Part of Issue #12 of The Highlight, our home for ambitious stories that explain our world.
Rebecca, 33, grew up in a single-parent household and graduated from college with a music degree in 2008, at the pit of the recession. She lived paycheck-to-paycheck until she took a job at a Fortune 500 company while putting herself through business school, at which point she paid off about $15,000 of student loan debt she accumulated during undergrad.
Rebecca felt the pressure to earn. Since she was 23, she has financially supported her mom, who was laid off in 2008; it’s one of the reasons she left music. “It was really all about money in the beginning,” she says.
But she quickly discovered, as she wrote on her blog, “I don’t like to go to work.”
It wasn’t the work that Rebecca hated; it was the work environment, the Sisyphean cycle requiring deft navigation of office politics and frustrating management, early mornings, and the surrender of nights and weekends in order to climb. On her blog, she would describe the relief that washed over her at the end of a workday, writing: “I get home, plop in front of the TV to block out the miserable thought that this [is] my life until birthday #65.”
So, for seven years, Rebecca — who blogs under a pseudonym and asked that her real name be withheld to keep her financial information confidential — and her husband, a freelance musician, saved and saved, and invested and saved. They made a combined low-six-figure income, though his was sporadic and hers steady. They also received two inheritances from her grandfather and father, money they put directly into their investment portfolio.
The less they spent on lattes, clothes, new iPhones, and the like, the sooner she could leave fluorescent-lit 9-to-5 life behind. Rebecca’s goal: to amass a net worth of $1 million by the end of 2019.
Rebecca’s extreme retirement plan wasn’t necessarily of her own design. She was inspired by FIRE — a movement that takes its name from the acronym Financial Independence Retire Early. FIRE is buzzy and blog-friendly, attracting followers in their 20s, 30s, and 40s who reject the notions that income earning must steer the bulk of adult life, and that the reward of retirement must wait for their golden years. What if, they propose, a better plan is to live frugally, save intensely, and retire in the prime of life?
Guesses at how big FIRE has become are vague at best, but there are some clues: There are currently more than 700,000 members in an active Financial Independence subreddit founded in 2011, and popular blog and podcast network Choose FI has registered more than 1.6 million downloads to date. Another FIRE-related blog, Mr. Money Mustache, reported last year that it had been accessed by more than 30 million unique viewers since 2011.
In November 2019, Rebecca hit her target and retired. But as her FIRE date drew near, anxiety crept in; she feared walking away from a high-paying job. Rebecca’s mom “totally freaked out” when Rebecca shared her plans. So did her in-laws. Who could blame them? There’s a not-insignificant amount of risk involved in FIRE, as the stock market roller coaster and economic ripple effect in the wake of the coronavirus pandemic have recently made worryingly clear. “Not knowing what’s next is really scary, and I didn’t think it would be as scary,” Rebecca told Vox before leaving her job. “I think about it all the time.”
Her fears are well-founded, particularly for her generation. Many millennials were laid off in the Great Recession (8.7 million total lost their jobs across all generations), or struggled to find paid work after graduating, and many are still playing a losing game of financial catch-up as a result. Today, millennials remain strapped with an unprecedented student loan debt crisis and ballooning housing, health care, and child care expenses. As a result, they overwhelmingly put off homeownership, medical and dental visits, and having kids because they can’t afford it. All the while, but especially now, evidence has grown that another economic crisis may be imminent.
The rise of FIRE runs strikingly counter to that financial picture. How can anyone dream of quitting their job when they can barely stay afloat?
Yet the existential dread Rebecca felt about work is far from uncommon. Gallup has reported that more than half of millennials describe themselves as “not engaged” at work, or not “emotionally and behaviorally connected to their job and company.” That dread, and a growing sense of burnout, may in fact be feeding millennial interest in FIRE. The Harris Poll found in 2018 that Google searches for “Financial Independence Retire Early” rose 96 percent in five years.
