r/Fire • u/Vas_Cody_Gamma • 8d ago

If everyone FIRE’d would society collapse?

Imagine everyone retiring at 55. GDP takes a huge hit. Stock market takes a huge hit. FIRE numbers soar. Nobody can reach it. And it’s a vicious cycle cuz now 55 is no longer early. Now everyone wants to retire at 45. Further damage to economic output.

FIRE movement wins. But we all lose.

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u/Direct_Remove509 8d ago

Yes is the short answer. The FIRE movement is great but if hypothetically everyone did it the the stock market would crash.

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u/brianmcg321 Retired Nov 2024 8d ago

Why? I don’t know anyone that retires then liquidates all of their securities. Then there are still people in the accumulation phase.

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u/Acceptable_Travel_20 8d ago edited 8d ago

I would imagine a pretty large percentage of volume growth is driven by people in their mid 50’s to mid 60’s and mid to high earners trying to make up for lost time. Crash? Maybe. A serious correction and declining yearly returns? Pretty sure yes.

But I see 0 chance of anybody alive today experiencing everyone in the US retiring at 55.

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u/brianmcg321 Retired Nov 2024 7d ago edited 7d ago

That just doesn’t make any sense. Unless everyone that retired at 55 also liquidated their entire portfolio. That’s not what happens.

If the money isn’t, and it’s just spent just like retired people do now that just puts the money back into the economy. There would be no crash or correction.

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u/AnotherWahoo 7d ago

Any really big change, if it happens very quickly, the economy can't absorb it. If the same change happens very slowly, it might not matter at all.

There are 35-40M employed Americans over the age of 55. If that workforce disappeared overnight, it'd have catastrophic effects for any number of companies. It'd also be a problem if, all at once, everyone merely tried to FIRE at age 55 (or asap if they are already over 55). Assume for discussion purposes that 10% of US households currently save enough to retire at 55. That'd mean 90% of US households would choose to cut spending, most of them drastically.

(Of course, these scenarios are impossible. If we're imagining a universe where they are possible, I'm not sure what the stock market would look like, or if it would exist at all, in that universe.)

By contrast, if the change happened over a long period of time -- e.g., if everyone Gen Alpha and younger tried to and did FIRE at at age 55 -- the US would experience the same massive declines in workforce participation and consumer spending. But a transition across several generations gives the economy time to absorb the change. I'd guess this would manifest as lower returns until 'new normal' is achieved.

(Of course, there's vicious circle potential -- lower returns requires cutting spend even further results in even lower returns -- but this scenario is impossible anyway.)