Financial Independence, Recreational Employment (FIRE): A Modern Approach

The FIRE movement has gotten a facelift.

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Key points

• Followers of the FIRE concept face many challenges, including loss of income and insurance.
• The new Financial Independence, Recreational Employment movement has answers to many of FIRE’s obstacles.
• Those answers include working a part-time job you actually enjoy.

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In the 2010s, the Financial Independence, Retire Early (FIRE) movement swept up the millennial and Generation Z workforce. The concept of retiring in one’s 30s continues to appeal to many, and across news headlines and online forums, some claim to have discovered the key to making it possible. However, the movement has faced a number of challenges over the years. Today, the FIRE movement may be facing a rebrand, one with fewer roadblocks and a more moderate approach to walking out on your employer.

The flaws with FIRE

At the core of the FIRE movement is the idea of living life without a typical 9-to-5 job. For a dissatisfied worker, this cold turkey approach might seem liberating. However, the long-term effects of leaving the workforce early may leave one at the mercy of economic factors.

The financial implications of exiting your working years early are substantial. For many Americans, their job is their largest source of income. Many FIRE followers cut this source off completely, instead falling back on retirement savings citing the “4% Rule.” This reliance on savings exposes FIRE fans to inflation risk and market risk for extended periods of time.

Another factor in the FIRE conversation: health insurance. While the gap in premiums between group plans and individual plans is narrowing, that is only one part of the picture. Employers often cover more than half of the cost of health insurance for their employees, while individuals must cover the entire premium. And while younger FIRE followers may benefit from avoiding risk pool calculations, aging FIRE folks will have to pay higher rates, especially if they develop a health condition. For the young and healthy, FIRE can seem possible. For the old or sick, not so much.

FIRE 2.0 includes recreational employment

Reconciling the financial aspects of early retirement can be difficult. But the FIRE movement is facing a dramatic change. It goes by many names: FIRE 2.0, Coast FIRE, Financial Independence, Recreational Employment. The latest edition of financial independence allows for some wiggle room when it comes to leaving the workforce.

FIRE 2.0 takes a more moderate approach to walking out on your working years, replacing quitting work entirely with working recreationally. Recreational employment can mean many things, but the typical characteristic is work that one enjoys doing on a part-time basis. While the benefits offered to part-time employees may not be equal to those offered to their full-time counterparts, followers of this variety of FIRE tend to seek jobs which offer healthcare and a decent paycheck. The hallmark of FIRE 1.0, frugality, still applies to the followers of this iteration. In theory, exercising control over your expenses while conceding complete freedom in retirement makes FIRE 2.0 more attainable than its counterpart.

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Should you FIRE?

While Financial Independence, Recreational Employment answers some of the questions posed by an early retirement, the likelihood to successfully FIRE varies from person to person. Financial pressures, such as market risk, still pose a greater risk to Coast FIRE followers than they do to the average American. Additionally, emotional pressures are at play against those who FIRE. As one blogger put it, “I retired at 40, now I’m bored.” While cornerstones of the FIRE movement, like strict budgeting and high savings rates, will always be financially savvy, leaving full-time employment poses significant risks.