How Can I F.I.R.E. Up My Students About Retirement?

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Nov 26, 2018
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Retirement, Index Funds, Video Resource, Investing, Savings

Looking for ways to get your students thinking about retirement? Introduce them to the F.I.R.E. Movement! That is the Financial Independence Retire Early Movement.

Why do I think this movement is important:

  • It's a counter-narrative to our consumerist society by focusing on extreme savings. We read so many stories about maxed out credit cards, why not expose your students to tales of young people saving 60-70% of their income?
  • It helps students understand the concept of passive income and compound interest in action as they see how these early retirees are able to live off their "nest eggs."
  • It introduces students to the concept of index funds and the importance of investing in low-cost, diversified portfolios. It doesn't require finding the next Netflix to retire early.
  • It makes the concept of retirement more pressing as students hear stories of people saving as much as they can in their 20s

I'm not naive enough to think that retiring in your 30s is attainable for all for a variety of reasons. Then why introduce the concept? The F.I.R.E. movement does have some sound financial principles behind it (frugality, investing in index funds) and can engage students in an alternative view of retirement that seems more near-term. 

Here's a PBS NewsHour segment (9 minutes; over 2 million views in a month) on one of the leaders of the movement. Mr. Money Moustache:

Questions:

  • What are the key insights you learned from the folks who retired early? 
  • How are these early retirees managing to live when they are not working (and not collecting Social Security)? 
  • What is the 4% rule? 
  • Where did they invest the money they saved?
  • What other tips did you pick up from these F.I.R.E. adherents?
  • What does it mean to use credit cards strategically? 
  • This video has received over 2 million views since it first appeared a month ago. Why do you think that so many people are interested in this movement? 

This chart is one of my favorites as it shows the relationship between your savings rate and your time to retirement. The higher your savings rate (or the less your annual living expenses), the faster you can retire. 

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You can listen to the story of Canada's youngest retirees, Kristy Shen and Bryce Leung, on the NGPF podcast. 

 

 

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.