then such things do matter.
        But again- freedom in FIRE is a privilege and not a right.


  10. In my early 70s now and retired at 58 – that was early retirement back when I did. I think there should be more emphasis on separating FI – or FU – from RE. FI was always a goal for us as a couple.
    I elected for RE because I just could not take the politics of my job any longer. I always enjoyed my profession of scientist – I still think of myself as a technical guy.
    FI keeps my wife and I from a shift at the local donut shop or burger joint. I see so many seniors in Canada dresses up in a McDonald’s uniform and it ain’t a pretty sight.
    BTW we never lived in a central city nor did we keep moving up in the real estate market or buy to let. Just saved and lived beneath our means for 35 years. Now we are in a small town far from the madding crowd.

    Liked by 1 person

    1. It’s the politics that gets you down in the end, IMO. All that justifying yourself every quarter and SMART metrics. If it were just doing the job I’d probably still be working, which would be a waste of my remaining lifespan. It’s an ill wind and all that.

      The trouble with FI is that it begs the RE question pretty fast, the first time some berk tries to make you do something that you don’t care for, and you ask “So the reason I am putting up with this toerag flapping his lips obnoxiouly in my direction is?”.

      The fact that you get to rent a U Haul and camp out under the railway arches while guys with thick necks sell your TV and worldy goods is a good reason to put up with the ritual humiliation of the quarterly review. The fact that you can walk off but haven’t thought of anything better to do is not so good, and tends to lead to the exit ASAP


      1. When the politics of my job began to get me down, FI allowed me to take a step down from middle management and go part-time. Apart from the occasional skirmish, I enjoy my new role.


      2. Cannot deny that in my case FI and RE came close together although the action of RE probably applies at a much younger age now than it did for me.
        My a-ha moment came when after some of my moaning and bitching at work, one of my colleagues said: “You two likely have enough money to get out of here tomorrow. Why are you sticking around if you don’t have to?”
        I had no answer – so I left.
        However, the sweetness of FI lingers after the thrill of RE has receded in the rear view mirror a bit.


  11. This 900-in-a-pub thing is probably a journalistic embellishment. It’s probably a reference to the most recent Facebook group meet-up on August the 2nd. Yes, it was at a pub, in London. But there were around 100 of us at most, and the only money changing hands happened at the bar. Although, as ChrisS pointed out, it felt like there were 900 at the bar given how long it took to get a drink.


  12. @Jon – mine is a similar story (middle-management in a large corporate, defined benefit pension, share schemes, redundancy) that enabled me to retire early forties. I know I’ve been lucky, and it helped that I have no kids, was able to buy my house before prices ramped up, etc. but it could still be a path to an earlyish retirement for some.

    @P2PPunter – yep, I gave up reading TEA blog a while back due to some of the pseudo-science he peddles. His commenters seem to lap it up without question, which is concerning.


  13. “nothing in it for his kids but privation, they don’t have to earn the money for their nice middle class lifestyle”. Pah! Here’s how you do it.

    A child: “All my friends have swimming pools.” My wife: “Name some.” A child: silence.

    Later we were told that our “lifestyle” was envied by classmates because (i) my wife is a fine cook, (ii) we all ate round the table together, (iii) we used napkins.

    The English, bless ’em, are easily wrong-footed in the Snobbery Games.

    Liked by 1 person

  14. Ermine,
    Yes, my friends pension pot did recover eventually but he had to continue to withdraw a modest income while topping it up with part time work. Taught him the lesson of all eggs in one basket does not a good investment strategy make. As to what extent it recovered I have no idea and was too scared to ask.
    Im the first to admit that Im not the sharpest tool in the box when it comes to investing but I took heed of that lesson.


    1. It’s an interesting story – when George Osborne lifted the requirement for us all to buy annuities to win an income from our pension funds, many people decided that the old habit of derisking (usually by shifting the asset allocation more towards bonds) over the last five years before retirement was old hat.

      Although the original reason (you needed to crystallise the investments to a cash lump sum to buy the annuity) went away, I wonder if there’s still good reason to derisk a bit in the runup to retirement. The reason is because your invested capital is at it’s highest value, and in drawdown you are exposed to the greatest amount of investment risk at the high-water-mark of that capital when you shift to drawdown. Blackrock has this PDF illustrating that sequence of returns doesn’t matter a toss in accumulation, but kills you if it goes against you early in drawdown.