“If you have a conversation long enough about FIRE, you end up getting into this existential crisis of, like, ‘What are we doing here?’” says Scott Rieckens, 36, a filmmaker who chronicled his family’s entry into FIRE in the documentary Playing With Fire, released on iTunes late last year. “Because it is about your time, this nonrenewable resource. ... So what are you going to do with the life that you have left, right?”
“Financial freedom,” as FIRE proponents call the salvation bequeathed by quitting their day jobs, comes with a cost, however. Saving intensely — some FIRE leaders recommend saving 50 to 70 percent of your paycheck — is an expense in and of itself. To get there, FIRE requires life optimization to the extreme, optimization that can edge out folks without a 401(k) or more than $400 in the bank at any given time, those who don’t make six figures by 30, those who don’t have partners with whom to split the mortgage, and those who have $40,000 in student debt. And in the end, no one, not even a millennial with a million in the bank can say for sure that the hustle to save will result in the thing that eludes them: happiness.
FIRE is more complicated than telling your boss to get bent, hightailing it to the beach, and never answering another “high priority” email again.
The first and most crucial part is the FI: Financial Independence. Achieving “FI” is what the movement, and all of its corresponding blogs, podcasts, forums, and subreddits, hinge on.
Adherents to the FIRE model reach FI by obeying an austere financial diet: Cut spending, eliminate bad habits, pay down debt, and come up with target numbers for how much net worth to accumulate and when to accumulate it by. To come up with their FI number, FIRE’s followers multiply the total amount of their yearly living expenses by 25. This formula uses what’s known as the “4 percent rule,” derived from a 1998 academic paper referred to colloquially as “the Trinity study” that recommended withdrawing no more than 4 percent of your portfolio (savings, retirement funds, stock market investments, etc.) every year post-retirement. According to the US Bureau of Economic Analysis, the average American saves a little more than 8 percent of their annual income after taxes. FIRE’s followers aim to save half, if not more.
Financial independence and its pursuit predates the term “FIRE” by a few decades, going back at least as far as the landmark personal finance book Your Money or Your Life, which became a bestseller in 1992 after its co-author, Vicki Robin, appeared on Oprah and shared with the audience some simple math: If it takes X time to make Y money, and you need Y money to buy Z stuff, then stuff equals time. When Oprah waved her hand over a rack of jewel-toned clothes and asked Robin to impart her algebraic wisdom, Robin — who retired at 24, in part thanks to an inheritance from her grandmother — responded, “This is six weeks of your life.”
But Robin and her co-author Joe Dominguez proffered a solution: Become financially independent, i.e., accumulate enough net worth to quit your job, and you will be freed from the binds of stuff — because of the plain fact that you will no longer have a seemingly endless supply of money with which to buy it. The book didn’t lead legions to embrace extreme frugality en masse (though Your Money or Your Life sold 600,000 copies in the first five years, and more than 1 million to date). It did, however, attach a personal price tag to capital-W Work, and would become a foundational text for other folks desperate to find a way off the hamster wheel of capitalist life.
Your Money Or Your Life didn’t lead directly to FIRE either, exactly. Tracing FIRE’s history is tricky, in part because its tenets were developed on disconnected personal blogs, largely helmed by people who either believed that they’d discovered some secret sauce, or who discovered one another (and Your Money or Your Life, whose co-author was eventually considered FIRE’s “godmother”).
It’s even unclear when the FIRE-specific brand took off. The movement’s “reluctant and beloved de facto leader,” Pete Adeney, doesn’t even know. “Your guess is as good as mine in this department,” he says via email.
Adeney, 45, doesn’t love the name “FIRE.” He prefers “retired” to “fired” or “FIREd,” which is how some prefer to describe their voluntary unemployment status. More specifically, he prefers Mustachianism.
