Weekend Reading – What the FIRE community gets wrong

Weekend Reading – What the FIRE community gets wrong

Hey All,

Welcome to another Weekend Reading post entitled what the FIRE community gets wrong.

Before sharing more of my favourite finds from the personal finance and investing blogosphere, here is my recent article below…

Based on a change we made, our dividend income is soaring higher. Learn what we did recently and what we bought here.

From the recent past, are you looking to find out how much you need to retire on $5,000 per month?

What about $6,000 per month?

See my cases studies on those starting here.

Weekend Reading – What the FIRE community gets wrong

I found out about a newish podcast this week, about FIRE (Financial Independence, Retire Early), profiling/interviewing one of my favourite early retirement gurus: Karsten Jeske.

For those that don’t know of Karsten, he is the wizard behind the Early Retirement Now blog.

(Karsten may not remember me too much, but we had a chat and a few drinks together at FINCON19 in Washington D.C. a few years back…)

Anyhow, I enjoyed watching and listening to Karsten in the What the FIRE Community Gets Wrong edition of the Two Sides of FI show. I’ll link to that episode in a bit. 

For years now, Karsten has been the math whiz behind what I believe is the most comprehensive series behind safe retirement withdrawal rates found anywhere on the internet. You can find his 53-part series (not a typo!) here.

Now, many of you don’t have the time to read 53 articles on safe withdrawal rates (SWR), nor watch lots of videos about it either (I certainly don’t!) – but I would like to capture the essence of what Karsten mentioned in his recent update on that show – to see if that rings true for you and any of your financial independence/retirement withdrawal dreams.

Here are some nuggets of wisdom about early retirement/FIRE that Karsten speaks of that have always resonated with me:

  • Asset accumulation is rather simple. Save, invest, repeat. The simplicity of asset accumulation cannot and should not be so easily extrapolated into the asset decumulation stage due to a number of factors – some of those far beyond your control.
  • Most of us are worried about running out of money in retirement. Very fair. Even though the “4% rule” has been determined safe as a retirement withdrawal rate in the past, it is by no means a slam dunk nor for any early retiree, should it be taken as gospel for early retirement in our futures. (Read more here why it doesn’t work for FIRE.) Instead, your safe withdrawal rate can vary significantly when compared to others based on when you retire, your income sources, your asset mix, your longevity, inflation, portfolio rates of return, estate planning or legacy desires and much more. As such, whether you live in Canada, the U.S., or anywhere else for that matter – we all need personalized financial analysis and projections to determine our safe withdrawal rates. Nothing less will do.
  • Any financial study, while interesting, has no personal value. Everyone’s personal finance balance sheet is unique, dynamic, and does not fit within any, as Karsten writes on his site, “model household.” 
  • On the subject of “bucket strategies”, Karsten feels they work, to a point. I mean, you need to be flexible too but nothing is fail-safe and anything related to emotional market timing will be flawed. 
  • When it comes to increasing equities, in retirement, Karsten is a fan. Consider an equity glide path. As such, you take on more equity risk as you get older because you can: “it’s a little bit of an insurance policy” as Karsten puts it for growth as you get older once your poor sequence of returns risks in the first few years of early retirement have passed. 

Weekend Reading - What the FIRE community gets wrong - Equity Glide Path

Source: https://earlyretirementnow.com/2017/09/13/the-ultimate-guide-to-safe-withdrawal-rates-part-19-equity-glidepaths/

More details on equity glide paths can be found by our math wizard here. 

  • Avoid timing schemes in retirement. Instead, develop a withdrawal plan that is reaonsable and sustainable that transcends any short-term (1- to 2-year) market conditions.

On the show, there was a lengthy discussion about dividends, of course (at 45:30 min.). It was an entertaining discussion. Unlike the hosts and Karsten, I believe there is merit in owning individual dividend growth stocks. Sure, there is always a risk of dividend cuts. There is also a risk for lack of individual stock growth if a company pays no dividends at all. Meaning, there are many ways to create shareholder value – paying a dividend is just one of them. Dividend growth stocks are hardly underperforming as a class of stocks. Don’t take my word for it.

Dividends, especially in Canada, account for a good portion of total returns:

Weekend Reading - What the FIRE community gets wrong - The Power of Dividends

Source: https://www.rbcgam.com/documents/en/articles/the-power-of-dividends.pdf

So, your total returns will always matter. I just happen to get a good portion of my total returns from dividend stocks AND low-cost ETFs. Your mileage may vary as an investor!

In closing, Karsten is a one helluva smart guy and it was great to listen/watch him speak.

If you’re passionate about learning more about safe withdrawal rates, if even from the U.S. context for skim, check out his site. 

Here is the show/video with Karsten:

More Weekend Reading…

Thanks to Jon Chevreau for highlighting our Bonds vs. GICs post from Cashflows & Portfolios.

Robb Engen from Boomer & Echo wrote about postponing retirement. Some are. I hope to avoid that!

MoneySense helped us make sense of the markets, which included a recap of Canadian bank earnings.

Vibrant Dreamer provided an extensive dividend income round-up from many bloggers. Way to go!!

This article had some data that shocked me a bit, many folks tapping debt to deal with inflation. 

“According to the survey, six-in-ten homeowners are taking additional measures to cope with increased costs. Forty per cent of respondents said they tapped into their savings to help pay for increased costs; 15 per cent took on extra work; 13 per cent tapped into lines of credit, credit cards, or other forms of debt; seven per cent looked for better-paying jobs; five per cent asked for a raise; and four per cent said they used a home equity line of credit.”

This is a bad recipe I believe…

On the positive only slightly, in the U.S., Northwestern Mutual’s latest study shows that while many people took advantage of the pandemic to save more, the average retirement savings dropped in 2022 from $73,000 to $62,000. That might explain (again, a bit) the perspectives I shared last weekend and why what it means “to be financially comfortable” are really falling fast in the U.S…

Weekend Reading - Modern Wealth Survey

Have a great weekend and I’ll be back answering more reader questions next week!


My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.

4 Responses to "Weekend Reading – What the FIRE community gets wrong"

  1. Hey Mark, good post. About the 4% rule, I’m not up on what the FIRE people are saying, just my own 8 years of retirement experience. At the moment, with accounts being lower value, I’m presently taking out a little over 8%. Dividends are taking care of about 75% of that 8% while the remaining 25% I have to sell something. I’ve been fortunate as the first 8 years have been OK in the market. Also, being a DIY person with no advisor fees to pay, that helps to pay the 25%. So far, I’m breaking even. But, I think the 4% rule is a great number to use for people who are saving towards retirement. Maybe a good target to shoot for to calculate savings longevity? In retirement, as you say, each person can adjust withdrawals for their own particular situation.

    1. Well, lots of the FIRE folks start with this rule as the guideline for having “enough” to be financially independent. The rule makes no sense for that of course, it’s a rule of thumb at best.

      Back to you, you have done very well it seems – kudos.

      I think any retirement spending plans must start with needs, then wants. Some folks retiring in their 60s or 70s need WAY higher than a 4% rule – they can likely spend at will. Someone trying to “retire” at age 40 (nobody really does, they all have hustles…) likely needs a withdrawal rate closer to 3% to start. It all depends in my opinion which makes personal finance both personal and interesting.

      Assuming folks can start to figure out what they intend to spend (easier said than done for some people…) then they can likely determine some retirement savings needs.

      Thanks for your comment!

  2. Thanks for mentioning my post, Mark.

    Regarding SWR podcast, I think I will wait some years before listening. It is just that many rules can change by then and I will probably forget what’s the best approach at the time. For now, the focus is piling up money and build more income.


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