      Another way to protect against that is to carry a long cash float. I carry about three years living expenses (not living + entertainment) in cash, because I didn’t want to become a forced seller into a dead market. I will downscale that when my pension comes into payment, because that is effectively an annuity, but I will still probably retain about a year’s worth. You obviously give up some return on that cash, that’s effectively the insurance against ending up in your friend’s position. There is, of course, also a hidden assumption behind that three-year term, which is that most bear markets are short and sharp. The GFC was, and others I can recall were, but there is one exception, which was the slow surrender coming off the dotcom boom.


      1. That Blackrock link isn’t comparing like-with-like. In the accumulation phase it assumes a single initial bullet deposit but zero further deposits until drawdown. Clearly there can be no path-dependence. In the decumulation phase, however, it assumes regular withdrawals. It’s this that creates path-dependence (SoRR). If you had made additional deposits (say dollar cost averaging) during the accumulation phase, you would also have SoRR.


  15. Ermine,
    Thank you for the article and the link to the flannelguyroi article – both interesting reading. I like how you always add a dose of realism/pessimism to the FIRE arena.

    Liked by 1 person

  16. @T’ermine: You & I have had a back & forth a couple of times ever the last few years in the comments on the topic of how attainable FI/RE is, as well as the contemporary trend…..

    The general agreement was that it was always a niche sport given that it required a strong character, relatively high earnings, discipline & a run of decent luck [don’t get seriously sick, have sh*tty relatives, partners or kids, etc., etc.]
    This was only going to get more so, as the underlying fundamentals were trending away from attainability, as in AI & austerity [the latter mainly derived from the planetary population explosion necessarily reducing resources per capita] driving inequality to levels whereby it is ever harder to even stay in employment to normal retirement age.

    In conclusion, it’ll taper to an even more minority sport, with only those with an unusual combination getting there – inheritance/other massive luck, no bad luck, a certain personality. If you think about it, the whole FI philosophy is really simple common sense, what our grandparents’ generation thought of as ‘just normal life’ – so people can easily ‘get it’ or do it if they want to, if they don’t see it, its because they don’t want to ……so nothing’s really changed.

    Liked by 3 people

  17. Compound interest matters, a lot, but you need to start early and keep going through thick and thin and as your career progresses then don’t let the lifestyle gallop ahead of yourself.

    Started 1990 £200 pcm and slowly lifted savings, 100% equities and just keep going, after about 6 years the portfolio generates more than my annual savings rate and after about 11 years its earning more than I was.

    Retired November 2007 still pretty much entirely equities, what could go wrong ! Keep your nerve and a little portfolio juggling and by 2018 all still going well.

    At least 80% of what I have now was generated from compound interest and 100% of income the last 11 years , so I would write it off.

    Started with earnings of £100 week so no mega earnings but being self employed in a blue collar job can produce earnings growth and a decent 7 figure portfolio now.

    Read the FT would be my advice and think for yourself , blogs are interesting but so much is for confirmation bias, or looking for a quick solution.

    (Investment Trusts and of recent years ETFs, approx 12% compound throughout the period with some substantial drawdowns which can provide opportunities as well as paper losses)

    Liked by 1 person

    1. While it doesn’t detract from the achievement over 30 years, the early 1990s recession wasn’t a bad time at all to start one’s investment career, unlike now the chance of every which way is down was much lower. I think it’s much much easier to start one’s FIRE journey from an economic suckout.

      Trouble is, if you are reading in the papers that you can retire by 40 and you haven’t given it much thought, you could easily be 30, and expect the action to happen by the time you are 40. There’s a big difference between was CI can do over 30 years and what it can do over 10. Overlaid upon that is the natural volatility of the stock market – your future returns depend inversely on the price you buy at. Not so bad in the 1990s, not so good starting now IMO. There again, over 30 years your integration time of that is longer. If I were starting now aiming for 2050 I’d say go for it. Aiming for 2030, from a standing start, hmm…


  18. Since when is the validity of a lifestyle determined by how many people can do it? What if everybody wanted to be a lawyer? Or a hairdresser? Or a nurse? Or literally anything bar farmer or hunter-gatherer.

    Yes, you have to work at it. Yes, there are certain mathematical realities and you have to tip ’em in your favour by earning more, cutting costs or waiting longer for your FU day.

