Decumulating Wealth with Kids: FIRE Strategy for Retail Investors

Many individuals who are pursuing financial independence and early retirement (FIRE) often focus solely on accumulating wealth through aggressive saving and investing strategies. However, there is another way to decumulate wealth that is often overlooked: having kids.

While having children may seem like a financial burden, it can actually be a profitable FIRE strategy for retail investors. First, children can provide a significant tax benefit through the child tax credit and dependent exemptions. This can help lower your tax liability and potentially increase your overall tax refund, giving you more money to invest.

Additionally, having children can also lead to an increase in your Social Security benefits. Social Security benefits are calculated based on your highest 35 years of earnings, and having children can potentially increase your average earnings over those years. This can result in a higher Social Security benefit when you retire, providing you with a steady stream of income in your later years.

Lastly, having children can also serve as a built-in retirement plan. As your children grow up and become financially independent, they can provide support for you in your retirement. This can be especially beneficial if you have multiple children who are successful in their own careers. Not only can they provide financial support, but they can also serve as a source of emotional and physical support as you age.

In conclusion, while having children may seem like a financial burden, it can actually be a smart FIRE strategy for retail investors. With potential tax benefits, an increase in Social Security benefits, and built-in retirement support, having kids can be a profitable way to decumulate wealth. So, don’t overlook this alternative strategy when planning for your financial independence and early retirement goals.