There’s a subset of the personal finance community that goes by the acronym FIRE: Financial Independence, Retire Early.

Financial Independence is a worthy goal: who wants to be dependent on someone else for an income? But it’s (understandably) the Retire Early part that gets attention from the wider internet. One of the biggest bloggers in the space, Mr Money Mustache, retired aged 30. That’s so unusual as to be newsworthy.

I have a love-hate relationship with this whole space.

I love the emphasis on saving, rejecting mindless consumerism, and building passive income.

But I hate how many bloggers seem obsessed with the idea of retiring as soon as possible, so they set a target amount of savings that I don’t believe is anywhere near enough for long-term security. Or even happiness.

They often go by a heuristic called the “4% rule”: if you put your money into the stock market and withdraw 4% of your total funds every year regardless of whether the market is up or down, you should be able to go a long time without running out.

To calculate this the other way around, it means that you need to have 25 times your annual spending amount invested in the stock market in order to “retire”. You want to live on £50,000 per year? Then you need £1.25m in the markets. 4% of £1.25m is £50,000, so you just take that out to live off it every year come rain or shine.

I have all manner of problems with this “rule”, but I’ll stick with one for now: relying on any one asset class as your sole source of income for decades seems extremely risky.

The stock market could fall by 50% in a year. It’s not likely, but it could. If you stick to the “safe” 4%, you’re now stuck living on £25,000 per year until the market recovers. Which could take a decade or more.

What if you relied on property instead of the stock market? Well, properties sit empty. Tenants stop paying. Mortgage rates rise. Boilers fail. I actually think property is a lot less volatile and a property-based income stream is more stable, but regardless: your income could fall for any number of reasons, and there’s not a lot you can do about it.

It’s the same for any single source of income that you don’t have total control over. If you’re relying on royalties from books you’ve written in the past, those books might stop selling. If you’re getting paid from a business you built but no longer run, that business could run into trouble.

In any of these scenarios, you could be left rushing to polish up your CV and explain a multi-year career gap.

The world is a risky and uncertain place. Low probability, high impact events will happen. If you retire at 30 with a single income stream, you’re basically crossing your fingers and hoping nothing unexpected happens for the next 50 years or more. Doesn’t sound like much fun to me.

What’s exceptionally unlikely to happen though? All those bad things all at once.

Sure, everything is correlated up to a point. But spreading your bets means that any particular disaster is going to have a smaller impact on your income.

FIRE bloggers actually know this, whether consciously or not. After they reach their magic number and “retire”, they almost always develop another stream of income so they’re not reliant solely on their investments. Often, this income is derived from adverts on their blog, financial coaching, selling books, and so on.

I don’t see anything wrong with that at all. But it does mean that when you get down to it, hardly anyone is actually doing what they were attempting to do for all those years: retiring and living off their investments. All their investments actually did was give them the financial cushion and confidence to stop working for someone else, and start working on ways to earn money on their own terms.

But here’s the thing: you don’t need to wait until you’ve got a large sum of money in investments and “retire” before you start doing that. You can start building those extra, semi-passive income streams right now – while you’re still working.

Once you’re able to generate income in multiple different ways by doing things you enjoy, you don’t even need to worry about the big number in the bank much. You can quit your job (if you want to), and keep earning money on your own terms without having to worry about events beyond your control.

That’s not what FIRE bloggers are preaching, but it’s mostly what they’re doing. And I don’t blame them: it seems like a much better plan to me.

But there’s no need to wait until the “4% rule” says you can do it: start right now.

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