    The credible sections of the FIRE community don’t shy away from these facts. Helping you navigate those truths is pretty much what they’re all about. Newspapers and certain fairy-tale spinning shysters don’t worry about it. Not news!

    At least a story in a newspaper publicises the fact that FI is even possible. I’d be FIRE by now if I’d heard of it before 2010.

    The media is pretty shameless in its promotion of celebrity success and ‘aspirational’ lifestyle consumption driven by the desire for status.

    So it seems weird to stomp all over an alternative vision just because it’s dared to get noticed. Especially when much of the community promotes some laudable values.

    What are those vitriolic commenters afraid of as they spit venom under every FI story published in the mainstream press? Are they afraid they might actually learn something new?

    I guess people don’t like having their values challenged. Because for me, that’s what the FIRE community is really about.

    It isn’t really about whether you can retire in 5 years, or 10, or whatever. The dirty secret is that it nurtures a values system that shows you don’t have to spend your life indentured to a corporate. That the measure of your worth isn’t really expressed by the size of your house, or the car on your drive. That’s the threat – the knowledge that a good life can be the simple life.

    Liked by 6 people

    1. A lot of FIRE blogs these days are just simply marketing exercises to sell coaching/ financial advice/ books/ seminars/ affiliate links

      Like anything on social media the line between FIRE influencer and peddler is a blurry one


    2. There is no doubt the positives of the many FIRE blogs outweigh the negatives. Nonetheless, a decade long, low vol, bull market in pretty much all assets has created overconfidence in some parts of the community. There have been equal periods where you would not end up with anything like the multiple you achieved in the last decade; in some cases you’d have lost money. I just think some blogs need to be careful about small sample bias. They need to make the point that in a world when bonds and equities both rallied hard, that the converse might then follow. That accumulation during a period of good returns does increase the risk of decumlation in a period of poor returns.

      Beyond that though you also have a set of blogs that are clearly are built to market their owners as financial independence gurus, lifestyle experts etc and to make money. Start with a simple message that you can retire on 25x earnings. Add in the eco benefits of frugality and some fashionable talk about “mindfulness”. Finally a bit of Greek or Eastern philosophy to taste and you’ve got a great product.

      I don’t think such a product is wrong if there is a market for it (and there clearly is). I do think though that a level of responsibility is required. Telling people 25x earnings is enough is not acceptable without also telling them that is only valid under certain conditions (US not UK, no fees/taxes, 30 years etc). Saying that 100% in equities is ok and that other investments (bonds, cash) is a waste is an extreme viewpoint over a longer history. That some psychobabble will reduce all your fears, solve depression etc. Not everyone is the superhuman they are. Not everyone will handle the 30% drop in their porfolio value as easily as they do. Emphasise the error bars, emphasise the uncertainty. A little humility would also help.

      Liked by 1 person

      1. Amen, ZX. I agree with what you say. My sense is that people, on the whole, aren’t so daft as to bank their future on the few blogs that overpromise. If you have anything about you then you’ll do plenty of digging. Which brings to mind a quote from Jason Zweig:

        Three ways to get paid for your words:
        1) Lie to people who want to be lied to, and you’ll get rich.
        2) Tell the truth to those who want the truth, and you’ll make a living.
        3) Tell the truth to those who want to be lied to and you’ll go broke.”

        Liked by 1 person

  19. @ZX

    I don’t see a huge problem with the 25x income guesstimate of capital to live off….provided the market is priced at attractive levels, market valuations at the time of purchase is what matters… doesn’t have to be UK equities alone.

    The tricky part is selecting and running an investment portfolio, understanding the inevitable volatility and that market conditions change over time and responding to that appropriately .

    When I started in the early 90’s an Equity Income unit trust I was buying was hit by market declines and was yielding 7% briefly. That was a good time to buy income !

    Looking online, that fund continues, despite two name changes and it now is 30% bonds 70% equities. (I ceased to hold this around 15 years ago)

    The yield is around 5% now , not dissimilar to the levels through most of the 90’s and the capital value has gently outpaced inflation. This suggests the Equities approach would have worked then and I imagine it’s a reasonable approach now.

    One of the biggest problems with FIRE is the discipline to control spending before and after retirement and deal with the inevitable ups and downs of investments.

    It’s not for everyone and most people simply don’t have enough surplus income to invest to save and invest to achieve FIRE quickly.


  20. “That’ll learn me for being too tight to read the original Times article and relying on a precis.”

