Playing with FIRE: The ethics of aiming for financial independence

How to start a FIRE

The FIRE lifestyle boils down to planning and living one’s life with a central goal in mind: achieving financial independence as soon as possible, in order to be in a position to retire early. FIRE is a personal financial strategy. It introduces a specific goal, that of achieving a financial net worth enough to fund a lifetime of non-working existence. 

This net worth is often set at 25 times annual expenses, based on the so-called 4% withdrawal rule, which allows funding a non-working lifestyle for the rest of one’s life. So-called "FIRE calculator" tools allow individuals to plan their financial future accordingly. In order to build the net worth as quickly as possible, FIRE aspirants save (and invest) aggressively, maximising the so-called "savings rate". The more one’s savings rate outpaces one’s living expenses, the sooner one can achieve FIRE. 

"Toxic" FIRE: The pitfalls of unreflected pursuit of financial independence 

Following this strategy can have far-reaching implications for how individuals approach their relationships, careers, and social life. The pursuit of FIRE can often go beyond "budgeting" and involve scrutinising every Euro spent, every hour worked, and every material possession acquired. Delving into FIRE without reflection can turn problematic: an individual that aims at maximising their income, obsessing over financial details, all the while being frugal might may have the FIRE goal crowd out all other values. A person might retire early, but find they have sacrificed their health, relationships, or capacity for enjoyment in the process. The freedom they gained is hollow because they never figured out what they wanted to do with it. This is the possible "toxic" FIRE that can result when pursuing financial independence without reflection. 

FIRE as a thought experiment and tool for reflection

We find it helpful to see FIRE, first and foremost, as a thought experiment. It involves individuals asking themselves how they want to spend their time, what role their careers, their work, their relationships, their social life, and other pastimes and pursuits play for them. The FIRE perspective makes these questions sharp by highlighting that decisions about career, consumption, and life expenses stand in direct relation to how one spends one’s time. In other words, the FIRE thought experiment forces individuals to seriously consider the "bottom-line consequences" of their cares and concerns. These bottom-line consequences are formulated in terms of the allocation of money and time in an individual's life. Reaping the deliberative rewards of FIRE does not necessarily imply actually pursuing it: the deliberations may just as well lead many individuals to reflectively endorse a "standard life schedule" engrained in many societies. 

"Warm" FIRE: the conscious pursuit of one’s deliberative values 

Some individuals might turn the FIRE thought experiment into lived reality: they might find that after asking "what is truly valuable to me?" and "how should I aim to spend my time and money?" they endorse a variant of FIRE as their life plan. It may mean that FIRE helps them to live according to their values – for instance, many FIRE aspirants report that their lifestyle helped them clarify their relation to consumption, the intrinsic value of work and relationships, community, and various social norms. FIRE can be a catalyst for those individuals to live their best life and to make positive contributions to society, such as by volunteering in early retirement. 

FIRE and prudence

The pursuit of FIRE raises many interesting philosophical questions with regards to prudential values: as a calculating and instrumental design approach to life, it entails specific conceptions of intertemporal rationality and autonomy, for example. It also is a contentious approach to "designing" one’s life and can put pressure on interpersonal and social relationships. Moreover, pursuing FIRE often encapsulates views on the nature of freedom, and the value and role of work. Our analysis suggests that FIRE aspirants will do well to reflect on these prudential values. FIRE is a peculiar pursuit that only a minority of individuals will find to coincide with their conception of the good life. 

FIRE and social ethics

While FIRE is an individual – and individualistic – project, it also relies on many societal institutions, such as a functioning labour and capital market that allows FIRE aspirants to tailor their life schedules. As such it raises the question whether adopting FIRE is undermining solidarity. Reports of FIRE aspirants avoiding or evading taxes, or "country hopping" for the most favourable environment for the life stage, point to possible problematic social consequences. At the same time, the FIRE community has offered useful resources for financial education for a broad public, helping many to tackle their credit card debt. And the deliberations entailed by a reflective approach to FIRE also foster a critical and possibly emancipatory perspective on the institutions and norms of society. More social scientific research on the effects of FIRE is needed. 

And so...

...with the ethical examination of FIRE pointing into manifold directions, we reiterate that the most fruitful approach to FIRE is seeing it as a thought experiment. As such, FIRE has "deliberative value". When pursuing FIRE without deliberation, it can be undermining and even threatening, for individuals and society alike. The fact remains that FIRE can be a powerful framework for helping individuals reflect on their values, priorities, and what constitutes a good life. One does not have to be invested in FIRE to reap its deliberative rewards.