The Hidden Costs of Early Retirement — And Why You Can Avoid This Trend

Are you willing to make big sacrifices now, so you can retire decades ahead of schedule? Both Gwen Merz and Derek Sall thought so, until they began second-guessing their decision.

“Financial independence, early retirement,” or fireis a lifestyle movement that encourages you to build a cushy nest egg – at least 25 times what you’ll need for annual expenses in retirement – so you can leave the workplace before your typical retirement age.

The FIRE movement hit the scene in 1992, but really took off with millennials over 15 years ago. and The path to FIRE looks different for everyone, and there are different approaches in the movement, most journeys start in the same way: Land a well-paying job in your 20s, save a significant chunk of money (anywhere from 50% to 75% of your take-home. pay ), and live far below your means. Many FIRE participants also boost their income with a side hustle (or multiple side hustles) or through real estate investing.

It can also mean developing an obsessive focus on hitting your FIRE number, the specific amount of money you need to save to retire by your desired age.

The idea of ​​early retirement has a universal appeal that attracts many followers, but FIRE has also received its fair share of detractors. Some dropped out because they were tired. Others realize that it cost them relationships and experiences that no amount of money can recover.

Jovan Johnson headshot

John Johnson

“It takes a lot of discipline and sacrifice,” says Jovan Johnson, a financial advisor at A piece of Wealth Planning in Atlanta. To save aggressively, some FIRE participants give up years to do important things like traveling with friends and family, Johnson said.

That’s what happened to Merz, a 32-year-old IT professional from Missouri who went into FIRE but became disillusioned with that lifestyle. “I can save a lot of money,” he said, “but I don’t earn enough money to save a ton and also live the kind of life that makes me happy, a fulfilled person.”

For Sall, a 37-year-old personal finance blogger and founder Living with My Finances from Michigan, being committed to fire meant putting his marriage at risk. After severely cutting back on spending, he focused on earning passive income, but that meant limiting quality time with his wife and kids. “Thank God, I saved it,” said Sall. “I’m not going to end another relationship just to reach out I goal versus us goal.”

That doesn’t mean they don’t learn practical tips from the FIRE movement about paying off debt, saving or spending wisely. For many, the balance between extreme FIRE principles and an enjoyable life is the sweet spot. This desire for equilibrium results in the generation of fire, viz Fire barista and Coast of firewhich still focuses heavily on front-loading your savings, then move to a low-stress job to provide some residual income.

Tyler Dolan headshot

Tyler Dolan

Whether you’re interested in joining FIRE or looking to retire at the standard age, stay aligned with your values ​​and priorities, says Tyler Dolan, a certified financial planner and vice president in Boston. Keenan Financial. “It’s really important to check what your financial goals are, what your personal money beliefs are, how you manage money, what’s important to you?”

An all-consuming effort to save every penny

Gwen Merz head shot

Gwen Merz

If you have the bandwidth to dive into FIRE, it can pay off significantly. In fact, both Merz and Sall found success early on when they started aggressively saving.

Merz went all-in on FIRE, living in the cheapest house she could find and keeping her expenses around $22,000 a year. She earned $65,000 a year, plus bonuses, and took on some side hustles. At this rate, he plans to hit his FIRE number of $635,000 and retire by 35.

Sall is also on the path to financial freedom. After paying off the mortgage and all remaining debt, she reduced her expenses to over $400 per month (food, phone bill, car insurance and utilities) and put the rest into investments and savings. To earn a passive income, he buys houses, repairs them and rents them out to tenants, a time-consuming and labor-intensive business away from his family, even if it pays off.

Derek Sall and family

Derek Sall

“At the age of 29, I earn $60K a year at my job, I just paid off my house, and I’m cruising towards FIRE,” he said. What appeals most to him about early retirement is the idea that, in a few more years, he can spend his time however he sees fit.

The idea of ​​flexibility and financial freedom is the main driver of the FIRE movement. “What’s most exciting about FIRE is the idea that you’re completely free and independent from depending on a traditional job,” Johnson said.

Fall out of love fire

Despite staying on track and saving a decent amount of money, Merz wasn’t satisfied. She felt trapped in her company, 9-to-5 job, and wanted more control over her time. It doesn’t help that the workplace feels toxic.

But the deeper ones didn’t click.

After five years of pursuing FIRE, Merz realized that it was mathematically impossible for her to earn and save the same amount as her friends who were married with two-incomes. He also burned himself out of work some side hustles.

“I became really disenchanted with FIRE when I realized that it was difficult for a single person to retire incredibly early on a high-to-above-average salary,” said Merz.

Plus, the effort needed to support this lifestyle began to catch up with her, and this left little time for her to relax or connect with friends.

Sall’s relationships, especially his marriage, also began to suffer as a result of his early retirement goals. He remembers the exact moment when he realized his FIRE obsession was destroying his personal life.

He’s out working on fixing up his latest “project house,” which he plans to rent out for extra income. As he approached the door, his wife stopped him, angry that he had once again ambushed her and their baby daughter.

“When is this going to end? I’m sick!” said his wife. “Is this what life will be like with you?”

Something shifts within Sall, and he finds himself rethinking his priorities and reflecting on mistakes from the past. He becomes more focused on his goals, to the point where he forgets his goals as a couple — the problem that ended his previous marriage.

Finding financial balance

Today, Merz spends a decent income on a comfortable home in St. She no longer lives in affordable housing, and she has a new job at a nonprofit where she feels empowered and supported.

Moreover, he has no qualms about spending money to enjoy quality time with his friends. Recently he took $200 in cash to spend a day with friends at a massive annual garage sale that his FIRE-focused former self never considered.

Even though Merz has put the brakes on his FIRE efforts, he doesn’t disappoint at all when saving aggressively. “I’ll have more money than I know what to do with when I retire at 55,” Merz said. “That money will compound and grow and become millions of dollars.”

Now, she’s building more room into her budget for the things that make her happy. “It’s great to save,” Merz said. “But also don’t sacrifice your relationship and ability to communicate when you can.”

Sall’s decision to quit the FIRE movement helped save his marriage. He and his wife sold the project house, as well as their primary house, and bought a new place in the forest with profit.

“Looking back, I can honestly say it was the best decision we ever made,” Sall said. “I’m still likely to retire early, but instead of doing it by 34, I can be 44. It’s better to do it with a beautiful wife and children who love me, versus achieving it broken and alone.”

Both Merz and Sall are now in a better financial position because they tried to FIRE. But you don’t have to go to the extreme of the FIRE movement to prioritize saving. To start, Johnson recommends thinking about retirement and what it means to you so you can come up with a plan. Then come up with a budget, or a system to manage your money. Johnson said that instead of being extreme about the budget, the goal is to be flexible. That way, you can enjoy life now while also saving enough to enjoy life later.

Some of FIRE’s principles are useful for anyone who wants to evaluate where their money is going, to make sure they’re not overspending and still prioritize saving and paying down debt, according to Dolan.

Both Johnson and Dolan agree that FIRE offers a great strategy for getting out of debt, but don’t get too consumed. You still need to have wiggle room in your budget for nights out with friends, family trips or other types of connections that are important to you.

What makes one person feel fulfilled and accomplished may not be the same for another. “At the end of the day, everyone has their own money beliefs. They have their own values, they have their own habits with money that they have developed throughout their lives,” said Dolan. And everyone needs to understand what it is for themselves.

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