    Um, to be fair to the precise-r in question (me I think?) I said it was an interview with TEA in the second or third mini-paragraph of my article.

    More that’ll teach you to get the rant-steam engine fired up before checking the wood doesn’t have any green knots in it! 😉

    (That said I’ve 100% been there myself, so taking my stones well away from your glasshouse… 😉 )


    1. > I said it was an interview with TEA in the second or third mini-paragraph of my article.

      Indeed so you did. I screwed up, would have stuck with the Guardianistas if I hadn’t developed the attention span of a gnat on speed. Sorry TEA/Barney. I’d had the steam engine fired up because I’d picked up wind the Torygraph was going to write an article on FIRE, no doubt it will tell us that people on average salaries can retire early…

      I really didn’t mean to have a go at TEA, more at the general anybody can do it line from the media. It looks a doozy now because someone who got there in 10 years started very close the the global financial crash. It is unwise to infer the general from the particular.


  21. New reader here, so pardon me if you mentioned this elsewhere but in this post you didnt talk about the affects of pension withdrawal age being ramped up continuously. The earliest I will become eligible to draw a pension would be 69! This means to retire early, my savings need to last that much longer before pension starts chipping in.

    Plus it also hurts that even though I could save 40% on taxes, I would only get to use my savings when I’d have little energy left to actually use it. This is hoping I dont die early, cancer seems to be thinning the herd pretty randomly. Better pay taxes and hope to earn high enough return.

    PS: you often mentioned in your comments about SIPP, appreciate you doing a post on its pros and cons!


    1. I can appreciate that the drifitng up of pension ages is a pain, although do remeber it’s not all bad news. You are expected to live on average 4years longer than someone my age 😉 The more pertinent hazard is drifiting up the age at which you can draw from a private pension. There is a stated aim that this should be 10 years before state pension age (59 in your case) although it has not been changed from 55 so far.

      To read more about SIPPS I’d say take a look at Monevator’s post on that. Moneysaving expert is also good on pensions, and perhaps more for a readership less familiar with the subject.

      Early retirees aiming to retire before 55 need a combination of SIPPs and ISAs, because you can always get hold of an ISA, even before 55. The ISAs matter more the earlier you retire; the downside is that you don’t get tax breaks on the ISA, and early retirees from high-paying occupations where burnout is rife (footballers and City finance people) take a hit as early retirees because more of their retirement savings comes from post-tax savings than is the case for normies.


  22. I have pondered whether the Hubris:Humility ratio in the FI blogosphere has tipped leftwards primarily due to the long bull run, or whether it’s a broadening of the demographic of people getting involved. Maybe a bit of both? Maybe a few key mavens are swinging it, or possibly it’s just a random event?

    I noticed TBA put together a defence of his Unicorn selling business but it seems to have since disappeared? Maybe he should just take things more literally and follow in this guys footsteps?

    Now that’s a side-hustle?


    1. I very much get the impression that Barney regularly edits every aspect of The Escape Artist Blog to optimise the “marketing opportunity”
      He should really start posting instagrams of himself in Gymshark and put up some affliiate links to flog leggings


  23. Since we are loosely talking about pensions..

    Hypothetically if someone was/had:
    Aged 55
    DB benefits of £37.5k pa payable in 5 years time (current deferred pension £30k)
    DC pot of £250k

    Can they take the £250k DC pot as the 25% tax free lump sum immediately? I can’t find the rule online and the readership may have the answer.

    Context – future planning on how/when to clear my outstanding IO mortgage balance.



    1. > Can they take the £250k DC pot as the 25% tax free lump sum immediately?

      Sadly, no. There are some specific circumstances where a DB pension is linked to a DC pot, often called AVCs (Additional Voluntary Contributions) which are not to be confused with Free-Standing AVCs, which roughly = SIPP. If your DC savings were collected via payroll while you were at the DB employer then under those specific circumstances you may combine the value of both pensions and take the AVC fund as your PCLS.

      In the unlikely event this is the case, HMRC pensions manual tells you you value the DB pension as a notional capital of roughly 20x the first 12 motnths payment (750k in your case, = 37.5kx20). To that you add your £250k, making £1M, and you could then take your £250k as a tax-free 25% pension commencement lump sum.

      If it is the case, you MUST talk with your Pension admin team, since you must take both, usually at the same time (according to the particular Scheme rules) and in a process such that the trustees will inform HMRC that the AVC fund is linked with the DB scheme. You must follow their process exactly.

