These People Might Have Cracked The Code For Retiring Young

Devotees of FIRE do everything imaginable to shave dollars off their cost of living.

These People Might Have Cracked The Code For Retiring Young
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Some millennials are blowing up retirement. With some radical strategies, they're entering their golden years early — 20 or 30 years early. 

Enticing? Yes. Feasible? Maybe. It's called the FIRE movement. Financial Independence, Retire Early.

Patrick Finnegan wears sunglasses and a hat.

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Its spiritual roots are found in a book called  "Your Money Or Your Life." The basic lesson: slash your spending and value time over material gain. FIRE is largely a virtual movement. Followers gather on message boards, like Reddit, and follow blogs like Mr. Money Mustache

Not all "firing" is the same. There's "lean FIRE," which is extreme frugality. There's "fat FIRE," which is maintaining a more typical standard of living while saving and investing. And there's "barista FIRE," working part-time for health insurance after retiring. On a superficial level, FIRE looks like budgeting 101: cut expenses, make smart investments. But it's more than that. It's a spartan lifestyle that, at its core, is anti-consumerism.

The FIRE savings target is more than 50 percent of income — ideally 70 percent. That far exceeds the average personal savings rate of less than 10 percent (6.6).

This requires changes, maybe drastic ones. Move to a cheaper city. Sell your car. Bike to work instead of taking public transit or driving. Cook at home (no restaurants). Do home repairs yourself. Shop at secondhand stores.

Obviously not for the faint of heart or even the modestly frugal. It's extreme. Another strategy is credit-card churningThis involves signing up for cards to get the bonus — usually cash or airline miles — then canceling before the annual fee. Then moving to another card. Next, invest the savings. Maybe low-cost mutual funds or individual stocks, which have paid off during the bull market. Or real estate — like a duplex where you live in one unit and cover the mortgage with rent paid by tenants.

Who are the FIRE adherents? Many are men in the tech industry or at least in upper-end jobs with comfortable salaries. You're unlikely to find minimum-wage workers. And it's safe to say the FIRE crew is a slim minority of millennials. Sixty-six percent of working millennials have nothing saved for retirement, and those who are saving aren't saving enough — mostly because they can’t afford it.