The world used to work differently. It used to be that a young man or woman could sign on to a solid company and be assured of long-term employment. Along with a job that would take them to retirement age, they had defined benefit plans (pensions) that provided for the years that came after retirement age.
This model, combined with government social security programs kept the boomer generation and their parents financially secure well into old age. This worked all through the 1950’s, 60’s and even through the 70’s.
But then the world changed. In the 1980’s the traditional pension system started to break down. People started living longer, and the world became more globalized. Suddenly employment, which was once considered secure, became far less secure.
Private companies had to compete against significant global competition AND they no longer wanted the open-ended responsibility of paying for workers who might live into their 80’s or 90’s.
So the world shifted to defined contribution plans (IRA’s and 401k’s)
Pensions died out almost completely, and today only employees of government entities might be offered pensions.
The Rise Of The 401k
Honestly, I don’t have a problem with the rise of the IRA/401k and the decline of pensions. Instead of the burden being on the government or a shaky employer, the responsibility for retirement savings now lies on the individual…
As it should be!
The world has completely changed. People now change jobs much more frequently — once every couple of years isn’t considered abnormal in many fast-paced industries.
Everything goes faster now… even the lifespan of our employers. If we look at the average lifespan of companies in the S&P500, back in the 1970’s that average age was 30 years. Today, it’s half that. Change is happening faster than ever before.
That sounds downright silly compared to the tax-deferred retirement plans we take with us when we leave a job today.
Nope, I don’t have a problem with pension plans dying out. What I do take issue with however, is the severe lack of financial education provided to young people today.
The Lack of Financial Education
When I went to high school, the closest thing we had to a personal finance class was a course that taught students how to do their own taxes, and calculate credit card interest. That was it.
We didn’t learn about stock investing, bonds, index funds, ETFs or anything remotely like the Trinity study’s 4% rule. Retirement never came up.
Once I joined the corporate workforce, this distinct lack of financial education continued… my new employers handed me the signup paperwork for the company 401k plan … and that was it.
Not once in my short career did I ever receive practical advice on how to utilize retirement accounts to actually retire. The lack of financial education available to young people like myself is utterly frightening.
Rather than live in ignorance, I chose to teach myself…
For years I literally devoured ever book on investing I could. From the classics, like Ben Graham’s Intelligent Investor and Thomas Stanely’s Millionaire Next Door, to more modern tomes like Jeremy Siegel’s The Future For Investors, and Mohnish Pabrai’s Dhandho Investor. (FYI: All of these books can be found on my Books page)
I read everything I could get my hands on. The point is, I was entirely self taught. I had to wade through piles of good information and mountains of bad information to eventually sort it all out on my own.
Few people probably have that same level of passion for investing. It probably qualifies me as a “Personal Finance Nerd” or “Investing Geek”.
Unfortunately, a young person just starting out in the world shouldn’t need to go to these extremes just to learn how to retire.
Too Much BS
Today, learning to invest is harder than ever — We still have very poor personal finance education in schools. All the classic investing books still exist, but now we have countless more books published on investing.
Most people aren’t looking to read hundreds of long, boring investing books. They want to be out leading incredibly awesome lives… windsurfing or something! Not pouring through some old dusty investing book.
Oh, and we can’t forget the relatively new-ish phenomenon called “fake news” to contend with. That bullshit just confuses everybody.
For the average person, it’s just too much noise to sort through. Who can you possibly trust? Everybody is selling something (or charging fees). It’s a nightmare for young people just starting out in the world.
The world needs clear answers and a way to cut through all the financial BS to get what it really wants — financial freedom.
Authenticity Is Everything
Thus, change gave rise to the FIRE movement — bloggers telling their stories about how they reached financial independence. Some of them retired early. Others kept working. A few even traveled the world. Real people, real lives, and real finances. I happen to be one of them.
The FIRE movement simply said — “Here we are! We’re actual real people and we reached financial independence! Here’s how we did it…”
I think this was inevitable given the monumentous social changes we’ve seen in the last 50 years. People needed real answers and real authenticity. We no longer had the safety of “big brother” handling our pension fund. We needed real role models to follow… to see that our financial plans were actually going to work.
For the most part, bloggers provide that authentic message. I think this authenticity is what really helps the FIRE movement grow.
There’s still doubters of course — plenty of people who still don’t believe FIRE is real. Despite the mountains of pictures, detailed dividend and expense reports, annual net worth posts, and countless personal blog posts about how I live my life…
People still doubt.
For The Doubters
I get it, I really do. Change is hard. The world often sells fake dreams. People are jaded. You can tell some blogs are clearly created with a profit motive.
But there are plenty of honest story tellers out there. Take me for example — I’m as real as they come! I’ve written hundreds of blog posts now, and earned only pennys per hour of effort. Barely enough to pay my website hosting and domain registration fees.
Why do I do this? Because I love it! I’m a personal finance nerd. I geek out when I see the latest annual report of my favorite investments. I absolutely love investing, and I wanted to share my story with the word. Because it’s fun!
Nothing could make me happier than spending countless hours researching data to write detailed posts on investing. I’m weird that way.
I do it for my kids too — I want them to lead lives of financial independence once they grow old enough. I think they need better financial education that I received.
Of course, I do it for the readers too — If I can help someone make their own escape from the chains of wage slavery I’ll be a very proud octopus.
That’s why I do it.