Academics on FIRE: Is the Financial Independence, Retire Early Movement for Academics?

For the past ten years or so since I first started paying some attention to financial discussions online, the most energized idea has been FIRE: Financial Independence, Retire Early. Particularly popular among overpaid tech bros, the idea is to save your income aggressively, invest it in broadly-diversified index funds of stocks and bonds, and employ assumptions about future market growth and safe withdrawal rates to calculate when you can afford to quit your job and start reimagining your life. Hyper-privileged discourse around it aside, I love the FIRE movement primarily because it has motivated so many of us to think creatively about our goals and how to align our financial practices with these goals to realistically achieve them. But is FIRE for academics?

Does FIRE Make Sense for Academics?

But does FIRE make sense for academics? It depends. On one hand, financial independence (having enough wealth to sustainably support your needs — AKA F-U money) is a great goal for anyone. To see this, close your eyes (uh, after you finish reading this I guess) and visualize with me for a moment. Just imagine you go into your annual review with your administrator and they start criticizing you for failing too many students (who never turned anything in), quote the most critical student reviews back to you (from the student you reported for academic dishonesty after several warnings), or tell you that once again there will be no cost of living adjustment this year during a period of record inflation (so that the board-appointed Underdeanlet for Avoiding the Appearance of Political Bias, who just happens to be a golf buddy of a board member and a key member of the state legislature, can afford that new rooftop pool for their McMansion). And imagine for a moment that thanks to years of diligent saving and good fortune you’re financially independent and — quite literally — don’t need this shit. Wouldn’t it feel good to be able to tell them exactly what you think about all that without having to worry about potential destitution if the worst consequences should transpire? Of course it would. Same goes for anyone worried about their health or that of a loved one, or who finds they just don’t get the joy out of the work that they used to, or any other number of circumstances. Financial independence is about having the best options to live a great, authentic life, and that’s as relevant to academics as anyone else.

On the other hand, we have a lot of advantages that many other careers don’t that may make the ‘RE’ part of traditional FIRE less appealing. Below I’ll review the different versions of FIRE that have become popular and then discuss how and when I think these could be applicable to professors.

Flavors of FIRE

There are many flavors of FIRE:

  1. Traditional FIRE: you quit your job when you reach your number that can sustainably support your current standard of living.
  2. Barista FIRE: you quit your job and take a lower stress, part time job for supplemental pay and health benefits so you can quit your career sooner.
  3. Coast FIRE: you save up enough early in life that, with subsequent market growth, will be enough to support you at normal retirement age. In the meantime you don’t have to save for retirement anymore unless you want to!
  4. Various alternative levels of post-RE standards of living: lean FIRE, chubby FIRE, fat FIRE, etc.

When Is FIRE for Academics?

I can think of several situations where FIRE principles could be helpful for professors.

Before Grad School: Coast FIRE

I’ve already written two posts about this (here and here), but I’ll succinctly repeat them because I think that Coast FIRE is a powerful concept to help future academics avoid the worst financial risks of seeking a career in academia. The idea is that you wait several years between your undergraduate/masters degree, enter the workforce in the best-paying job you can get, then save aggressively and invest in low-cost index funds until you reach your Coast FIRE number (where you can reasonably project that your current savings can fund your retirement after decades of growth). In the advanced version, you make sure that these investments are in tax-deferred retirement accounts like 401(k)s, 403(b)s, and traditional IRAs, then perform Roth conversions on them during grad school, thus locking in your lowest lifetime marginal tax rate. A bonus of this approach is that you will be much more keenly aware of the opportunity costs of graduate school after you’ve earned a real paycheck for a few years, thus helping you make a more informed decision about whether to actually apply. Whatever you decide, you’ll be in great shape.

Mid-Career: Lean FIRE

Many tenured academics have periodic opportunities for sabbaticals from teaching and service obligations. Often this deal comes with two different options:

  1. Take a one-semester sabbatical at full pay.
  2. Take a two-semester sabbatical at reduced pay.

At my institution for instance, the full-year / reduced pay sabbatical option pays you 67% of your 9-month salary. For those sufficiently funded with grants or who receive external fellowships, they may be able to top this amount off to avoid any dip in pay. For everyone else, reaching a lean FIRE level of financial independence can help you make the most of these opportunities. If you’re sufficiently wealthy, you can make up for any lost pay with withdrawals from your investment accounts and take the full year every chance you get. These can be great opportunities to remember why you got into this line of work in the first place, and get a little taste of early retirement as well to see if it’s to your liking.

Very important note: If you plan to adopt this approach, unless you’re past expected retirement age, make sure that you’ve pre-funded taxable brokerage accounts, CDs, bond ladders, HYSAs, or some other non-retirement savings vehicle so that you can make these withdrawals without the early withdrawal penalties that come from non-qualified retirement account withdrawals from traditional IRAs, 401(k)s, and 403(b)s. (You could also take it out of your Roth IRA if you’ve accumulated enough contributions, but I don’t recommend it given that account’s enormous post-retirement and post-death advantages.)

