Hello, everybody, it's Sam from Financial Samurai. I hope everybody is having a wonderful, wonderful holiday season. I am excited about this podcast because I want to introduce a new movement to the world, and that is the DIRE movement. D-I-R-E. Ten years ago, when I first started writing about achieving financial independence early in 2009, I never thought the FIRE movement would reach such a huge level of interest a decade later.

After all, only misfits decide to aggressively forego material pleasures, save 50% or more of their incomes, and retire from well-paying jobs in their 30s and 40s. Back in 2009, the lifestyle design movement was all the rage because people were getting blown out of their jobs left and right. Some people went back to graduate school to save face.

Others decided to start lifestyle businesses after getting laid off. I, for one, figured there was a good chance my head would also roll, which is one of the reasons why I started Financial Samurai that summer. And thanks to a raging bull market that ensued, which is pretty much all luck, life turned out just fine and the FIRE movement picked up steam.

And today, I'm here to say we are at peak FIRE right now, perhaps similar to peak cryptocurrencies reached in December 2017. And unfortunately, when you're at the peak, there's usually nowhere to go but down. You know we're at peak FIRE because the mass media has latched onto the FIRE movement like a rabid dog which hasn't eaten in weeks.

Not a day goes by where there isn't a new story about someone leaving a job early and how they did it. And as an investor, we know that by the time the big media gets hold, it's often too late to invest. Rather, it's probably a more opportune time to sell.

Just think about Uber and Lyft finally filing to IPO in 2019. After all these years, all the easy money has already been made as private companies, they're now finally hoping to finally cash out to public investors. And I'm sure they will, and they're going to do a wonderfully good job as a result.

My job as an investor, and as a personal finance writer, is to do my best to forecast the future. Writing about and talking about what may happen is infinitely more interesting and more risky than writing about the past. Forecasting the future challenges your mind, and could make you a rich hero or a broke fool with egg on your face.

But as with everything in life, no risk, no reward. Today, my crystal ball is saying the FIRE movement is in for a rude awakening. On the one hand, there is growing disdain against the FIRE movement from the majority of Americans who will never reach financial independence, with the median household income going nowhere over the past 10 years, and actually over the past 20 years, it's been hard for middle class Americans to get ahead.

Further, the average American has a pitiful amount saved in their retirement accounts, less than $20,000. When you've been spinning your wheels for so long, all this brouhaha about people retiring early to live their fabulous lives in their mom's basement while posting fake Instagram curated pictures about their amazing lives starts to get mighty annoying after a while.

And this annoyance turns into rage, and a new movement is born. And on the other side are FIRE practitioners, who are finding out that not all is sunshine and rainbows once they've quit a stable job with wonderful benefits. They're finding out, hey, quitting a job at the top of the market and then it goes down 10, 20, 30% might not be a good thing as that income that you're relying on goes away.

So with a slowdown in the economy on the horizon, things are just not looking good. The Fed is on a mission to suffocate the economy with more rate hikes. The current administration wants to further escalate trade wars because of alpha male ego. Do we really need to arrest the CFO of Huawei after you guys just met and said hey, we're going to talk about good trade de-escalation policies?

No matter how adversely it affects the stock market, it seems like hey, we must conquer you and win. Meanwhile, the housing market has gone past its peak, the peak was probably in the fourth quarter of 2017 or first quarter of 2018, and will likely continue to be in the doldrums for the next several years.

So when a downturn hits, if it hasn't already, it's an inevitability that FIRE followers will be forced to go back to work and earn their retirements the old-fashioned way. Some might even say FIRE during a recession stands for Foolish Idealist Returns to Employer. However, as long as we keep the FIRE acronym alive, we give hope to its original meaning, and when all is lost but false hope persists, people get into further trouble.

