​People Are Retiring Earlier Than Ever—Here’s How

Meet the new movement of 30-somethings changing the face of retirement.

Ever since millennials entered the workforce, we've been redefining career goals.

We're the generation that bore the gig economy, social media influencers, and the side hustle. We prioritized flexible hours, self-care and personal satisfaction in the workplace. We believed our dream job was out there if we just kept working to find it . But then, something shifted.

Call it disillusionment or just getting older, but the new millennial career dream is not having a job at all. Blame burnout in the digital age, where work-life balance is nearly impossible; or blame companies like Google and Facebook, who once topped the list of ideal employers before wage gaps, election hacking, privacy infringements and other scandals tarnished their reputations.

Whatever the reason, for some, the dream job has been replaced by the dream of early retirement. Enter the FIRE (Financial Independence Retire Early) movement—a rapidly growing collective of big-thinkers who are saving to retire by their 30s and early 40s.

Hard work pays offPractical Money Skills

FIRE sowed its seeds on Reddit forums and millennial money blogs—which preach the gospel of 70%, AKA saving 70% of your yearly income for a fixed amount of time. Attempting as much on an average salary involves a lot more than coupon cutting. Every penny saved—through blood, sweat, second jobs and serious downsizing—goes into income-earning investments like low-fee retirement accounts.

It may sound far-fetched, but for some 30-something savers, retirement is already a reality. In September, The New York Times profiled several individuals, formerly employed in tech, finance, creative, and recruiting fields, who have already called it quits on the working world.

While some FIRE folks have had the benefit of hearty six-figure salaries, others have managed to punch out their time cards indefinitely by maximizing more modest salaries. But fair warning: it isn't easy.

Members of the FIRE movement looking to retire ASAP work round the clock and pinch pennies to the extreme—we're talking no dinners out, no movies, no gym memberships, and no life until their retirement finances are in order.

So how much downsizing are we talking about? One couple, Scott and Taylor Rieckens—both in their 30s and earning a combined $160,000 prior to ditching their 9-to-5 jobs—moved their family from California to Oregon to scale back on rent, sales tax, and gas mileage. They also swapped one of their cars for a more cost-effective bicycle. But on the plus side, they no longer work day jobs and have more time to spend raising their child and developing pet projects.

The RieckensThe New York Times

"The whole retire early thing is unimportant to me. It's more about gaining control of your time," Scott, a former creative director, told the Times. "If you dive into the definition of retirement, what you're retiring from is mandatory labor. It's not necessarily about piña coladas on the beach."

Las Vegas residents Joe and Ali Olsen can attest to that. Both began as teachers in 2004, when they decided they wanted to work less and travel more. By taking on extra jobs—from teaching summer school to running fitness programs—they slowly but steadily increased their earnings by about 50% without increasing their spending habits.

Joe and Ali Olsen with their childBusiness Insider

"We kept driving the same cars... We also ate at home, a lot. Eating out was rare, and a treat," Joe told Business Insider in 2017.

The couple continued living on a $20,000-a-year household budget and saving around 75 percent of their combined $80,000 annual income until they accrued enough to buy a rental property. Then they bought 14 more.

"When we started acquiring rentals, friends and family would ask when we were going to move into one of these three-bedroom, 1,800 square feet places, rather than our tiny condo," Joe told Business Insider. "But we were happy where we were. We never felt like we were depriving ourselves, because simple pleasures were enough."

A search of the FIRE Reddit forum, which boasts around 430,000 subscribers, reveals that some of the biggest hardships are letting go of the small indulgences. One user bemoans saying goodbye to craft beer, another gave up bowling. One user misses pizza delivery the most, while a few gear-heads have traded in their prized wheels for used cars. But many agree that a life without Starbucks and gym memberships is worth the long-term independence.

While there's no precise formula for extremely early retirement, there are some hacks to get started, including setting up auto-recurring bank transfers that withdraws money at set times depending on your paychecks, so that portions are allotted to checking, savings and investments automatically.

"When it comes to investing, the most common investment strategy of FIRE folks is to max out traditional IRAs and 401(k)s and put the remainder of their money in low fee index funds," notes Vice's Shomari Wills, who covered the phenomenon back in June. "Compounding interest helps the money pile up faster."

Then there are the bargain-basement tricks that the Reddit community shares with each-other—from renting video games at the library, to coupon-ing, and maximizing credit card points and other hacks.

Every penny counts www.valpak.com

But for all the bargain-hunting brags, the journey to financial freedom can take its toll. "Anyone else tempted sometimes to 'give up?'" one FIRE Redditer asked, before describing another taxing day of work and hardcore savings.

While financial independence gurus like the blogger behind Mr. Money Moustache and author Vicki Robin have fueled the movement, it's not without its detractors.

"Individuals who retire early are choosing to stop their earned income, which is the greatest defense against life expenses," Hank Mulvihill, a Dallas-based senior wealth adviser warned Marketwatch readers. "This is a decision not to be taken lightly."

One issue with retiring so early is unexpected expenses— think surprise pregnancies or health issues. If emergency money is tied up in retirement funds, penalty fees for early withdrawals will set you back. The precarious state of the healthcare system also makes planning ahead a challenge.

Then there's the issue of putting your happiness on hold in the hopes of future financial freedom.

"Financial independence shouldn't come at the cost of your happiness as you work endlessly and never enjoy the fruits of your labor in fears of derailing your early retirement goals," writes Hank Coleman on Yahoo Finance.

Time to relax amp.businessinsider.com

Remember the Olsens? They have a different take. In 2015, just eleven years after entering the workforce, the couple had saved over $1 million, and decided to quit their teaching jobs in order to travel around the world. While they still oversee their many rental properties, they've gained the flexibility to pursue the dreams they never had time for before. They also keep a blog, Adventuring Along, where they chronicle their travels and offer financial and real estate coaching.

"Teaching was one of our lives," the pair shared on their blog. "We loved it, but we also love our new one of travel and kids. Financial independence gives us the ability to take the risks to explore these lives. Despite loving our jobs, we quit, and couldn't be happier."

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