Because of an obnoxious subset of FIRE devotees who tout extreme savings rates and brag about retiring in their 30s, the FIRE movement is often portrayed either as a ridiculous quest to live in utter destitution in an attempt to retire decades early or as a lifestyle choice that’s only accessible for high-income earners. If you’ve been put off by the FIRE movement, this portayal is probably why.
However, this rejection of the FIRE movement comes with several major problems: First, most people do retire earlier than planned—and not by choice. And when they do retire, they often have several times less than what they actually need to live comfortably—that is, if they have any savings at all.
And despite the widespread image of the FIRE movement as something that’s only for high-income earners or those who want to live in destitution in order to save money, the FIRE movement should be for everyone because financial independence is something that everyone needs.
People retire much earlier than planned—and not by choice.
The Retirement Confidence Survey, published in 2023 by the Employee Benefit Research Institute and Greenwald Research, reports that there is a significant gap between when people expect to retire and when retirees actually retire:
“There is a big gap between when active workers expect to retire and when retirees say they actually did: Workers continue to report an expected median retirement age of 65, while retirees report they retired at a median age of 62….One in three (33 percent) workers expect to retire at 70 or beyond or not at all, while only 6 percent of retirees report this was the case.”
Similar findings are echoed by another study by the Transamerica Institute, which found that 47% of workers age 50+ expected to retire after age 65, and 19% of workers age 50+ expected to never retire. Only 18% of workers age 50+ expected to retire before 65.
However, the Transamerica Institute’s study found that 58% of retirees retired before age 65, and the median retirement age is 62—that’s 5 years earlier than the median age at which workers over age 50 expect to retire: age 67.
According to the study, 56% of retirees retired sooner than planned, but that’s not because they wanted to retire early: “Among retirees who retired sooner than planned, only 17% retired due to their financial ability to do so.”
Poor health was the number one reason why people retired earlier than planned, followed by difficulties with their employer:
“Forty-five percent retired sooner than planned for health reasons such as physical limitations or disability or ill health, and 42% did so for employment reasons such as unhappiness, organizational changes, job loss, and/or a buyout.”
Poor health was also a leading cause of early retirement in other studies, and job loss continued to be another significant factor in unplanned early retirement.
Clever Real Estate’s State of Retirement Finances: 2024 Edition notes that 54% of retirees retired earlier than planned, and 38% of them retired as a result of health issues, while 14% retired due to job loss.
Similarly, the Retirement Confidence Survey reports that retirees “consistently” retire earler than planned, with 46% retiring earlier than planned in 2023; 35% of those that retired early cited health reasons, and 31% cited issues with their employer.
The fact that multiple studies all point to the same conclusions about unexpected early retirement due to health concerns or employment issues should be a wake-up call to those who don’t want to—and aren’t financially prepared to—retire early.
Retirees and older adults are facing a retirement savings crisis.
The statistics on unexpected early retirement due to health or employment issues are especially troubling given that both retirees and non-retired older adults are facing a retirement savings crisis.
Retirees and non-retirees alike are deeply concerned about running out of money in retirement. Clever Real Estate’s study, the State of Retirement Finances: 2024 Edition, reports that 40% of retirees are concerned that they will run out of money in retirement, and 19% of retirees already have run out of retirement money.
Non-retirees are just as unconfident in their ability to be financially secure in retirement. Only 33% of non-retired adults over the age of 50 believe that they will have enough money in retirement.
The numbers confirm older Americans’ fears: Per AARP, the average non-retired adult age 50+ has $257,000 saved for retirement, which is about three times less than what those adults expect to need for retirement ($752,000).
And retired older adults aren’t faring any better than their non-retired counterparts. Clever Real Estate’s State of Retirement Finances: 2024 Edition notes that retirees have an average of $269,078 saved; however, alarmingly, the median retirement savings among retirees is $142,500. And the situation worsens even more if you look at the data by gender: women retirees have a median amount of just $100,000 saved.
Both retirees and non-retirees are facing a crisis of zero retirement savings. A recent survey by GoBankingRates notes that 25% of Americans aged 55 to 64 report having nothing saved for retirement. Similarly, AARP reports that about 20% of non-retired adults age 50+ do not have any retirement savings, while Clever Real Estate reports that “25% of retirees have nothing saved for retirement.”
These numbers accord with data regarding how many people rely on Social Security for the bulk of their income because they have little to nothing saved. The U.S. government reports that 40% of Americans aged 65+ rely on Social Security for at least 50% of their income, and 25% of Americans aged 65+ rely on Social Security for 90% of their income or more.
