As poor an acronym as it is(*), F.I.R.E. (Financial Independence Retire Early) has become widely known, inspiring many to spend less and save more.
Not everybody thinks it is a good thing, however, and we are probably guilty of setting a bad example – indolent, hubristic, aggressive, patronizing, flippantly roaming the globe in luxurious fashion…
… so when the economy struggles and the stock market implodes, I am unsurprised that some headlines and individuals are excited for the opportunity to say, “I told you so” or to predict “the death of FIRE.”
Are early retirees at risk of serious F.I.R.E. Damage?
This weekend the Coronavirus Aid, Relief and Economic Security (CARES) Act was passed into law, with the intention of providing relief to taxpayers affected by the coronavirus (COVID-19). I imagine this is but one of many stimulus/emergency relief efforts to come, and the details will undergo much scrutiny in the coming months.
This is a massive and wide-reaching law. I’ve done my best to summarize the parts that I think will have the greatest interest or impact to early retirees and aspiring early retirees, although it will affect nearly everyone.
Following an epic collapse of double bubbles in the stock market and real estate prices, Japan “suffered” 2+ decades of stagnation and deflation.
You would be hard pressed to find somebody who hasn’t at least heard of Japan’s Lost Decade(s.) It’s a popular topic people raise as soon as our early retirement and living off an investment portfolio comes up in polite conversation.
“Oh man, what are you doing to do when the United States (inevitably) experiences it’s Lost Decade(s)?!”
“20 years of 0% investment performance is bound to put a dent in your retirement plans, hehe”
“I want to retire early too but I’m really concerned about a Japan-style financial collapse. What can I do?”
That last question is probably the best – What lessons can we learn from Japan’s challenging times?
2019 was our 7th full year of post-work life and probably our most “normal” year to date – we lived in a normal city, Jr went to a normal school, and we did normal life things. It was nice. And different.
We did manage ~5 weeks of travel vacation (Thailand, Vietnam, Bali) and I took most of the summer off from anything with a screen, which was also very wholesome and normal and nice.
So of course something happened that will completely change our lives, forever.
After 10 years or so of “this legislation will pass soon”, at the end of 2019 the Setting Every Community Up for Retirement Enhancement Act finally became law.
Besides a cool acronym, the SECURE Act offers a wide range of changes and “enhancements” to 401(k)s, IRAs, and 529s, as well as a whole slew of incentives for small businesses to add or expand retirement plans to both full and part-time workers.
In my opinion, most of the changes (including the much-touted compression of the stretch IRA) are of limited interested (to the living.)