Early retirees are often misunderstood when it comes to their financial status
I’ve modified the 4% rule to the 2% rule since reading Ed Thorp’s autobiography.
Social debt is highly cultural and I mean that at a family level, not just a country level. I think there are people raised to be highly independent of their family financially. Especially in countries with well established welfare states.
One has to be cognizant when interacting with people from different cultures that the social contract may be different. If you are in a cross cultural marriage, for example, think about what it may mean for the people from a culture different than your own if you start sharing resources. You may sign up for something without realizing it.
This is an interesting take. I am hoping to FIRE in the next few years. With that said, I have no intention of ever being without a source of income. The risks of future calamities and unexpected outcomes are simply too great to stop working at 30 or 35.
I also suspect that those who have saved 30-50 percent of their income for years will likely not succumb to social debt in the same way that others might.
An interesting piece, thank you.
From my perspective as a very early retiree from the UK with less than half of the $2.5m figure you've quoted, I would say I'm rather more hard-nosed.
For me, the idea of people I know pursuing my wealth directly purely because they correctly perceive that I have it would be totally abhorrent. The only pressure I would feel in that situation is weighing up consequences of just cutting them out of my life and the impact that might have to my relationship with the rest of my family.
In a hypothetical situation where someone I know looks truly in financial need, then I would reach out. But I'd still be pretty demanding, it'd be on my terms. How did they get there? Can I help them plan to avoid it again so that if I lent/gifted cash it wouldn't happen again? So yes there would be (well-meaning) strings, which I know would turn a lot of people off. But tough T's as it's a piece of my hard-fought freedom I'd be giving up for it.
Other than that, I can totally relate to the weird dynamic (even internally, never mind with other people) of thinking of one's capital purely as a modest income and not a stack of cash with which to fund Lamborghinis and pool villas. It's a strange one, but the costs of those luxury fripperies measued in freedom are far far too high for me.
Something I often think about the FIRE movement, is that it's essentially coincided with extremely loose monetary policy left to run since 2008 QE1. So we have seen a decade and a half of impressive performance in simple index fund investment strategies deployed by those lucky enough to be of working age (and savvy) in the early 2010's. I'm not sure how well informed the FIRE people are going into the next few decades, nor am I sure what the correct investment play is that would mirror the mentality of the last wave. I think betting against monetary debasement is an option, but almost nobody wants to join the 'sound money camp'.