You’d be forgiven if you’re not familiar with Mustachianism, a philosophy of “financial freedom through badassity” that Adeney spun out of his popular blog, Mr. Money Mustache. But within the FIRE community, Mr. Money Mustache is required reading, a colorful compendium for anyone serious about achieving FI, and Adeney’s word is near-gospel. A former software engineer, he retired at 30 and started the blog in 2011 to proselytize his idiosyncratic version of personal finance. (It was his blog that inspired Rebecca.) More a Gen X-er than a millennial, and having long settled into retirement, Adeney serves as a model within the FIRE community of what is possible.
“Once you are off the [tread]mill, you’ll feel like Neo did when he unplugged the suction cups from his pale naked body in The Matrix and looked around at the other imprisoned humans,” Adeney blogged in his very first post. “‘Holy Shit!’, you will say. ‘I’ve been living in this ridiculous slave world and never noticed...and everyone else still is! WAKE UP DRONE PEOPLE!!!’”
“It’s supposed to be a bit of a cult,” Adeney told the New Yorker back in 2016. “The rest of society oppresses us. We have our own symbols. The bicycle, the hatchback.” Adeney’s language is evocative, to say the least. America’s “Car Clown” culture and “Exploding Volcano of Wastefulness” aside, Adeney is after a revolution. “[A]s we lift up the poorest among us, we also need to cut back the environmental destruction that we rich people are causing,” Adeney — who says his annual expenses in Longmont, Colorado, are under $25,000 — tells Vox via email. Culture, he says, must change from the top down.
In many ways, it already is. We’re in a moment in which giving up stuff, not acquiring it, is an aspiration. Look to the declutter craze inspired by Marie Kondo; the zero-waste movement that celebrates reducing one’s garbage output to one mason jar a year; and the trend away from consumerism with the Buy Nothing Project. Millennials prefer experiences to stuff, we hear again and again.
If the popularity of these concepts is any indicator, the idea of freedom from capitalistic tendencies isn’t so abhorrent for plenty of people. Striving is a millennial way of life, and in that way, we’re a generation primed for FIRE. As Robin told the Wall Street Journal last year, millennials “understand that the system their parents built is coming apart.”
Adeney’s ascetic lifestyle is clearly inspirational to those who have followed his blog over the years. The message is also transfixing, channeling our worst fears about capitalism and our powerlessness over stuff. “Most of our spending is a sign of weakness,” Adeney told The Tim Ferriss Show in 2017, “and it’s a bunch of stuff that we do to compensate for our weaknesses, because we couldn’t solve the problem in a smarter way.” For Adeney, it’s not really about luring the American workforce into early retirement, but instead about breaking money’s grip on the masses, about the end of Work to Buy and Buy to Maintain. Abstaining from consumerism is evidence of piety, restraint, and dedication to the cause.
But the flip side of this message is that those who still participate in that cycle are weak and don’t have Adeney’s problem-solving skills. FIRE’s bootstraps outlook, however, isn’t necessarily accessible to the vast majority of Americans who work not to buy, but to survive. Nearly 17 million households live in poverty, including 5.3 million households headed by a millennial; and credit card debt is a major hurdle for millions of US households, too, with more than half of credit card holders owing debt. A quarter of US adults have no retirement savings, and 28 percent don’t have a rainy day fund for emergencies. Any single one of these factors could make it impossible to retire early, let alone a combination.
Adeney acknowledges that he’s not talking about the working poor — or to them — when he makes these sweeping statements. As he puts it to Vox, “Getting rich people excited about consuming less is by far the most effective way to [protect the environment], which is why I mainly write articles targeted at my fellow wealthy Americans.”
Elizabeth Willard Thames, who blogs about her young family’s frugal lifestyle, has been candid about how privilege allowed them to retire early to the woods of Vermont. On her blog, Frugalwoods, she catalogs a number of factors that made her and her husband, in her phrasing, “advantaged from birth”: They were raised by parents with college degrees, they didn’t grow up in poverty, their families are “loving, intact,” and they are white. She also cites a number of “smart decisions we’ve made thanks to our privilege,” namely that they went to college, have never been in debt (apart from their mortgage), worked in high-paying jobs, are healthy, and delayed having children.
