Monday, November 26, 2018

Suze Orman and the FIRE Movement

            I’ve been very interested to see the progress of the FIRE movement. For those not acquainted with the term, it stands for financial independence, retire early. Unlike earlier frugality movements, this one has been getting serious attention from the media. Perhaps that’s because journalists are an endangered species these days and recognize the wisdom of cutting consumption and saving money in an increasing likelihood of unemployment. I’m looking forward to Scott Reickens’ new book, Playing with FIRE, which is due out in January. I’m trying to get a review copy, but you may have to wait for me to get a copy from the library.

            When the frugality movement of the 1990s began, those of us who were part of it were at first covered by serious writers, among them Nick Ravo of the New York Times, who gave Living Cheap News the mention that got it going. Soon, however, we were covered by writers eager to make fun of the movement. Amy Dacyczyn, after she had ceased publishing her wildly successful Tightwad Gazette in 1996 was “encouraged” by a reporter to open up her life. She did, and the reporter wrote a scathing article about Amy’s deprived children and bare bones lifestyle. The same reporter, who was at that time childless, went on to write another article advising women not to leave the workforce when they had children.

            I was encouraged that the coverage of the FIRE movement had been overwhelmingly positive, and every once in a while I check the Mr. Money Moustache website to see what’s going on, which is how I discovered that Suze Orman hates, hates, hates, hates the movement.

            Her interview with Paula Pant, whose podcast is titled “Afford Anything,” is available on YouTube and, I’m sure, elsewhere. It’s cringeworthy and about an hour and ten minutes long. It’s worth listening to if you want to hear something worthy of an overlong Saturday Night Live skit, but there’s no reason to suffer through it, as I did, because I’m going to give you the short version.
            If you’re going to watch it, though, I suggest you first have a glass of wine and watch the Kinsey Sicks version of “Don’t Be Happy. Worry,” which is also on YouTube and sums up Suze’s position on the FIRE movement and pretty much everything else.
            First, Suze says $2 million is not enough to retire on. Especially if you retire at a young age. Suze seems to think FIers retire with their nest egg and start spending it down. She does not have enough grasp of the movement to realize we try not only not to touch our principal, but to add to it. Suze then goes on to say things happen. You could be hit by a car. You could get run over by a bus. You could fall down on the ice. You could get cancer. Further, artificial intelligence is coming. In 2030, unemployment could be 25%. That means those who are working will be taxed at higher rates. Social Security and Medicare will be gone. Your money may not last, and you’re not adding to your retirement accounts.
            Reality check here. Do you suppose anyone who gets hit by a car, run over by a bus, falls on the ice, or gets cancer laments not working while they were healthy enough to enjoy their lives?
            Suze, who once earned and lived on $400 a month, says a safe spending amount per year would be $350,000 after taxes. When pressed, she says $10 million may be enough to retire on. When pressed further about people who spend their whole lives earning $50,000 or less, Suze says they’re more ready for retirement because they’re used to living on less.
            Suze spends a great deal of this interview telling how rich she is. Why, just a few years ago, she sold five of her houses, canceled a bunch of her commitments, and moved to her own private island where she spent time on her yacht learning how to be its captain. But she got bored and was welcomed back by her fans who wondered why she’d ever deserted them—sort of like hearing this story from the Norma Desmond perspective—and she’s flogging a new book.
            In short, Suze says she's smart and rich, so listen to her. People who didn’t have wound up putting a gun to their heads.
            She compares FIers to those who got on the duck boat that sank here in Missouri. Those people, after all, thought they were safe and look what happened, so work as long as you possibly can in an area you love so you don’t feel that it’s work. At this point I couldn’t help but be reminded of Kurt Vonnegut’s Slaughterhouse Five, which is one of the texts for my history class, and I wondered if Suze had been kidnapped by the Tralfadamoreans because she’s certainly not living on planet American middle class.
            Suze’s ideal retirement age is 70 at which time a person can get their maximum Social Security benefit. (Remember Social Security? That program that won’t be around in 2030?) She reminds us once again that $2 million is “nothing,” and that people who retire early “don’t have a passion” and will spend their long retirement “sitting and doing nothing,” which I found funny because it was a great effort on my part to carve out the time to listen to this drivel.

            It is OK with Suze if a new mother stays home to raise her children, but once that kid’s in school, the mother needs to get back in the labor force. She’s even opposed to college students taking a gap year. But two to six weeks is OK if you’ve maxed out your retirement contributions and have eight months of living expenses in the bank.

            I find it amazing that anyone would let this nutcase tell them how to live their lives. As someone who retired early—nearly 25 years ago, I can tell you it was pretty darned easy for me. I had the guidance of Paul Terhorst’s Cashing in on the American Dream to show me what an early retirement could be like and Joe Dominguez’ and Vicki Robin’s Your Money or Your Life to take me through the math to show me it was possible. When I left Company L, I was living on my passive income, so I moved my 401(k) to my IRA. I am extremely lazy about money, and I did not want to have to think about it every day, so I bought zero coupon treasuries. I planned not to have to touch the IRA until I reached age seventy, and I didn’t. In the meantime, I have been able to add to my non-IRA principal by, among other things, finding an enjoyable consulting gig that lasted four years and living on less income than the accounts earn.

            Unlike Suze, I do not have a private island, a private plane, or a yacht. And, I’m extremely happy to report I only have one house. Woe is me.

            But I have had almost a quarter of a century to do pretty much as I pleased.

            Maybe it’s time for another glass of wine and another viewing of “Don’t be Happy. Worry.”

© 2018 Larry Roth

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