Cortburg Speaks Retirement

FIRE vs. DIRE: Two Different Retirement Strategies – Which One is Right for You?

• Miguel Gonzalez, MBA, AIF®, CPFA®, CRC® • Season 2024 • Episode 230

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 Should you retire early and embrace financial independence (FIRE), or delay retirement and maximize benefits (DIRE)? In this episode, Miguel Gonzalez, CRC®, breaks down the pros and cons of both strategies to help you make an informed decision about your future. 

About Cortburg Retirement Advisors, Inc. 

Cortburg Retirement Advisors is a full-service, boutique financial planning firm - helping guide clients through turbulent and calm economies. Their goal is to help grow, protect, and preserve their assets from their first job through retirement. Cortburg’s “all in one house” capabilities mean that their experienced team can help with all financial needs - wealth management, estate and tax planning, group retirement, employee benefits, insurance, and retirement planning 

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Welcome to Cortburg Speaks Retirement Podcast
with Miguel Gonzalez, MBA, AIF®, CPFA®, CRC®

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Welcome to Cortburg Speaks Retirement

An audio podcast about investing in the stock market, financial planning, money management and retirement planning.  Each Wednesday, we help investors at all stages of life learn how to potentially grow and preserve their money from first job through retirement.

Now here is your host, Miguel Gonzalez.

Good morning and welcome to the CORTBURG SPEAKS RETIREMENT audio podcast.   

This week let’s talk about 2 very different strategies when it comes to retiring. 

The first one is  “FIRE, (financial, independence, retire early)” – a movement that has gained momentum as more and more millennials in the workforce show interest in becoming financially independent and retiring early.

The second is DIRE (delay, inherit, retire, and expire). This strategy is for people who believe it is more financially beneficial to retire early with financial independence or to delay retiring.

Let’s break down the pros and cons of each.

First, let’s look at the FIRE movement. 

FIRE Pros

  • Beneficial for your health –Early retirement could offer health benefits. You might feel less stressed, sleep more, eat healthier, and spend more time getting fresh air and exercising.
  • Ability to pursue hobbies – You can now pursue hobbies you couldn’t while working, such as traveling.
  • Family time – There could be more free time to spend with family.
  • Begin a new career – You worked hard and earned enough money to retire young, however, your job may not have been what you dreamt of doing. Now you have the time to start a new career and fulfill your dreams.

FIRE Cons

· Money troubles – Retirees may realize they don’t have enough money saved up to maintain their financial independence.

· Loss of purpose or motivation – Some young retirees lose their motivation when they don’t wake up with a purpose. 

Frustration and depression – When people realize they aren’t saving nearly enough to retire as early as they like, it can impact them psychologically. As cost of living increases faster than income for some people, it may be difficult to avoid negative emotions like frustration and disappointment.

Your Social Security benefits will be less – If part of your strategy for retiring early means taking your Social Security earlier, for example, at age 62, your monthly benefits will be 30% less than if you had waited until age 67 or even 70.

Health and potential long-term care coverage – If you aren’t working, you may need to find your own insurance, which could be expensive. You also must consider the possibility of having to pay for long-term care for you and your spouse if you have one.

Next up is DIRE - Delaying your retirement is another strategy that appeals to some individuals. Some people prefer the benefits of working longer, staying busy, getting employer-sponsored healthcare, waiting for the inheritance if you are lucky enough to get one, and finally hanging up your hat and enjoying the new free time.

DIRE Pros

· Purpose-driven life – Working gives people a purpose. Not long after people retire, they often grow bored and return to the workforce or pursue part-time work to keep themselves busy.

No need to find your own health insurance – Since you are still working you will likely receive health care coverage from your employer.

Larger Social Security checks – If you claim your Social Security benefits later because you decide to continue working longer, your Social Security checks will be larger.

DIRE Cons

Your health – Many jobs involve a tremendous amount of stress that could have a negative impact on your health.

Less time to enjoy retirement – If you choose to retire later, you will have less time to enjoy your retirement.

Tax consequences – Some retirees find they face considerable tax bills after retiring. This may occur because distributions from 401(k) plans and tax-deferred IRAs create taxable income. If you continue to work and are a super saver you may experience what is known as a “tax bomb.” This when you are hit by a large tax burden you didn’t expect. Working with a financial professional before and during retirement can potentially help you prepare for future challenges and develop strategies to overcome them.

So, which one appeals to you?

Consider consulting a financial professional

Planning for retirement, whether you want to retire early or continue working long after many others call it quits, can be complex. Getting the help you need from a financial professional can provide you with ideas for designing strategies, creating attainable goals, and deciding which retirement approach would work for you and your financial and retirement aspirations.

Remember, retirement isn’t just about money. It also includes your health and family, and getting the most out of what retirement has to offer. Finding a financial professional to build a long-term relationship with now could be beneficial as you modify your strategy to better align your changing interests, beneficiary updates, and the constantly evolving world and market.

Make sure to visit our website, www.CortburgRetirement.com. Our site is filled with educational videos, eBooks, publications, and financial calculators designed to help you learn more about your finances.  As you search our site, send us a note regarding any questions you may have about any particular investment concepts or products. We will get back to you quickly with a thoughtful answer.

This is Miguel Gonzalez, Certified Retirement Counselor (CRC) and Managing Partner, with Cortburg Retirement Advisors signing off for this week’s educational podcast.  

 

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Miguel Gonzalez, MBA, AIF®, CPFA®, PPC®, CRC®

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