“I wish I could say that if everyone would just save a little more, and live a bit farther below their means, and avoid buying an SUV, they’d be able to quit their jobs and live the life they crave,” writes Thames. “But that’s not the reality. There’s structural privilege inherent in our ability to pursue financial independence at a young age.”
Personal finance expert Erin Lowry, author of Broke Millennial, is a self-described “cynic” when it comes to FIRE, though she understands its appeal. “It’s aspirational in a lot of senses,” she says, “to have that level of autonomy over your life at such a young age, to feel like you can opt out of the traditional workforce and have a lot of control. However, there are certainly some pieces of the puzzle that do not fit together quite as neatly as it sometimes gets presented.”
Sometimes (not always), an inheritance eases the road to FIRE, as it did for Rebecca and Robin. Sometimes (not always), a successful career in a lucrative industry helps, as it did for Adeney. Sometimes (not always), one-half of the household continues to earn income. And often, early retirement means leaving the grind, only to change careers.
Much digital ink has been spilled on FIRE blogs and forums about the definitions of work and retirement, definitions that don’t necessarily align with how critics, average Americans, and the dictionary define both. Many FIRE-ers continue to work. Operating real estate rentals and picking up side gigs are two common FIRE recommendations, not to mention pursuing passion projects.
This is where FIRE draws some flak from its critics. While FIRE’s seductive premise is that followers can retire early and quit work wholesale, some of the most public-facing FIRE-ers aren’t living solely off their savings and investments. Their work, often FIRE-related, translates into money — podcasts monetized through ads, blogs that earn money through ads and affiliates, speaking engagements, book deals, etc.
Our Next Life blogger Tanja Hester, who declared herself retired at 38, does not monetize her blog, and calls for income transparency among other FIRE bloggers. She has noted she did receive a small advance for her book published last February, appropriately titled Work Optional.
Thames monetizes her blog through affiliate links, earning a commission each time a reader buys something through that link; she also made money off her book deal, and her husband continues to work remotely. “[W]e work because we enjoy what we do — not because we need the money,” Thames writes on her blog. “This is the extraordinary privilege of financial independence.”
True dictionary-definition retirement, FIRE’s followers argue, isn’t the goal, anyway. It’s being able to do what they want. And sometimes they want to make money — albeit in a different way.
“I quit my job, which was very comfy, and made a lot of money in terms of what I was doing, but I wasn’t happy,” says Jamila Souffrant, 37, of her former life as a commercial real estate executive. Souffrant and her husband, who live in Brooklyn with their three young kids, paid off debt, saved and invested $169,000 in two years, and left corporate America behind. (Her husband continues to work as a teacher.) She started her blog, Journey to Launch, to chronicle her path to financial independence by 40; now the blog, along with a corresponding podcast and her personal finance business, are Souffrant’s full-time work. “This is a freedom that everyone looks for and wants,” she adds.
There’s freedom, too, many in the community argue, to decide how intensely to FIRE. For that reason, the FIRE community uses certain tags — “Fat FIRE” for less stringent savings and a longer road to upper-middle-class retirement; “Lean FIRE” for minimalist lifestyles and retirement ASAP at whatever cost. “Barista FIRE” for those picking up part-time work in retirement (such as becoming a barista).
Fat and Lean and all the rest are largely irrelevant labels for Kiersten and Julien Saunders, though they don’t abide by frugality dogma on the one hand, and are well on their way to financial independence on the other. FIRE, for them, “is a little bit of art and science,” says Kiersten, 35.
Kiersten adds that despite the current lack of diversity, the community is one of the more welcoming ones she’s participated in, and the space is changing for the better. But the disparity, they say, comes down to cultural differences. There are expenses they prioritize that are specific to their lives as people of color that might otherwise be considered expendable by FIRE die-hards.
