What Is the Financial Independence, Retire Early Movement — and Has the Pandemic Changed It?

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The concept sounds appealing enough. Achieve financial independence — accumulate enough income to be able to support yourself for life — and retire years but preferably decades before the traditional age of 65.

That’s what the FIRE — Financial Independence, Retire Early — movement stands for. FIRE gained popularity, especially among millennials looking to retire in their 30s, in the late 2010s. Frugality and anticonsumerism play a part in the way most of these early retirees have been able to quit their 9-to-5 jobs, which come with steady salaries, health insurance and 401(k) benefits.

In a recent Reddit post on the subreddit r/Fire, which has almost 90,000 followers, user Altair1208 talks about being close to 30 and about to resign from her job. She describes living frugally (no wedding ceremony, living with their parents until she and her husband could own their place, and renting half of their place once they bought one.) "[We] invested all we could, worked our asses off, got pretty well off on cryptos and stock market trends, did real estate deals."

Living with your in-laws might not sound like the kind of sacrifice you’re willing to make for early retirement. Kristy Shen from the FIRE site Millennial Revolution and who retired at 31 with her husband concedes that there are compromises to be made when retiring early. "But any accomplishment worth doing requires sacrifice and compromise," she said via email. "Getting to FIRE isn't about sacrificing all creature comforts, just prioritizing your spending towards the things that make you happy while cutting away spending that doesn't. When we were still working, we still paid $5k to $10k a year for vacations because that made us happy, but we chose to walk to work rather than buying a car because driving stresses us out."

If there’s one trait that defines most early retirees, it’s not frugality, but financial savviness. Investment expertise is one of the things that allow them to achieve passive sources of income and independence from regular jobs in the first place. Browse the FIRE blogs Millennial Revolution, Frugalharpy and Rich & Regular and you’ll see they are — among other things — a finance class. They talk about net worth, 7-figure portfolios, reducing expenses as a way of paying off debt and investing in stock index funds.

"We retired from real work way back in 2005 in order to start a family. This was achieved not through luck or amazing skill, but simply by living a lifestyle about 50% less expensive than most of our peers and investing the surplus in very boring conservative Vanguard index funds and a rental house or two," popular blogger Mr. Money Moustache explains.

Getting a conventional job, spending the minimum, saving as much as possible over a few years, and strategically investing that saved money is one of the traditional FIRE models. But not all FIRE believers are created equal. Fat FIRE followers aim to achieve that financial independence without sacrificing spending, for instance. They’re more in the $200,000 a year in passive income bracket as opposed to the $40,000 a year Lean FIRE followers aim for. That significant difference can mean the need to find a much higher paying job and having to work for longer before achieving retirement.