FIRE: Seeking Financial Freedom

Retirement Pkanning: A Concept in Transition

In the world’s largest economy, the concept of retirement age is undergoing a change.  Continuous surveys by Gallup have highlighted this shift.  In 1995, the USA working population expected to retire at 60, whereas the actual average retirement age was 57.  By 2022, the anticipated retirement age rose to 66, with the actual average at 61.  Currently, 30% of those aged 65-69 are still working, and for those aged 70-74, the figure stands at 17%.  This trend has sparked my interest in the younger generation’s attitude towards retirement.

The Young Generation’s View on Retirement

Every young generation is full of confidence about retirement.  From the 1990s to the millennium, the market value of U.S. stocks jumped from an average of 0.5% of the GDP to over 1%.  During this time, many young people (aged 25 – 40) dreamed of retiring between the ages of 30 – 50.  A popular motivation book of that era, “Your money or your life: transforming your relationship with money and achieving financial independence” sold over 100,000 copies in its first edition and continues to be available on Amazon.  The book focuses on key issues for the young, eliminating debts, saving proactively, prioritizing life goals, being aware of the environmental issues, and turning crisis into opportunities, showcasing a positive way of thinking.  However, the global financial crisis of 2007 was a significant blow to many people’s early retirement plans.  But as the economic downturn triggered by the financial tsunami subsided, people gradually forgot the possible extreme instabilities encountered during economic cycles, reigniting the younger generation’s passion for the FIRE (Financial independence, Retire early) movement.

Latest Trends in the FIRE Movement

According to a Harris Poll survey, among the new generation, 24% of Generation X, 37% of Millennials, and 43% of Zoomers aspire to retire before the age of 65.  Regardless of the slogan, the core concept of the FIRE movement aligns with that of the older generations: accelerating wealth accumulation and minimizing wealth erosion.  However, each generation has different motivations: the previous generation focused on improving their then living standards, our generation aims for a better life for the next, while the younger generation aspires more for their independence and societal contributions.

However, the new generation faces two major challenges in accumulating wealth at the rate of the previous generations: the rising cost of sustainable living and the uncertainty of economic growth momentum after more than a century of rapid expansion.  The survey indicates that modern young people are saving a larger portion of their income to accumulate wealth faster.

Statistics often represent averages, including more or less planful individuals among the new generation.  Moreover, on a personal level, savings, investment, and consumption planning require individualization and appropriate guidance.

Corporate Attention to Employee Needs

In terms of corporate responsibility, beyond contributing to employee retirement funds and arranging retirement product suppliers to conduct seminars, more attention should be paid to the actual needs of the employees.  It is recommended that companies incorporate financial education into employee training, encouraging the new generation to work more actively and innovatively, thereby achieving higher return and creating more opportunities for wealth accumulation.

Goldman Sachs provides financial training and personalized counselling to employees at different career stages.  The one-on-one counselling, conducted on digital platforms, considers employee privacy and time management.  As employees’ financial plans require more sophisticated services and products, specialized consultants provide counselling.  This not only alleviates employees’ financial stress and helps them focus more on driving business, but also contributes to society’s move towards a stress-free financial management environment.

The FIRE movement illustrates the younger generation’s desire for economic autonomy and their efforts to achieve this goal.  Large corporations actively providing personalized financial education and counselling significantly help in enhancing talent quality.  Corporate management can explore whether they have adopted appropriate strategies to establish a supporting financial planning environment for their employees.