I’m reading a book about middle class failure. It’s called NOMADLAND Surviving America in the 21st Century. I’ve searched for FI blog posts about FI failure but find none. FI is all about travel and travel hacking and minimalism, simple ratios proclaiming assured retirement longevity. It’s all about starting a blog or some other side gig like real estate. You know some white collar kinda of “passive income” kind of deal to make you a cool hundred K/yr on the side while jetting to media events. It’s all about being glamorous and being amazing. In short it’s all about a narrative that doesn’t include failure. It’s preached with the fervor of a health and wealth evangelist. It turns out MMM may not be the first evangelist of minimalism, though he may be the most prominent in FIRE land. Here is a site CheapRVLiving, dating back to 1995 this guy spent his life living in a truck and blogging about it. Pretty minimal.
As I read the book it was full of stories people middle to upper middle class, college teachers, college administrators, accountants, home owners, 401K owners, people with several hundred K in the bank and retirement accounts some pushing a million. The people are now Workampers, itinerant post 65 year old’s who travel from “gig to gig” like Amazon fulfillment centers. They walk 15 miles in 90 degree heat a day stooping and lifting to fill pallets with goods to ship to us Prime customers. They pick sugar beets, and scoop ashes and clean toilets 4 times a day at California campsites and make ten bucks an hour, trying to survive. 10 bux an hour plus a place to park their truck. Some campsites don’t have showers. Those are half an hour away. They get paid for 8 but are expected to do what it takes. If that’s a 12 hour day so be it. People lost their dough in 2008. People got divorced and the savings were split. Mortgages were due and jobless could no longer make the nut, people just walked away unable to pay. (I’m 66 and retired). They drive from place to place, no healthcare, a few bucks for gas, maybe a burrito from Taco Bell living in Vans and Trucks and RV’s. Entirely different narrative than the FIRE narrative. It turns out these employers like the seniors because they know how to get the job done. They are wired to do the task at hand even if their bodies are busted and injured and fried. They like the seniors because come hell or high water they show up.
It’s a fascinating contrast and so I ask myself what’s the difference? How can high level executive types wind up shoveling shit in a camp ground instead of swilling stout with MMM at some event? As I worked through it I think it’s leverage. People live lives of leverage and they don’t even understand they are levered up. I wrote an article: “A Graphical View of Retirement”, and I was struck that the difference in the three scenarios was leverage. The 60 year old basically had no leverage and could pay for his retirement straight up cash on the barrel head. He would get some SS likely but he wouldn’t struggle. He saved for 40 years to cover 30 years. In the 52 year old’s case his future was slightly leveraged. He worked only 32 years to cover 38 years. He was basically bullet proof as well. He only needed to make a net of 15% on his money over 38 years to compound his money to enough to cover his retirement. SS would make up most if not all of his shortfall. The FIRE guy had to cover 52 years, but he only worked 18. In his retirement he needed his retirement nest egg to triple to die not poor. Each of these guys has a different level of leverage on the future from 0 to a lot, and each will have a different probability of joining Workampers R Us. In 2008 people who were slated with retirement aspirations 20 years in the future, were forced to crack the nest egg in the present with no W2 assist on the horizon. Remember as you withdraw from the nest egg it’s ability to pay you contracts and chances of failure increase. Their expected age 60 portfolio turns into the age 38 portfolio in a crash and is way underfunded. People worry about poor return, but this hidden unrealized leverage is just as deadly. FIRE types talk bravely and glibly about withstanding disaster and how FI gives you “options”, with no experience of failure. Then comes Hurricane Mike.
It’s about as close as I’ve yet come to failure stories