Retirement
Can FIRE members survive a recession?
The idea of being financially independent and retiring early might appeal to young Aussies looking to escape the nine-to-five, but what happens if the market turns?
Can FIRE members survive a recession?
The idea of being financially independent and retiring early might appeal to young Aussies looking to escape the nine-to-five, but what happens if the market turns?

While the Australian economy might have the current record for the longest streak since its last recession, dating back to 1991, economies eventually turn, with investors relying on dividends being negatively affected.
In a conversation with nestegg, FIRE guru Aussie Firebug, who has chosen to remain anonymous, discusses the options for early retirees if the market turned for the worst.
Noting a Trinity study, Mr Aussie Firebug believes a 4 per cent drawdown rate on 25 times expenses has a greater than 95 per cent chance of lasting the investor’s life, although he acknowledges that market conditions can make early retirement difficult.
“Even if you do get really unlucky and you retire the year a major crash happens, even if that happens, you still have another 40 years to either tighten your belt and bring spending down a bit or return to work,” Mr Aussie Firebug said.

Finance expert from Canstar Steve Mickenbecker also agrees with younger investors having more options than older retirees.
“If you’re 75, maybe you don’t have the options of younger Australians and return to the workforce to sit out the recession,” Mr Mickenbecker explains.
The finance expert also noted that people who built enough wealth to retire early have skills the workforce requires, noting that “not every job goes in a recession”.
Mr Mickenbecker advises that younger retirees need to revisit their sums as soon as possible to see if it is still viable to leave the workforce.
Mr Aussie Firebug believes that realistically, early retirees have options, with doomsayers “scaremongering” the FIRE movement.
“A lot of finance people scoff at the idea of a 4 per cent withdrawal rate, when in reality [FIRE retirees] have so many options across at least a 40 year time period to make adjustments,” Mr Aussie Firebug said.
However, pulling the pin on work early does not come without any risk. Using the example of someone who retired in 2007 with $1,000,000 relying on a drawdown of 4 per cent before the GFC would have net assets worth $600,000 in 2008 due to the market correction.
The Trinity study notes that an investor in 50 per cent bonds and 50 per cent stocks that has a drawdown rate of 3 per cent instead of 4 per cent has a 100 per cent chance of not outliving a 30 year retirement.
nestegg has previously reported how investors can live a “kick-arse” lifestyle and retire early.
About the author

About the author


Retirement Planning
Majority of Australians anxious about retirement as super knowledge gaps persist, report finds
A new study by Aware Super has revealed that a significant majority of Australians aged 45 and over are feeling anxious about retirement, with nearly nine in ten respondents concerned they will run ...Read more

Retirement Planning
AMP’s MyNorth Lifetime boosts financial security and retirement income
AMP has reported that its MyNorth Lifetime retirement income solution is delivering significant financial benefits to retirees, with an average uplift of 50% in total income. Read more

Retirement Planning
Retirement living sector calls for planning reforms amid declining construction confidence
The Retirement Living Council (RLC) is urging governments to streamline planning systems to boost housing supply, following a decline in confidence in age-friendly construction activity. Read more

Retirement Planning
New laws to boost women's retirement savings through paid parental leave
The Australian Parliament has passed new legislation that will see superannuation guarantee contributions paid on the Commonwealth Government's Paid Parental Leave (PPL) scheme. Read more

Retirement Planning
Planning systems under scrutiny as Australia's ageing population grows
The Retirement Living Council (RLC) has called for governments to address planning system shortfalls in preparation for Australia's ageing population, following the release of new data from the ...Read more

Retirement Planning
Retirement Living Council calls for focus on seniors' housing as population ages
The Retirement Living Council (RLC) has urged governments across Australia to prioritise age-friendly housing solutions in response to new data revealing an ageing population. Read more

Retirement Planning
Macquarie University study reveals benefits of guaranteed income in retirement
A new study by Macquarie University's School of Psychological Sciences has found that mental health, enjoyment, and financial security are key benefits of incorporating guaranteed income and annuities ...Read more

Retirement Planning
Retirement villages offer affordable housing amid market crisis, study finds
Retirement villages are providing a significantly more affordable housing option for older Australians compared to the traditional property market, according to new data released today. Read more

Retirement Planning
Majority of Australians anxious about retirement as super knowledge gaps persist, report finds
A new study by Aware Super has revealed that a significant majority of Australians aged 45 and over are feeling anxious about retirement, with nearly nine in ten respondents concerned they will run ...Read more

Retirement Planning
AMP’s MyNorth Lifetime boosts financial security and retirement income
AMP has reported that its MyNorth Lifetime retirement income solution is delivering significant financial benefits to retirees, with an average uplift of 50% in total income. Read more

Retirement Planning
Retirement living sector calls for planning reforms amid declining construction confidence
The Retirement Living Council (RLC) is urging governments to streamline planning systems to boost housing supply, following a decline in confidence in age-friendly construction activity. Read more

Retirement Planning
New laws to boost women's retirement savings through paid parental leave
The Australian Parliament has passed new legislation that will see superannuation guarantee contributions paid on the Commonwealth Government's Paid Parental Leave (PPL) scheme. Read more

Retirement Planning
Planning systems under scrutiny as Australia's ageing population grows
The Retirement Living Council (RLC) has called for governments to address planning system shortfalls in preparation for Australia's ageing population, following the release of new data from the ...Read more

Retirement Planning
Retirement Living Council calls for focus on seniors' housing as population ages
The Retirement Living Council (RLC) has urged governments across Australia to prioritise age-friendly housing solutions in response to new data revealing an ageing population. Read more

Retirement Planning
Macquarie University study reveals benefits of guaranteed income in retirement
A new study by Macquarie University's School of Psychological Sciences has found that mental health, enjoyment, and financial security are key benefits of incorporating guaranteed income and annuities ...Read more

Retirement Planning
Retirement villages offer affordable housing amid market crisis, study finds
Retirement villages are providing a significantly more affordable housing option for older Australians compared to the traditional property market, according to new data released today. Read more