Kiersten cites self-care as critical in helping people of color heal from microaggressions and trauma endured in daily life, and high-quality day care as essential in giving black children, and black boys in particular, the best chance at lifelong success. Their budget, as a result, doesn’t resemble some of the more spartan budgets elsewhere in the FIRE world. “We give ourselves the freedom to let life happen, and then stay on the path to the best of our abilities,” adds Julien.
Souffrant is after work flexibility. “I think that’s more realistic for a lot of people, versus, they’ll never work again and retire in five years,” she says. “I don’t think that necessarily can be possible depending on people’s lifestyle and goals.” Souffrant adds that she’s not particularly frugal herself. “I’m not like, ‘Oh, I want to only spend $20,000 a year.’” Living in Brooklyn is expensive. Kids are expensive. Souffrant made FIRE fit her lifestyle, not the other way around.
Lisa Harrison thought that her future was FIRE. In 2015, the now 44-year-old corporate scientist Googled phrases like “extreme savings,” “budgeting,” and “how to become rich,” and stumbled on the Frugalwoods and Budgets are Sexy. “Even in 2015, I didn’t know what a blog was,” she laughs. She read personal story after personal story, and just like that, she had a new life plan.
“I’m working in corporate America, and I’m sitting under those fluorescent lights in a cubicle, so it really spoke to me,” says Harrison, who lives with her husband and 10-year-old daughter in suburban Pennsylvania. They paid off their debt, and took a hatchet to their budget, line item by line item; anything inessential, from their Pizza Fridays to Coffee Date Sundays, was out. Soon, Harrison and her husband had achieved a savings rate of 70 percent. She’d even started a blog to document her journey to FIRE, too. And they were miserable.
Harrison grew up in a trailer, the youngest of four. Money was always tight, and she’d put herself through night school while working in a factory, soldering electrical components together. She never expected the frugality she adopted for FIRE to dig up memories of the deprivation she used to feel. But it did. “I feel like sometimes that’s what happens with the FIRE movement. You’re so entrenched in, ‘Do it cheaper, do it better, don’t do this, don’t do that.’ And you don’t allow yourself to enjoy the journey. We want to enjoy our lives both now and later.”
Mental health is a big concern for FIRE critic Lowry. “The movement almost gets presented as this cure-all for angst and anxiety that you’re feeling in your day-to-day life,” says Lowry. “A lot of money and quitting your job is really not going to be the solution to anxiety and depression that some people think it might be.”
Suze Orman has heard of FIRE, and has her own critiques. “I hate it,” Orman, the “Matriarch of Money” told Paula Pant on her Afford Anything podcast last year. Orman’s issue isn’t with FI, but with the RE, as it is for many FIRE critics. To Orman, FIRE’s followers are unprepared for the cost of unforeseen illness and health emergencies such as accidents, living expenses rising after 60, paying for kids’ educations, paying for aging parents’ care, inflation, stock market crashes, missing out on the compounding years of a retirement plan by drawing down early (even if you don’t plan to), and on and on. You want to retire early? “You can do it if you want to,” Orman concluded; it would just be “the biggest mistake, financially speaking, you will ever, ever make in your lifetime.”
The FIRE community’s response was swift. Robin called Orman a “wet blanket on FIRE” on her blog. Adeney dubbed Orman’s appearance a “crazy interview” on his blog. “[M]oney will not cure your fear, as mega millionaire Suze proves so clearly,” wrote Adeney. “If you are afraid of what might happen in the future, you have a mental problem rather than a financial problem.”
Some FIRE recommendations make sense. Achieving any savings rate, much less a high one, is a step in the right direction, especially considering that a quarter of Americans have no savings at all. And the advice to invest in low-fee index funds, says Yale University professor of finance James Choi, is a good idea, in part because it allows for diversification of your portfolio at a relatively low cost. FIRE-ers, by and large, do not advocate drawing down on traditional retirement accounts early, and Choi agrees.
