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Rekenthaler Report

In Celebration of Financial Independence

Echoing the sentiments of two Morningstar colleagues.

Home Lesson
I knew the FIRE Movement before there was a FIRE Movement.

For those unfamiliar with the acronym, the initials stand for “Financial Independence, Retire Early”--a goal typically achieved by combining a relatively high income with low spending. The concept was initially advanced in 1992’s “Your Money or Your Life,” by Vicki Robin and Joe Dominguez. The idea has gained popularity over time, thanks to its following among younger investors.  

Of course, Ms. Robin and Mr. Dominguez were not the first to appreciate that saving a great deal of money when young couldn’t hurt. My father fantasized about that throughout his working life, without doing anything to advance his cause, besides dreaming that he had invented the Pet Rock. (The Rubik’s Cube would have stretched his abilities, but a Pet Rock he could have comfortably managed.) My stepfather, however, accomplished the task, retiring at age 50.

He was ideally placed for the arrangement. He had his children young, so they no longer required (much) support. He had earned high wages. He disliked his job, intensely; he derived little pleasure from spending, not caring about his clothes or restaurants or what car he drove; and his primary hobby, rebuilding houses, created income rather than consumed it. Why not quit as soon as he was able?

The decision worked out very well for him. He never regretted leaving dentistry, nor did he pine for the consumer baubles he had once enjoyed. He had arrived late to the not-yet-invented FIRE Movement, having pursued the “good life” through his mid-30s, but once he embraced frugality he did not look back. Nor did he fuss about running out of money, although he was not terribly wealthy. He knew that if worse came to worse, he could always economize further.

Gone Fishing
Twenty years ago, while on a road trip discussing the features of Morningstar’s 401(k) software, my pitch was interrupted by a man who responded, “Those programs always tell me to save too much. When I retire, I want a cottage by the lake, where I can go bass fishing. I don’t need 80% of my salary to do that.”

Those two examples have long influenced my thinking about retirement planning. Standard approaches assume an All-American level of consumerism, thereby requiring most wage earners to have 40-year careers. That choice suits many. They follow the path unquestioningly, perhaps because they like working hard, playing hard--or perhaps because their paid occupations give them self-worth. However, one lifestyle size does not fit all.

A Public Conversion
Such was my background when encountering two recent Morningstar articles about the FIRE Movement. One was Christine Benz’s “Confessions of a Former 'FIRE' Skeptic.” Initially, she had dismissed FIRE as a symptom of Millennial overconfidence. Don’t be a drudge like the older generations. Get rich quickly by trading stocks on Robinhood, keep your costs low, retire early. Day jobs are for geezers.

However, hearing more about the movement, she learned that many FIRE practitioners were neither self-indulgent nor unrealistic, but instead were “incredibly productive,” although not usually earning high incomes. They work because they want to, at jobs they enjoy and that give them meaning,” wrote Christine. That held true for my stepfather. He didn’t call rebuilding houses his “work.” But he certainly could have, because it was hard, productive labor by any standard. In addition, he profited from the endeavors.

“In the end,” summarizes Christine, “I’ve concluded that the ‘retire early’ part of FIRE is a bit of a distraction from the really important part of the movement; the value of mindfully allocating our previous time and money in a way that aligns with your values, life goals, and joys. From that standpoint, even those of us who don’t plan to retire early can learn something from FIRE, and young investors with their whole lives ahead of them can learn even more.”

Know Thyself
Morningstar’s Larissa Fernand took that sentiment even further, in “Why Early Retirement is a Wrong Goal.” Initially, I thought she intended to argue against defying social norms by having only a short career, but that was not her point. Rather, it was to emphasize the power of the first half of the FIRE acronym, financial independence, while urging readers to think carefully about the second portion, retiring early.

She writes, “Retirement is not a destination, and certainly not a ‘happily ever after’ reality. You have to plan through it. Building up a retirement corpus is just one aspect.  Figuring out your life and how you plan to spend the time is the other. It would be a shame if you attained the financial independence to enable an early retirement, only to be confronted by an existential crisis.”

Which led me to reconsider my future bass fisherman. Did he truly know that the simple life would suffice? When he was 40 years old, my father thought he finally understood what would make him happy. He would leave his stressful corporate job, teach high school in New Zealand, and catch trout every afternoon on the Tongariro River. He promptly did all those things; it lasted 12 months, before he fled back to the United States seeking another corporate position.

Who in their youth knows what will fulfill them at age 64? Paul McCartney does indeed have grandchildren, as he envisioned when he was 16, but rather than scrimping and saving for his summer rental on the Isle of Wight, he tours the globe. For many people, what ends up mattering is not retiring early but rather possessing the option to do so. Freedom is power. So is financial independence.


John Rekenthaler ( has been researching the fund industry since 1988. He is now a columnist for and a member of Morningstar's investment research department. John is quick to point out that while Morningstar typically agrees with the views of the Rekenthaler Report, his views are his own.