      However, if it is an urelated DC pot (like a SIPP, a FSAVC or pretty much anything not collected as an AVC or linked DC fund to your DB pension), then you crystallise the pensions separately, and you can take 25% of the 250k as a tax-free lump sum, the rest is takable income. Don't take it all out ino one year! Usually with the DB pension, you can commute some pension to a tax-free lum sum, and some DB pensions have a TFLS built in. The multiple used to commute DB pension to lump sum is key, it can be quite low in some cases.

      You would probably know if your DC pot were an AVC fund, if in doubt ask your DB pension administrators.

      Another way would be to do a DB transfer out to the SIPP by taking the CETV, but this is likely to be lethally bad for your long-term interests and a risk analysis way beyond my pay grade. You would have to take independent finacial advice because your DB pension capital is > 30k, you could ignore the advice as an insistent client. For the sake of clarity I am in no way recommending that course of action, seek advice, and take heed.

      You can get a free personalised consultation where you can ask these sorts of things and get a more definitive answer if you are coming up to pension age from the government-funded Pensionwise service


      1. Thanks Ermine, very useful.

        I wasn’t optimistic about getting the £250k cash free lump sum at 55 – but it would have been nice.

        However, I had assumed 25% of the combined pot (20xDB + DC) would be possible at 60 (start date of DB pension) – this is bad news, but great to know now!

        I will take up the pensionwise offer in 2020, when I meet the age restriction. Ahh the joy of being too young!


        – my latest CETV multiple was only 28x current deferred pension. Personally I wouldn’t event consider it unless it was ~40, and even then probably not as my wife is uninterested in investments.
        – Talking to a guy at Barclays, his multiple was 50!!


      2. Update – I omitted to say I had taken fixed protection 2014.

        Looking at the resource below it seems to imply that taking Fixed Protection creates a notional combined pot for the 25% PCLS to be measured against. (See below). I will pick up with HMRC and give a final answer at a later date.


        “Standard TFC(tax free cash)
        Under Fixed Protection 2012, the member is allowed up to 25% of £1.8 million (£450,000) rather than 25% of the LTA at that point in time. Under Fixed Protection 2014, the member is allowed up to 25% of £1.5 million (£375,000)and under Fixed Protection 2016 the member is allowed up to 25% of £1.25 million (£312,500). At the time of writing, the LTA is £1.03 million (TFC of £257,500). If the standard LTA rises to more than the protected LTA, the member with fixed protection will be entitled to 25% of the higher figure.”


      3. I spoke with HMRC today – and as per Ermine’s summary not a chance of taking 25% PCLS based on notional Fixed Protection pot. Seems harsh to me penalising job swappers and the mobile. One for the MP when they’re not pro-occupied with more serious stuff.



  24. Will people stop saying “if you don’t have kids”. I do have a baby on the way and I still need to retire in 10 years time. I am thinking the days of saving 50% of income are behind me. Roll on the crash …assuming I keep my job off course.

    Liked by 1 person

  25. Great blog post, thanks. I’m new to FIRE having recently read about it in the papers but I don’t want to retire early on £25k, I want more and am prepared to wait. I view these recent newspaper articles with scepticism too. I’m an accountant on a godo wage with 3 kids and a large mortgage. I need to pay for the kids Uni fees before I can even think about retiring early. But I am planning for both of these things.


    1. There’s a huge difference between the extreme early retirement at 40, and early retirement around your mid 50s. The latter tends to coincide with when people’s kids come of age, although they are peak expensive if you are paying them through university (as an aside, why – there’s an argument that it is a misallocation of capital compared to the same amount helping them onto the housing ladder?).

      People with kids who want to retire in their 40s need to have taken action young, before they have kids IMO, or be on a stratospheric income. Early retirement a decade later should be entirely possible for partents on a good wage IMO using the general principles of FIRE.


      1. Interesting article. I have never bought this idea that the fees shouldn’t be paid and that it was cheaper to get a loan. I understand the maths and the article explains it well, but I didn’t buy it. Now I know why. I have doen well for myself post graduation, having done well at a comprehensive school. My kids all go to grammar schools and my expectation is that they will do equally well, if not better.

