These past few years, the Financial Independence, Retire Early or FIRE has been very popular.

Conceptually, FIRE is very simple. You save and accumulate enough funds that will generate income that matches or exceeds your expenses, so you don’t need to work anymore. For example, if you can live on $2,000 a month, you need $600,000, assuming a safe withdrawal rate of 4%.

This was a very successful formula for the last decade due to the non-stop bull market, and there are famous bloggers like Mr Money Moustache and Financial Samurai who popularised FIRE. They invested in the height of the 2008 financial crisis, let their investments compound for years, and then quit their jobs once they felt they have enough. They are living the dream of never having to work again, and doing things on their own terms.

But with the market crash, is FIRE still possible?

For people already on FIRE, it’s a scary time. Portfolios have been smashed, and no one knows when things will recover. Still, most people should have some emergency cash, so they don’t need to sell their investments right now. People on FIRE also tend to be frugal, and can tighten their belts to reduce expenses. They can still go back into the workforce. It’s not the end of the world. The key thing is to survive this tough period and not burn your capital.

For most people that were aiming to FIRE this year or the next, I don’t think it’s a good idea right now to quit your job. Just working and investing 1-2 more years during this period will have a huge payoff to your retirement funds for the rest of your life. Retiring now to travel the world is a bad idea too, thanks to the worldwide pandemic.

But for people whose FIRE target is more than 2 years away, I think you have been given the greatest gift.

You can accumulate a lot of investments that will likely have returns of 7% or more, easily. You can lock-in bond and mutual funds yields that are double of what they were a month ago. Everything is cheap now. Long-term wise, you cannot lose.

Your job isn’t safe

The FIRE goal of saving and investing to gain passive income will become even more important. It will get harder and harder to depend on your job for income.

I don’t know about you, but it feels like people are being asked to work more with the same amount of resources. Projects that used to require 10 people now only need half of that. People are being asked to double-hat 2 roles, while still getting 1 salary. Everybody wants things to be cheaper, better and faster, all at the same time. If you can’t keep up, you’re out.

Being old and experienced is a liability. As I get older, I find it harder to learn new things and work long hours. There are tonnes of eager young people willing to work more for less pay. Honestly, I can see why my boss would want to replace me once I’m past my prime.

In addition, we should fear the robots. Many companies can’t wait to replace their employees with them. Robots aren’t affected by pandemics and don’t take sick leave. Robots don’t need petty things like holidays, children, or wage increases. Robots will do as they are told.

Your job can’t be automated? Well, there are thousands of other jobs that can be, like drivers, cashiers, and salesmen. Even jobs in the banking and professional sectors are being heavily automated. Where do you think these people will go? They will go and try to compete in your supposedly safe sector, pushing down wages and job security. So it affects everyone, and it will accelerate. It is happening already.

So no, the FIRE movement is not dead

It is always going to be relevant to be financially independent and not be beholden to anyone. Creating a secondary source of income is never going to be a bad thing.

Hold on to your job for now and save away. A new generation of financially free people will be created these few years, those who had the cash and guts to buy in when everyone else was losing their minds.

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