Therefore, let's eliminate FIRE entirely from our psyche so that we can finally make a change. Nothing happens until you're feeling the pain. So let me introduce the newest retirement movement to the world. DIRE. D-I-R-E. As a realist who sees the future, it is all but a certainty the DIRE movement will supplant the FIRE movement as the retirement path of choice.

Let's find out why by going through the letters one by one. D is for delay. For most people, delaying retirement due to the rapid rise in costs for housing, health care, and education is the only logical way to survive. Look, the median household income is $61,000. That's about the same as it was 20 years ago.

Meanwhile, median home prices in America have risen from about $177,000 to $222,000. That's quite a big jump for a no-income change during the same time period. Housing is simply less affordable, and in some cities, real estate prices have appreciated so quickly that most residents have no hope of ever owning.

Health care costs are out of control, especially if you plan to carry the entire monthly premium burden yourself. The average total health care cost is now about $20,000 a year, subsidized mostly by the employer. Once you're out of a job, the entire $20,000 burden falls on you, unless you have a low enough income to qualify for subsidies.

So for example, a family of three, I pay $1,760 a month, or $21,120 a year for a platinum plan. Does that sound reasonable to you? Hell no! None of us are overweight, none of us have chronic illnesses, and we're still paying out the nose. Now let's look at education, specifically college tuition has grown unbearable with annual tuition increases averaging 5 to 7% a year, regardless of whether it's a recession or not.

That's a doubling of tuition every 10 to 15 years, folks. Good luck retiring early if you've got to pay $50,000 to $100,000 a year for tuition alone for four or five years for even just a single child. And for parents with kids, you know, bottom line, retiring early will be all but a pipe dream.

There will always be at least one parent working full time to earn a steady income and have subsidized health care. The non-working parent can shout from the top of their lungs they are fire as loud as they want, but nobody will buy it. Being a stay at home dad or mom is nothing to be shamed about, folks.

Yet for the man especially, it's really interesting. He can't seem to accept his new reality of living off his wife's income. Grow up. I is for inherit. With no hope of retiring early, many Americans are counting on inheritance as a retirement strategy. With 25 years old as the median age when parents had kids in the 70s, and the median life expectancy currently hovering around 80, the average American will likely have to wait until around 65 to inherit anything.

Today, the average age when women start to have children is 28. Therefore, future generations will likely have to wait even longer to inherit anything, all else being equal. Well, not all is bad news on the inheritance front. However, with the average net worth in America rising to almost 700,000, folks, that's a lot.

Don't debate me here. It's the truth. Parents are doing more than ever before to help their adult children thrive in adulthood. After all, baby boomers have benefited the most from the longest bull market in history. Every single one of my immediate neighbors in San Francisco has parents who have either bought them their house or are letting them live in one of their multiple properties rent-free.

When I first moved into my house in 2014, I met my neighbor's son, who at the time was 24 years old and a senior at UC Davis. When he graduated in 2015, he returned home and he still hasn't left. That's a long time, folks. Can you imagine relying on inheritance as a retirement strategy?

You might never, ever be able to start a family, create your own sense of independence, and make your great contribution to society. Clearly, one side effect of Dyer is a surge in depression. R is for retire. Forget about retiring in your 30s, 40s, 50s, or even 60s. With Dyer, we're talking about retiring in your 70s now, baby.

We're living longer. This means we've got to work longer to support ourselves. Once upon a time, people would retire at around 60, 65, and then die within 5 years. We're going to return to that phenomenon of that bygone era. The earliest one can collect Social Security will rise from 62 to at least 65 if the government wants to make the program whole.

After all, the government runs a massive budget deficit every year. With little to no social safety net, achieving a comfortable retirement will all depend on you. With the trend towards retiring in your 70s or older, retirement life simply won't be as fun. It'll be much harder to play leisurely sports like golf or tennis when your back is always in pain.

There'll be no way to ever climb the stairs of Santorini, Greece when your knees don't have cartilage. Donkey Ride it is. The only thing left you can do in this world of retirement is watch tons of TV and surf the internet. At least with the popularity of food delivery apps, you will no longer have to go out of the house to eat a nice rubber chicken dinner.