        Salaries post graduation are unknown, but its not unreasonable to be a high earner in the South East of England. It all depends on what degree you do and what profession you intend to enter. Also I graduated with no debts and I want the same for my kids. In addition, I’ll probably be able to help them onto the housing ladder as well. But if I had to choose housing or education, I would plump for paying Uni fees as that education will be with them forever, whereas they could sell the house and squander the money.

        I am 44, I want to retire at 55. I’ve always managed my money well so I am not starting from a standing start, plus I have a very good DB scheme to help me. I need to reduce my mortgage though!

        BTW I like your style as you are not pretending its easy and anyone can do it. Anyone can manage their money well and I am passionate about that. No one I know gives a stuff about retirement, being financially savvy or investing. Even buying a mobile phone outright (“I can’t afford £800 upfront) instead of paying monthly seems to be too much for most people


  26. I agree. Some people on low salaries will struggle to save even 20% of their income regardless of how frugal their lifestyle may be. One needs to eat and live somewhere; even charity shop clothing ain’t free. As you once so eloquently put it, a hairless mammal in a northern climate requires shelter, etc. And when it comes to the metaphorical value of the Latte Factor, well, let’s just say I have reservations.
    I wonder if anyone here has read Scarcity: Why Having Too Little Means So Much? Financial independence is essentially a continuous planning exercise – for one’s future. Scarcity dramatically decreases a person’s capacity to plan, which handicaps anyone on a low wage in two ways: one, they have fewer resources to play with, and two, they have less bandwidth for planning. So you’re right saying that FI is much – much – easier for those who have what the authors of Scarcity refer to as resource slack.


    1. I experienced some of that to a very small degree in the three years I was saving as much as possible. Turning off the central heating and using a wood burner to heat the house was a dumb move, you need some background heat in winter else hello mould 😦 And I shifted myself into a scarcity mindset, so even after retiring I didn’t spend enough money, protracting the recovery period. I was fearful of everything with money, I paid off my mortgage early which is about the most stupid thing you can do if you are retiring before 55 at a time of low interest rates.

      I thought I would fall short about two years into retirement, which was also overly fearful, six years in I still have some of that float. Yes, I did have some unforeseeable luck in George Osborne’s pension changes – annuity rates sucked at the time, and I wanted to run the SIPP flat before my main pension, not have a little bit more income spread over the rest of my life. But shortage thinking made me miscompute the amount I needed to bridge the gap by over 100%

      So this was someone who had far more slack than many, I have no idea what this is like for many people but I see them reallocating money and firefighting loans. I was walking back from town and overheard some girl on the phone talking about whether to take a loan of 6.5k and some shcoking rate or to borrow £8000 knowing she would be paying back £20000 and thought to myself “Lady, whatever it is, do not to that to your future self” At least I had to hat-tip that she was aware of the total cost, unlike so many borrowers. But she still had it as an option – WTF?

      I bought the book on Kindle. I could have got it from the library for £1 as it costs money to get books from other libraries here. So I spent £4.49 over the odds, to save myself headspace. Don’t tell MMM, but I am getting less frugal. Because Monevator’s ex-girlfriend has a point – “Well, what ARE you saving for then?”

      Liked by 1 person

  27. Retired three months ago. 56 and bit year old teacher and 50 year old teacher wife. No kids, both frugalish. Like the free things in life. I have a public service pension coming when I hit 60 of just over 20K plus 3 x lump. I have a SIPP of 80K in cash ready to drawdown from next April. Will empty it over three years. Wife has a SIPP of just over 90K still invested in ITs. She will draw it when she hits 55 and will empty it over 5 years. Her public service pension will be about 16.5K plus a lump of 45K. We will buy extra NI years to max out on state pensions. We also have cash of 150K sitting with atom and NSI, earning 2% and 1%, so losing value because of inflation. We also have ISA’s between us of about 250K. A mix of IT’s like CTY, HFEL, FGT, MRC etc. We can take income from these when we feel we need to or just re-invest. We need about 2K per month to be happy happy, plus a bit in case of major expenses. What would all you recommend for the 150K cash- should I leave it for now until my pension kicks in just in case. Everyone is saying equities are overvalued, but not everywhere? What would you do?


