Trend Spotting: What Is Early Retirement?

in Financial Planning by

Retirement doesn’t need to mean working until 65, diligently contributing to a 401k and then playing golf and indulging in all those vacations you put off until your twilight years. In fact, one of the newest money movements sweeping the U.S. is Financial Independence Retiring Early (FI/RE). People are opting out of the traditional workforce after only a decade or two of employment and at 35 or 40, they’re living their ideal lives.

What is the FI/RE movement?

These aren’t your Zuckerburgs of the world who created multi-billion dollar empires before 30 and can just sit back and count their money. Instead, it’s a rapidly growing community of self-described frugal weirdos dedicated to building net worth young and ditching the traditional work environment while most of their peers are only about a decade or two into their careers. These motivated folks strive for financial independence in order to have the flexibility to do what they want in life instead of exchanging time for money.

Defining retirement

Aside from budgeting, investing and tucking away a significant portion of your income – a key first step to FI/RE is defining retirement.

There’s the societal expectation that retirement happens about 10 to 15 years before you croak. There are the notions of mini-retirements scattered throughout your life (sometimes referred to as sabbatical). There’s also the idea of a semi-retirement, in which you have the money you need to leave the workforce but you elect to do work you find meaningful. Or there’s full on early retirement with absolutely no work on your end and you can exclusively live off your savings and investments.

Now, early retirement is deeply personal and some people pursuing the dream – or already living it – may disagree about semi-retirement versus early retirement. Some may still work on occasion but claim to be completely retired and only choose to do what they enjoy as they happen to make a profit from the work. There isn’t a financial need to do this work.

Regardless of your definition, you need to set a goal in order to start working toward the FI/RE life. You also need to have a vision of how much you’ll plan to spend in retirement, so you can save 25 to 30 times your annual expenses in order to safely withdraw at a 4% rate without running the risk of eating cat food in your final years.

This sounds insane

The idea of opting out of the workforce in your prime earning years and only having a couple of million in the bank may sound insane to you. Part of the FI/RE movement is truly embracing the frugal lifestyle. This means you’re okay living on $40,000 or $65,000 and raising a family. It means your lifestyle has been pared down to accommodate only purchasing what you truly value and freeing up your time to pursue other experiences that bring you pleasure.

For some this might be traveling the world or buying an RV to drive around America. For others it might be buying a homestead in a rural part of America. Some might build a real estate empire that provides them with passive income to live any place in the world. And others ditch the United States entirely and move to another country with a lower cost of living in order to make those millions convert to a more lavish lifestyle.

How do people make early retirement happen without creating an app?

High savings rates with some basic investing chops are the primary factors that lead to early retirement. FI/RE devotees often have savings rates tipping 70% – and yes this is sometimes in major cities with high costs of living. There are certain FI/RE community members who earned hefty six-figure salaries and were able to squirrel away 60 percent without blinking an eye. Others worked at non-profits, stopped shopping and eating out, and figured out how to eat healthy for very little money.

Obviously saving the money is more than just stuffing cash into a bank account. You need to be investing. Plenty of FI/RE participants do utilize traditional retirement accounts like a 401k or IRAs. They’ve figured out ways to hack the system and legally withdraw funds without penalty before hitting 59.5. They’ve also figured out how to minimize taxes, but keep Uncle Sam happy of course.

There are dozens of ways to successfully save enough to retire early – but regardless of your method it requires diligence, motivation and an actual desire to live off a fixed income for the remainder of your days.

Then again, you could always go back to work.

Interested in some inspiration?

Thinking that there might be something to this FI/RE movement? Or just interested in hearing directly from some of these crazies who think they can seriously walk away from careers in their mid-thirties or early forties? Be sure to check out these blogs of those pursuing or already living the FI/RE lifestyle.

Frugalwoods – A young couple, and recent parents, in their early 30s, the Frugalwoods set out to be able to buy a homestead in Vermont and ditch their traditional jobs for a life of hiking, gardening, traveling and pursuing their other interests (like welding and woodworking). The Frugalwoods now live in the woods and are still able to save 70 percent of their incomes.

Mr. Money Mustache – Mr. Money Mustache (or Pete) may be considered the grandfather of early retirement blogging – even though he’s in his forties. MMM is a hugely popular destination for early retirement devotees where his no nonsense approach and zero patience for those indulging in consumerism quickly get called out. His style might not be for everyone, but he’s worth checking out if this area intrigues you.