So people are not saving nearly enough money for retirement and they’re being forced to retire earlier than expected because of unforeseen issues like health issues or problems with their employment. That’s a recipe for disaster.
And younger people are on a trajectory to face this same future. The GoBankingRates survey notes that 25–35% of all age groups have nothing saved for retirement. The good news for younger workers is that is that you have time to make the changes you need in order to be financially independent.
You don’t want to jeapordize your finances.
Statistically, you are very likely to find yourself in the category of people who don’t have enough saved for retirement. You’re also very likely to find yourself among the cohort of people who are forced to retire early because of hardship.
If you’re NOT on board with the FIRE movement, this data should make you seriously rethink your approach to retirement savings. You should be fully prepared to retire earlier than expected even if you want to continue working well into your later years.
At the very least, if you’re like most people, you should radically change how much you’re contributing (or want to contribute) to retirement. The last thing you want to do is to be forced to retire early with only some-odd $100,000 in your retirement account. If you prioritize your financial independence and actively prepare to retire early, you won’t find yourself in this nightmare scenario.
What to do if you want to be financially independent:
Know how much you currently have invested.
According to a recent survey of 1,684 U.S. adults conducted by the TIAA Institute, 22% of non-retired people do not know how much money they have saved for retirement. If you don’t know how much money you currently have invested, finding that out will be your first step on your journey to financial independence.
Know how much you need to invest.
Personal finance experts recommend investing at least 20–25% of your income if you want to pursue financial independence. In addition to investing 20–25% of your income, you should also familiarize yourself with key retirement savings milestones and know if you’re on track to be a millionaire by retirement age based on the lump sum you currently have invested. You should also know how much you need to invest each month in order to reach millionaire or multi-millionaire status by retirement age.
Adopt the mindset that every dollar counts.
If reaching a 20–25% investment rate isn’t achievable right now, don’t underestimate the power of making small, incremental positive changes. You can likely still build a substantial amount of compound interest if you just increase your investment contributions by 1%, so focus on doing what you can to increase your investment contributions until you can hit that 25% investment rate.
Automate your investment contributions.
You don’t want to work for several decades only to realize that you haven’t invested enough money because you’ve been inconsistent with your retirement contributions. Automating your retirement contributions is one way to keep the consistency you need in your investing journey. Just remember to actually invest your money once those automatic deposits are made into your retirement account.
Reconceptualizing the FIRE movement
Pursuing FIRE doesn’t have to mean retiring early.
Despite the fact that the loudest representatives of the FIRE movement are upper-middle class men who retire in their 30s, retiring early doesn’t have to mean retiring in your 30s or early 40s. Early retirement just means retiring at any point earlier than the traditional retirement age of 65. If you retire in your early to mid 50s, you’re still retiring over a decade before the median retirement age of 62.
And the “retire early” part of the FIRE movement is completely optional: You absolutely can pursue early financial independence without retiring early.
Pursuing FIRE gives you the freedom to work on your own terms.
Having financial independence is about having enough money to work (or not work) on your own terms instead of being stuck in a job you barely tolerate, living a quiet life of desperation. A recent Gallup poll noted that 62% of workers worldwide feel “not engaged” at work, and a further 15% feel “actively disengaged” in their job. Only 23% of employees feel actively engaged in their work.
And while you shouldn’t wait to pursue meaningful work now, early financial independence is an added layer of protection that shields you from needing to stay in a job that you don’t love.
Pursuing FIRE is about abundance, not deprivation.
Achieving early financial independence is about putting yourself in a position where you have ultimate control over your quality of life. It’s about having the freedom to build the life you want on your own terms; financial independence lets you travel more, have more time for pursuing your passions, work a job you love instead of working to survive, and spend more time with family and friends.
Pursuing FIRE is about freedom from financial stress. Doesn’t everyone want that?
Pursuing FIRE is about having lasting freedom and flexibility to not have to worry about significant financial obstacles, like job loss or inability to work due to health problems. And while an emergency fund can protect you from some financial hardship, reaching early financial independence protects you from being unprepared if you have to retire early due to health issues or problems with your employer.
Why would you want to wait until you’re in your 60s to have freedom from financial stress?
Everyone should actively pursue financial independence—especially early financial independence. It would be a travesty to spend several decades in the workforce only to be forced to take an early retirement with the median retirement savings, which is less than $150k.
No one wants to be nearing retirement age only to find out that they don’t have enough money to retire on. If you’ve been a skeptic of the FIRE movement, the fact that most people are forced to retire earlier than planned and the data on median retirement savings should motivate you to evaluate whether or not you need to make any changes to your savings and investment contributions.