  28. In other news about the difference between perception from the internet and reality just read on Instagram that Mrs Money Moustache is seeking a divorce. If true, what enquiring minds want to know is the grounds for the divorce. I am thinking:
    A) Mr MM hooking up with numerous nubile albeit hirsute millennial female fire bloggers at “FIRE retreats” in the Caribbean
    B) Mrs MM running off with a Starbucks sipping, take-out eating pencil neck driving a gas guzzling F-140 truck
    C) Refusal of Mr MM to buy McDonald’s happy meal with free toy for MMM junior
    D) Arguments about use of proceeds from Mr MM’s USD400k a year revenue website
    E) All of the above

    “Don’t believe half of what you see and none of what you hear” Lou Reed


  29. I was puzzled why my numbers (in NL)didn’t add up nowhere near compared to the US numbers. Until i compared income tax which are above 52% in the higher dutch bracket and in some cases US tax was+-30 ? Not sure (Tax is good, you get a lot in return, i’m very much in favor of it but it doesn’t help to reach fi early)


    1. >it doesn’t help to reach fi early

      One thing which is very different for you compared to the US is the healthcare regime. I think Medicare helps those over 65, but otherwise in Europe the sort of hurt that healthcare causes in the US is absent.

      I have been lucky enough not to need the NHS much, but US style health insurance would have been a massive hit on my income through my working life. Indeed, it is the fear of US-style changes to the NHS that my ISA is largely there to defend against, when it falls due my company pension is enough for my running costs. But persistent underfunding from the government makes the NHS look unsustainable ot my eyes, just as I am reaching the third of my life where I would possibly need it more 😦

      The difference may be lower when that is factored in…


      1. Get your German passport, then all you have to do if you don’t feel well is cross the iron curtain by ferry to Ireland or train to the mainland for good, free healthcare. Of course, if everything turns out al’wight on the night, you can just saddle up your unicorn and fly anywhere you like with all the new trade deals 🙂


  30. Hi Ermine,
    Well, the recent publicity will at least give a few people a “Wow!” moment, like Kerry above and me last year, when a public comment on the Guardian’s CIF mentioned MMM (thanks to that anonymous poster!). Most people won’t see it though, and I don’t really know why. Perhaps your personality has to be suited already, and you need to have some trust in maths?

    @Neverland, I can’t belieeeeve you’re reading gossip on Instagram! 😉


  31. @Ermine, wow, that is so, so, so unjust, the randomness of an historical point on gender. I know it’s futile & therefore stupid to waste a second on, but it’s my character; microscopic arbitrary cruelties in life make my blood boil. I try to cope by balancing that with the knowledge that you also get undeserved beauty in life.


  32. An interesting post as ever Ermine. I strongly agree with one of the comments above, in that a lot of the FIRE blogs are about selling coaching etc from people who have little in the way of experience or qualifications to do so. I have noticed over the last few years that a lot of the FIRE bloggers have fallen by the wayside.
    The good lady and I have been working toward FI and I suppose RE for 10 years now. Before that we were lucky enough (and maybe sensible enough) to avoid becoming rampant consumers. We both drive older cars that I maintain, whilst holding down well paid jobs. Holidays over the last 10 years have been either camping or in our camper van. Most of this has been wild comping in the Scotland or Scandinavia. We live a very frugal lifestyle but I still consider us to live in luxury having traveled extensively with work to some of the poorer parts of the planet. I also paid off my mortgage as quickly as possible due the uncertain job market that was involved in (automotive). This was a massive benefit. We inadvertently became landlords after rebuilding the GLs flat and subsequently paying that mortgage off. We always encourage our tenants to buy rather than rent, so we are probably not typical landlords.

    There is nothing wrong with aiming for FIRE. Living frugally doesn’t mean you refrain from putting the heating on when it is cold. If you are sensible this path will let you enjoy a much more relaxed lifestyle even whilst employed. I hated my job due to the bullshit, politics, performance metrics etc, but once we had a sizable cushion behind us, we could afford to be a bit more blasé at work. This has not had a detrimental effect but rather the opposite bizarrely.

    The main benefits for us on our path toward FI have been living much more healthy and frugal lifestyles, the ability to help out family members when in a tight spot. Mental health has also improved for us both with a massive reduction in stress.

    Maybe people should be encouraged to aim for FI rather than the full FIRE. We will both leave our full time jobs at the end of the year. I’m 50 and the GL is 42. We will both continue to work in all probability, but only if we enjoy it and it suits us.

    The point of this long ramble is that maybe we should try to encourage frugality leading to some level of FI so that people can lead a more relaxed and flexibly lifestyle. This would be good for the individual and the planet.


