What to Tell Young Clients on FIRE to Retire: Advisors’ Advice – ThinkAdvisor

In the last few years, advisors have faced a new push bysome youngclients who want to retire early very early. The phenomenon is calledFIRE, which stands for Financial Independence, Retire Early.

The idea is to save as much as possible in ones early working years, spend little, and retire as early as their 30s or 40s. This idea certainly puts a twist into financial planning for retirement, especially whenthe typical30-yeardrawdown period could be stretched out to 50 years or more.

In early February2021, advisory firms began to see an increased focus on retirement planning and career changing within the client base, Angie Herbers, CEO and senior consultant of Angie Herbers & Co. told ThinkAdvisor. Much of these trends are driven by the reassessment of values clients are having post pandemic; missing family members, changes in how people work, desire to move to lower cost of living areas, etc. We are seeing many advisory firms double down on financial planning and psychologytools to help clients reassess their values.

Butissues arise, such as limited time working means any Social Security benefits are severely reduced. Perhaps its the younger generations way of showing they arent relying on the government program to help them as they age.

Other considerations: There will be less time to actually invest for retirement. And theamount of income to be saved, which is estimated around 15% for most workers, is pumped up to as much as 75%.

Further, spending has to be reduced dramatically. This is all the more difficult for investorswho face five- to six-digit school loan debt.

In the end,as one advisor noted,a FIRE disciple needsto learn to live like a monk.

We asked advisors through the Financial Planning Association and the XY Planning Network how they respond to clients who come to them with FIRE in their belly. Their responses were filled with caution as well aspromise that is, clients should focus on the FI part and learn how they can attain financial independenceand better habits when it comes to money and savings.

Scroll though the gallery above for their responses.

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What to Tell Young Clients on FIRE to Retire: Advisors' Advice - ThinkAdvisor