Jlcollinsnh – Jim Collins is a go-to resource for tips on investing and commentary on how to build wealth. This is a man who didn’t opt out of his career, because he enjoyed what he did, but he reached financial independence early, which enabled him to walk away if and when he chose.

Mad FIentist – Based on the “Science of Financial Independence”, Brandon eagerly helps fledgling FI/RE devotees figure out the mechanics of becoming financially independent and how to save, invest and minimize your tax burden.

Go Curry Cracker – This nomadic family not only ditched the cubicle life, but Jeremy and Winnie started their family while traveling the world as a 30-something retired couple. They too saved 70% of their incomes for 10 years and now travel slowly around the world.

Afford Anything – Paula Pant decided she wanted the freedom to never work again, so she began investing in real estate. Today, she’s developed a business and lives 2,000 miles away from most of her properties. Now she can live the life she wants to and pursue passion projects (some of which do make money) and traveling.

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Erin Lowry

Erin Lowry

Erin is the founder of, where she uses sarcasm and humor to explain basic financial concepts to her fellow millennials. Erin lives and works in New York City.


  1. Our Next Life

    We are about a year from retiring in our late 30s, and definitely believe in the idea of FIRE. But I don’t think it’s fair to say that retiring to spend “only” $40-$60,000 a year is some massive sacrifice. The median income for the household in the US right now is just over $50,000 a year, and that money is taxed, whereas most early retirees will pay very little tax. So fully half the country lives on less than what most early retirees will be spending in retirement… it’s worth keeping that in mind.

  2. KR

    OK, Personal Capitol just won my respect for publishing this post. I follow a few of these bloggers religiously.

  3. Ann H.

    Love this post! Most of the time people don’t quite explain early retirement correctly but Erin has hit the mark. Additional info is that both Afford Anything and Mad FIentist both have great podcast available on ITunes.

  4. [email protected]

    Great introduction to FIRE. Those are definitely some great blogs to follow if you are into financial independence. I’m in my mid 20s and working towards early retirement on my mid 30s.

  5. Paul

    Oh Erin, it’s amazing to see this article on a mainstream financial platform like Personal Capital.

    Keep on being awesome!


  6. Physician On FIRE

    The best news is FI and RE aren’t married to one another. You can aim for FI, then decide what you want to once you get there. It took me about ten years, but I didn’t know it was my goal. Spending this year is on track for your $65,000 mark, but it has dropped substantially as we no longer have a mortgage or any other debts, and cost of living is pretty low here.

    Once you have your FI merit badge, you can choose to change nothing, work less, switch jobs to something more personally satisfying, or of course, retire early.

    I anticipate being retired from clinical medicine in a few years, within 15 years of residency graduation. I plan to do some globetrotting with my family of four, and will continue writing, which I’ve found to be quite enjoyable.

    Physician on FIRE

  7. Rob

    Awesome article

  8. Matt @ Distilled Dollar

    This is an excellent recap of the FI/RE movement.

    Many people misunderstand some of these basic principles and it then becomes easy, even natural, to dismiss FI/RE as reckless and naive. You’ve broken down a few of the paradigm shifts well!

    Frugality is only one part of the puzzle. Investing is critical, as well as tax efficient withdrawals. The minimized lifestyle is something people become, “okay,” with. FI/RE folks understand experiences are more valuable and often less capital intensive, BUT more time intensive.

    Great job summarizing FI/RE!

  9. Mike

    First, get a couple of million in the bank. Wait. What? Oh! Nevermind.

  10. just a person

    Good summary. Good to see this here int he mainstream too. I’m thankful to Personal Capital for having one of the few Retirement calculators that doesn’t completely break when you enter in FIRE assumptions. I wish there was a good resource fro teaching people how to develop an income plan off of a mix of their qualified and non-qualified investment accounts for post-FIRE (without he need to go to an expensive Financial Adviser).

  11. Curt

    Is the 70% savings rate based on gross or net income?

  12. Julie @ Millennial Boss

    As a millennial pursuing early retirement, I can say that this description is dead-on. When my friends are getting psyched about buying BMWs, I’m just psyched to be maxing out my 401(k)!


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