    1. > I have noticed over the last few years that a lot of the FIRE bloggers have fallen by the wayside.

      The attrition in the field is shocking, I do agree. I am almost part fo the UK PF fossil record and my first real transmission is less than 10 years ago. Makes you wonder if they found the change in lifestyle too much to stomach, or if they are peacefully retired and chopping wood somewhere the Internet doesn’t trouble them 😉

      we could afford to be a bit more blasé at work. This has not had a detrimental effect but rather the opposite bizarrely.

      I am both surprised and perhaps not. I never had the pleasure, because I exited the workplace on reaching FI, but my favourite American ad from the 1950s on the value of having savings and the pleasure of walking tall says just that

      A man who can afford to quit is much more useful to his company, and therefore more promotable. He can afford to give his company the benefits fo his most candid judgements

      OK, that’s probably more in some jobs than others, I don’t think that Mickey D has much use for their counter staff’s most candid judgements even if said staff can walk away. But it’s nice to hear that the theory has been battle tested in at least one instance.


  33. Hi, I stumbled across your blog. I wasn’t aware of the whole FIRE movement until about 5 years ago. I’ve always been a frugal chap and I’ve had a bit of luck along the way. When I attended University there were no tuition fees, I worked for 18 years in a job which had a defined benefit pension scheme (present CETV about 600k), I’ve always earned about twice the average wage. Fast forward a bit to the present day. I’m 46 with 2 fully paid off properties, 1 solely in my name and another jointly owned with my partner. I’m in my last week with my current employer, I’ll then have a week off before starting with another employer who offered me a 50% pay rise. My trusty spreadsheet tells me I could quit work entirely but I’m going to try and stick at it for a few more years. I’ll be using salary sacrifice to fund my pension up to the 40k annual limit and as long as the sky doesn’t fall in I’ll (hopefully) hit pension LTA by 55. I agree that many of the bloggers sell unrealistic dreams. However, if it makes at least one person evaluate why they feel the need to continue to spend on shiny nonsense and then buy ever bigger houses to accomodate the accumulated shiny nonsense then I guess it’s a start.

    Liked by 1 person

    1. In some ways you make my case 😉 People who can aim for FIRE are remarkably fortunate, they really aren’t the average. You and I, for instance, have the advantage of a significant DB pension accrual. We have no need to buy bonds and the retirement saving challenege is much more bounded in our cases 😉

      Then you have the case that the LTA is an issue for you in 10 years time. You are not average 😉 There’s a certain arrogance in the PF community when we say anybody can do it. I don’t mean you specifically – you haven’t said anyone can do it. Early retirees need a hunk of good fortune, hard work alone won’t get many people there from where they start. I look at the workplace now and I don’t think that if I were nearly 40 years younger and starting out, that my future self would be able to retire early. I am grateful for the good fortune as well as the work of my younger self.


      1. Indeed, I agree that not everybody can expect to retire very early. I see the absence of financial education to be a significant issue. I presently ( for the next few days ) work in a large credit checking / financial services organisation and I’m astounded by the lack of financial knowledge in my colleagues ( although most of my colleagues are IT folks). My colleagues are clever but constantly moan about their salary deductions even though their employer allows them to make pension contributions by salary sacrifice. The car park is full of shiny new cars which will either be on business or personal lease, my car is 13 years old ( and I’ll soon be switching to cycling to work ). I agree that the DB pension has made my life significantly easier and I recently emailed the a former colleage thanking him for telling me to sign up for the scheme. However, I’m not taking my DB scheme for granted. I expect the company who manage my (now frozen scheme) to go bust before the scheme becomes payable. Thus, I’ll keeping an eye on the scheme and getting annual transfer values – if I transfer it I’ll be taking on more risk but my dependents will be free to inherit it. Anyway, enough ramblings. My underlying message is that people need to take charge of their own lives. Get financially literate, understand a shiny new car will not make you happy if you are sat in it stuck in traffic commuting to a job you hate. Think of the future and plan accordingly – of course there’s no guarantee that a change in regulations / government or other issues may not derail your plan ( I have a big spreadsheet to model such issues ). Don’t live so frugally that you miss out on the important things in life but the accumulation of shiny stuff will not guarantee happiness either. Oh, the LTA will only be an issue in 10 years because of my aggressive savings plans – If I chose to go out and buy a new BMW every 3 years the LTA wouldn’t be an issue. Best of luck everybody


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