Late Career: Barista FIRE AKA Deadwood Professor

For tenured professors with modest base teaching loads, the degree of control we exert over our own work hours and tasks is the biggest advantage we have over other occupations. If you’re fully tenured and have your syllabi and lesson plans down pat, the deadwood route is an appealing alternative to early retirement and is effectively a much cushier equivalent to Barista FIRE. You probably all know what I mean by deadwood — the professor who stopped publishing new ideas except as 2nd author with their grad students 20 years ago and shows up on campus only to teach and make their colleagues’ lives miserable at faculty meetings. Ok, maybe don’t do that last part, but the key idea here is that the low-research, low-teaching, deadwood version of this job for someone with a 2/2 course load and no new course preps could be a <20 hour per week job, at full pay. At higher course loads, that weekly number goes up, but it could still be a way to enjoy the fruits of your hard work with somewhat reduced stress due to no longer seeking other positions or biggish raises.

Late Career: Pursue Your Dream Job or Location

The geography of US universities has created an unfortunate financial dynamic. As you are no doubt aware, many of our finest institutions of higher learning are located in the middle of goddamn nowhere. Since many of us would prefer all else equal not to live in the middle of goddamn nowhere or in locations we otherwise find undesirable, some of these institutions pay better relative to local cost of living than many of their more appealingly-located peers in order to competitively recruit top professors. Among schools with public salary databases, Purdue University stands out as one institution that is willing and able to splash the pot in order to recruit the best and brightest to the corn fields of rural Indiana, either residentially or via I-65 from Indianapolis.

Between the high pay and low cost of living, such arrangements can make a lot of sense for those who prefer or are at least able to stomach it, which is of course a much easier thing to countenance for cis/het white folks without uteruses in the US in 2024. But let’s say you prefer a more diverse, urban environment in a place where the state legislature hasn’t yet decided to strip you of your fundamental human rights. Even if you get an offer for such a job, often that’s going to cost you as the pay for these positions is frequently incommensurate with the cost of living in those areas. Some universities partially make up for this gap through faculty housing programs with below-market rents or down payment assistance programs in the form of forgivable loans. But I’ve never seen the gap completely closed in my field. Working at such places is a luxury with a substantial sticker price that many professors can’t afford.

Unless, that is, you’re already wealthy, whether due to inter- or intra-generational wealth. Let’s assume for the moment that you are not a trust fund baby, would prefer to live and work in such a place, but also desire a stable financial present and future. In this case, the best way to thread this needle may be to work in one of the higher-paying, less appealing universities in the middle of goddamn nowhere until you reach a sufficient level of financial independence that you can now afford the luxury of working for comparatively low salary in a high cost of living area. Go to the corn fields, save aggressively, invest sensibly, and wait until your liquid wealth can sustainably cover the gap between what these universities pay and the standard of living you are willing in order to live there. Same goes if you want to move to your hometown but there is only a directional branch of a 2nd-tier state university, etc. The point is that sufficient wealth lets you make career choices with less weight attached to pay.

Late Career: The ‘RE’ Stands for ‘Recreational Employment’

When you’re fully financially independent, working becomes entirely optional, and the type and intensity of the work you do undertake becomes far more flexible. There are several options particularly available to academics to continue to work, but on their own terms:

  1. Phased retirement: Many universities offer phased retirement programs in which professors’ pay and duties gradually step down over a number of years. This is a great option for those ready to step back but want to finish their remaining projects, mentor their remaining students, etc. Having sufficient wealth to maintain the same lifestyle as your pay gradually reduces is a great benefit of financial independence as you move toward retirement, early or otherwise. At my university, there is no minimum age for this program, so this could be a great option for those considering early retirement.
  2. Emeritus status: Of course, many universities offer professor emeritus designations. At my university, this is available at the discretion of university administration to those age 60+ who have worked 10+ years at the university, or else to anyone who has worked 25+ years at the university. There likely will be no associated pay or monetary benefits, but benefits such as library and email access, campus facilities, office/lab space, etc can be negotiated so that you can continue to participate in campus life if you so choose.
  3. Semi-retired research professor: If you were a tenured professor with teaching and research duties, one option could be to transition into a soft money research professor position. This way you would have the university infrastructure to support any grants you wish to apply for in the future, but doing so will be optional for you so long as you can afford to go without your salary. I’ve known of a few faculty who have done this and honestly it sounds ideal for those more motivated to continue the research than teaching side of the job. If you’re in a field where grant funds are realistically available, this could work out very well for you.
  4. Adjuncting: Maybe you’re retired but would still like to have the option to periodically teach your favorite course. The pay probably won’t be great, but the great thing about financial independence is you don’t have to do it for the pay. This is a great use of adjunct professor positions, unlike many universities’ determination to create a permanent class of adjunct professors with no benefits, low pay, and no job stability. (If you find yourself being herded in this direction, run! The escape hatch unfortunately may close later.)
  5. Consulting: You spent decades of your life developing and expanding expertise, and this probably has significant value to somebody out there. If this is your goal, it will be important to build your consulting practice while you’re still employed full-time so that you already have contacts and a good reputation to trade on during your semi-retirement.

Final thoughts

Is FIRE for academics? It can be! Of course this will likely only work if you have a relatively high-paying academic job or relatively low expenses. However, if you set the seeds for wealth accumulation by working toward coast FIRE before grad school, fund your Roth IRA during grad school, keep living like a grad student/postdoc while you’re an assistant professor, seek and take advantage of the life-changing benefits of summer salary, negotiate your first position well, and periodically attract meaningful raises, you’ll be well-positioned to make the options above your reality. Fare thee well, comrades!

Discover more from Elbow Patch Money: Personal Finance for Academics from Grad School to Emeritus

Subscribe now to keep reading and get access to the full archive.

Continue reading