Three myths about the early retirement movement

Tales of extreme savers who scrimp to save 40% of their income can discourage people who are able to save "only" 10% or 15% of their income, if they're fortunate.
(Peter Dazeley / Getty Images)
Washington Post

People don’t like to be told they can’t have it all. It’s one of the reasons frugality as a way of life is a hard sell.

Enter the followers of the FIRE movement, which stands for financial independence, retire early. They advocate a frugal lifestyle in an effort to save 40% to 50% of their income or more.

Admittedly, those of us in the personal finance media are obsessed with FIRE people. Their life stories make for compelling reading and often elicit such questions as, “How does she do that?”


It certainly was my reaction to a recent Wall Street Journal article headlined “The New Retirement Plan: Save Almost Everything, Spend Virtually Nothing.

The article features a 38-year-old Seattle lawyer who wants to retire at 40 with $2 million, and she’s well on her way. To accomplish this, she’s saving 70% of her $100,000 net income. She buys brown bananas, walks to work and borrows Netflix passwords from friends. Oh, and she’s single with no children.

Such stories do not endear people to the FIRE movement. It’s too extreme and unrealistic for many. And that’s a problem because it makes it seem as though financial independence and/or early retirement for the masses is an unobtainable goal — a pipe dream. It makes people who are able to save only 10% or 15% of their income, if they’re fortunate, feel like financial failures.

But the superstar members of FIRE also don’t quite capture the essence of what the movement is trying to do, which is to encourage people to live on less so that they don’t have to work themselves to death.

You may want to work into your 70s, 80s and even 90s, but a lot of folks don’t. They want to have command of their lives. They are looking forward to several decades of doing what they want, when they want.

Of course, the reality is that many people aren’t saving anything or nearly enough to retire at 65, let alone quit working in their 30s or 40s. So, I applaud a movement that inspires individuals to at least try to cut back on their expenses, not sink so much money into a depreciating asset like a car or tether themselves to a mortgage they have to take into retirement.


If FIRE is going to gain traction with the general population, its image has to include more than folks living extremely frugal lifestyles. To that end, TD Ameritrade had Harris Poll conduct a survey of 1,500 U.S. adults ages 45 and older with at least $250,000 in investable assets. The goal was to clear up misconceptions about FIRE.

“Despite its buzz-worthiness and recent media coverage, two-thirds of Americans surveyed have never heard of FIRE,” JJ Kinahan, chief market strategist for TD Ameritrade, said in releasing the results of its survey. “So we think it’s important to help consumers understand what it is, and more importantly, what it isn’t.”

Here are three common misconceptions the survey by TD Ameritrade debunked.

Myth: FIRE is all about quitting work and retiring early.

The reality: Seventy-five percent of financially independent respondents said financial security is more important than retiring early. Only 35% said they were motivated by the prospect of leaving a 40-hour-a-week job. People said they were just looking for work-life balance.

Myth: FIRE means extreme frugality.

The reality: The majority of financially independent survey respondents (67%) said FIRE isn’t worth it if they have to live as though they’re broke. When asked what they were willing to give up, 40% said they would limit travel or going on a vacation. In fact, when compared with folks who hadn’t achieved financial independence, FIRE folks had similar responses about what they weren’t willing to sacrifice.


Myth: FIRE means living lean in retirement.

The reality: Sixty-eight percent said they would rather retire at a normal time than retire early and live a low-cost lifestyle in retirement.

This survey found that people didn’t have to live to the extreme to save more in a quest for financial independence and the goal of retiring on their terms — early or late. FIRE followers, many of whom start aggressively saving and investing in their 30s, understand the power of compounding. They are proving that if you give up some things now, you can achieve financial independence.

But even if you can’t cut and save your way to retire early, the principles of the movement will at the very least set you up for a more financially secure retirement when you do stop working.

Michelle Singletary writes a personal finance column for the Washington Post.