Fire Movement: how to retire in your 30s

Fed-up professionals are saving up to quit work as ‘Financial Independence, Retire Early’ trend spreads

Piggy bank pensions

A growing number of young US professionals are quitting the workforce after embracing a new movement called Fire.

Millennials view Fire - which stands for Financial Independence, Retire Early - as “a way out of soul-sucking, time-stealing work and an economy fuelled by consumerism”, reports The New York Times.

Adherents have been saving a large portion of their earnings and dramatically reducing their spending. Some have given up their cars, downsized their homes and relocated to cheaper areas.

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Listen to a discussion of the Fire movement on The Week Unwrapped podcast:

Many Fire followers are taking to social media and creating their own blogs in order to share financial hacks on how to save enough money to stop working. Their advice includes how-to guides for creating lucrative investment portfolios, increasing savings rates, travelling cheaply and making everyday cutbacks.

Carl Jensen resigned from his job as a software engineer in Denver at the age of 43 last year. After moving to Colorado to enjoy his retirement with his two daughters and wife, who still works, he says he has never been happier.

“People always assume there’s an external circumstance: ‘Oh, you must have received an inheritance.’ We’ve just chosen to live far below our means. That itself is a radical idea,” Jensen explains.

One Fire theory is that if you can save at least £1m before you retire, you can then live off no more than 4% of your portfolio amount a year.

“There is some disagreement over how safe this is and how long the portfolio will last,” says Jason Long, a pharmacist in rural Tennessee, who retired last year at 38. “We are on a 3% withdrawal rate. There is no historical precedent for that ever failing over any time, period.”

But is it really plausible for everyone?

The New York Times notes that Fire enthusiasts are “benefiting from a lengthy bull run in the stock market and, in some cases, the privilege of class, race, gender and background”.

It is “difficult to retire at 40 if you work a minimum-wage job, say, or have crushing student-loan debt”, says the newspaper.

Simon Moore, chief investment officer at Moola, has crunched the figures for Forbes and concludes that “for many Americans, the numbers suggest it is impossible”.

However, Moore adds, a lot of people “could benefit from nudging up their savings rate to 10% to 15% as a means to achieve financial independence faster, and with a far less extreme lifestyle trade-off”.

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