But is FIRE based on good advice? Or even tenable advice? “It’s not crazy advice,” says Choi, but it is complicated. Dividends paid from investments may not provide a sustainable stream of income, as Choi puts it, to your net worth, particularly as worries about an imminent recession have returned. And this month’s dramatic spiraling of the stock market amid Covid-19 fears revealed how quickly the value of an investment portfolio — a key element of FIRE’s financial model — could simply disappear. On the Frugalwoods blog, Thames responded to the corona virus-related instability by acknowledging those fears, but doubled down on her faith in the market: “I can tell you what my husband and I are doing with our money: we’re not touching it. We’re not tinkering with our retirement investments, we’re not selling our taxable investments, we’re not buying tons of stock, we’re doing nothing.”
The 4 percent rule raises concerns for Choi, too. That rate only makes sense if the stock market and personal investments are humming along well — and if your individual spending needs don’t go up. And for retirees who will eventually tap into Social Security, the fewer years they work and the less they earn, the fewer Social Security benefits they collect. “There’s a lot more risk if you’re trying to finance 50 years of retirement and not run out of money,” says Choi.
But most important is the hard truth: For most people, all of this will sound like meaningless steps toward a fantasy. As life expectancy goes up, the US faces a retirement crisis, because much of the aging baby boomer population will not have enough money saved to retire.
Teresa Ghilarducci, a labor economist and retirement security expert at the New School, says that about half of middle-class people will be poor or near-poor retirees.
Rebecca is quick to point out that the family inheritances she received were critical to her achieving FIRE; she didn’t need to start out on her path to a million-dollar net worth from zero. Robin, too, started her journey to Financial Independence in 1969 with an inheritance of $20,000.
“But that’s one of the little secret sources of wealth that most people don’t have,” says Ghilarducci, adding that FIRE’s irrelevance to the great majority of Americans’ lives renders it somewhat elitist. That’s an argument that FIRE-ers rebut, arguing that you don’t need to start out with a lot of money to spend less and save more, and that FI simply emphasizes personal responsibility.
“This criticism arises from the mistaken ‘all-or-nothing’ assumption that you need to reach full financial independence before you get the benefits,” Adeney tells Vox. “In reality, the principles I am teaching are the opposite of elitist — they make a bigger improvement in your life the lower you are on the income scale.”
Still, says Ghilarducci, “It’s very, very, very expensive not to work.”
When Rebecca quit her job in mid-November, it was ahead of the deadline she’d set for herself. Since then, she’s been traveling. Her physical health has improved, she tells Vox via email from Australia. She wakes up earlier, watches less TV, exercises regularly, and eats less junk food. Still, she worries about money. She has to remind herself to stay positive, that she did the math right, that she has the cash reserves to do this. “I’ve always struggled with being too self-critical, to the point where it has been detrimental to my mental and emotional health,” she writes. “Hitting my FIRE number hasn’t helped me with that. What it has done, however, is to give me the time and space that I need to look more inward and let me begin healing.”
She opted to not tell her bosses about FI, or that what she’d done was not actually quit this particular job but leave the grind altogether. Instead, she said that she’d be taking time off to travel. She worried that there were misconceptions that being financially independent meant being “a megamillionaire.”
She was surprised at how calm she remained during the short exchange. Her bosses were taken aback, but asked no follow-up questions.
“I wish I could say that it was like on TV, where I poured my heart out and then danced a jig as I left the building,” Rebecca blogged later in a celebratory post. But she didn’t. “I didn’t want to burn any bridges.”
She might need them later as a reference.
Stephie Grob Plante is an Austin-based features writer and essayist. Her work has appeared at The Goods by Vox, the Atlantic, Smithsonian Magazine, The Verge, Curbed, Southwest: The Magazine, Playboy, and elsewhere.