Attempting to achieve financial independence and/or retire early is an audacious goal. It takes grit. It takes gumption. It takes perseverance. It takes patience. It is an audacious goal, a lofty one, but here is the truly crazy thing about it:
You can’t fail at FIRE
Seems counterintuitive doesn’t it? If a goal is a difficult one, it stands to reason that only a few will stick it out to the end, the unfortunate rest will fail, and will sit around licking their wounds. Not so with financial independence. Not by a long shot.
What Does Failure Look Like?
Meet Geetha. Geetha is 26, and has just stumbled upon the tribe of folks aspiring to financial independence. Enthusiastically, Geetha joins the party. She starts to save with enthusiasm and invest with gusto. She scribbles on the back of envelopes and spends an unhealthy amount of time with cfiresim. She determines that her journey will be 15 years long and that she will retire at 41 with a stash of $1.2 million dollars.
Let’s say that Geetha never makes it to $1.2 million dollars at 41. Technically, Geetha has failed at achieving her goal. Or has she? What might this “failure” look like?
Scenario 1: Geetha has $800,000 at the age of 40, and is still striving for FIRE
With $800,000 on her 40th birthday, getting to $1.2 million when she turns 41 seems like a stretch. What happened? Life happened. Geetha got married, and then divorced, and is now a single mother. Or maybe Geetha got laid off along the way, and was out of a job for a year and a half. Or maybe Geetha’s mother back home in India got cancer, and Geetha took some time off to care for her, and spent some of her savings on getting her mother set up. They say that there is many a slip twixt the cup and the lip, and when it takes fifteen years for the cup to get to the lip, there is much opportunity for life to bump your elbow.
But would we consider calling someone with $800,000 stashed away at the age of 40 a failure? I think not.
The possible outcomes for Geetha from this point are many, and all of them are good. Her rate of saving could accelerate again, and she could get to financial independence at 45. Would a 45 year old retiree sit around bemoaning the fact that they failed because they didn’t get there at 41? Nope, I don’t think so.
Scenario 2: Geetha has $300,000 and has fallen off the wagon for good
Geetha had a number of years with a savings rate of 65%. She amassed $300,000. Then one day she was presented with the opportunity to work her dream job. It was a risky move and would require a complete shift in career paths. It would mean a salary cut. You know what allowed Geetha to jump off that cliff and fly? The giant $300,000 cushion waiting at the bottom to break her fall. Geetha loves her job. She no longer has any interest in financial independence or retiring early. She intends to work till she drops.
Look at her now, fulfilled and happy, with a solid nest egg in place for when she does get too decrepit to work any longer. If that is what failure looks like, sign me up.
Scenario 3: Geetha has $15,000, and the road ahead seems long and steep
While the idea of scaling the financial independence wall sounded like fun, the truth is that Geetha has a job that does not exactly shower her with money. She finds talk of sky high salaries, giant bonuses and restricted stock units both alien and annoying. Her life seems filled with altogether too many sacrifices, and the reality is that she struggles to put away $1,500 a month. She has kept at it for a while though, and has built up $15,000 in savings, but she is sick of feeling so far behind. At this rate it is clear that she will never hit her goal in 15 years. It will probably take double that time!
At her current savings rate early retirement may not be a reality for Geetha, but should we label her a failure? She has a solid emergency fund in place – car tires blowing out, small medical emergencies, a sudden flight due to a death in the family, a few months of unemployment – she is in a position where she can handle a lot of stuff without coming financially undone. Even if she decides to abandon the goal of early retirement, and save only $1,000 a month from here on out, her small nest egg will grow to comfortable proportions in time for a regular retirement, and that is more than what most people can say.
Getting Off The Highway Isn’t Failure
You may start off on the highway to financial independence, pedal to the metal. The truth is that you may not ever get there. There are many turnoffs, and they can lead to wonderful places. You may decide to take the scenic route, or meander off to a completely different destination.
The pursuit of financial independence will teach you how to manage your money. It will result in a stash, though the stash may end up being smaller than what you originally set out to amass. It will teach you to consume less, and appreciate all the things in your life that aren’t stuff. It will strengthen your spine, and allow you to disregard the Joneses. It will likely teach you life skills – you may learn how to cook, how to fix things around your house, how to travel-hack. You will learn that there is much fun to be had without opening your wallet.
The result of pursuing financial independence is that even if you never get to the finish line, you are very likely to get to somewhere worth going. So get on the road, and rest assured that failure is simply not an option.