Staying glued to a lounge chair is what the new retirement reality will be like. Finally, E is for expire. Here's where the Dyer movement will be at its saddest. After a long life of working because you had to, not because you wanted to, reluctant Dyer followers will look back on their lives with regret.

They will curse the day they ever heard about fire, because otherwise they would never have taken the leap of faith at the top of the market and fallen splat on their faces. Instead of being the hare, they would have won the race as the tortoise, steadily saving and investing their income during their highest income earning years with much less stress and worry.

They wouldn't have had to embarrassingly gone back to work with their tails between their legs and watch old colleagues leapfrog them to now be their bosses. They wouldn't have had needed to go through multiple mental breakdowns and countless nights of self-doubt because they couldn't replace their day job income with freelance income or entrepreneurial income to take care of their families.

Contrast reluctant Dyer followers with Dyer enthusiasts. Dyer enthusiasts see the fire movement is in trouble and decide to stay the course. Instead of retiring in their 30s or 40s, they decide to maximize their highest income earning years and retire with multiple millions of dollars in their 50s. Given everyone is living longer, retiring in your 50s is like retiring in your 40s of yesteryear.

Of course, they also don't just stay miserable at their jobs. Dyer enthusiasts proactively search for better opportunities in order to keep on working. A Dyer enthusiast doesn't scoff at families who believe they need $5 million in an after-tax portfolio to retire early, like so many folks did. Dyer enthusiasts realize that runaway inflation, globalization, and structurally lower investment returns in the future will wreak havoc on living the early retirement dream.

Therefore, instead of getting to rage about why the world's round peg doesn't fit into their square hole, they simply logically adapt and work longer. So look, the Dyer movement may sound bad, but I think it's pretty good. Unless you're willing to work more than 40 hours a week, build some side hustle income, generate some stable passive income, save aggressively, and continuously make shrewd investments for the long term, you have no chance of fire.

And if you don't do all these things, and you still decide to retire early, you will likely be screwed and join the reluctant Dyer camp. Yes, I know, some of you will decide to live like poppers and either delay or not have kids to keep expenses to a minimum to hold on to your fire dreams.

More power to you, freedom is priceless. However, for the majority of you who want to live more conventional lifestyles, it's more important than ever to follow some key financial principles to increase your chances for financial independence. And if you're wise, you will embrace the realities of Dyer as the world heads south.

Giving priority to caring for your family and delaying a super early retirement is the responsible thing to do. Don't let fire FOMO foster irrational decision making. Early retirement is selfish, no matter how you look at it, especially if you have dependents. Yes, if the economy gets really bad, there will be more face saving by folks who say they are fire instead of admitting they got laid off and are drowning in a sea of despair.

Just recognize, not all is what it seems on the internet or in podcast land. If your passive income cannot comfortably cover your best life's living expenses, if you have to drastically cut your lifestyle in order to be fire, you're not fire, you're just fooling yourself. It's time for the Dyer movement to rise up folks.

I'm personally looking to head back to work, but I'm afraid after almost 7 years of unemployment, nobody will hire my Dyer self. Look, I know I sound like a Debbie Downer a little bit, talking about what it was like during the previous peak in 2007, reflecting on the 2008-2009 financial crisis, talking about what if you buy a property at the top of the market, you know, these things, they're not nice to hear.

But look, you've got to listen to it. Because if you're part of the financial samurai community, you've got to see both sides of the equation. There is just too much damn cheerleading going on right now by folks who did not have enough skin in the game during the last downturn.

They have no idea folks, how bad things can get. And if things get really bad, please, please focus on the fundamentals of personal finance. And don't lose your head and think you're going to retire early and do this, this and that. Look, life is long folks. Save, invest, take care of your family, love each other.

And thanks for listening.