A Growing Cult of Millennials Is Obsessed With Early Retirement. This 72-Year-Old Is Their Unlikely Inspiration
Vicki Robin had no idea she'd become a millennial icon.
The 72-year-old coauthor of the 1992 bestseller Your Money or Your Life was recuperating from a hip replacement early last year when a young man she'd met at a sustainability event months prior told her she was popular on a Reddit forum about financial independence.
At the time, she was confined to the pullout couch of her Whidbey Island, Wash., living room, with its view of the Cascade Mountains and Puget Sound. So she had plenty of time to explore the online community where, to her surprise, she discovered she was something of a celebrity.
"It was stunning," Robin says. "I'm an elder in a community I didn't know existed."
Robin's fans belong to an impassioned, mostly millennial movement known online as the FIRE community, or simply FIRE. It's an acronym that stands for "financial independence, retire early." Adherents track down to the penny where their money goes, mindful of how much each purchase will really cost, with the idea that dollar amounts should be equated to "hours of life energy," in Robin's words. So if you make $300 a day and want to buy a $100 pair of shoes, you ask yourself: Are those shoes really worth nearly a third of a day of your precious time on earth?
As the first part of the acronym suggests, the goal of the movement is to gain financial independence, meaning you're no longer relying on paid employment to keep afloat.
It's no coincidence that the ranks of FIRE followers are spreading like, well, wildfire right now: The stock market has been very good to investors in recent years, especially to those who understand the magic of compound interest. Unemployment is low, and opportunities to earn extra money in the sharing economy are plentiful. Add the do-it-yourself spirit of a generation that can learn anything on YouTube, and you've got ripe conditions for a movement.
Redefining Career—and Retirement
What's more, we all know that a traditional retirement is a thing of the past. No one works for 40 years at the same company anymore and retires to a front porch with a gold watch and a pension to show for it. So instead of tweaking the traditional model around the edges, these young people are saying, let's just blow up the whole concept of career, and retirement, and start from scratch.
The financial independence subreddit has more than 350,000 subscribers around the world. A directory on the blog Rockstar Finance counts roughly 1,600 personal finance blogs, many dedicated to early retirement.
Grant Sabatier, 32, was living with his parents in 2010 and eking out a meager postcollege existence when he came across Your Money or Your Life. "It completely changed my life and trajectory," he says. "It is still my favorite book of all time." Sabatier, who says he amassed a fortune of more than $1 million in five years primarily through lucrative web-design side gigs, founded Millennial Money, an online community dedicated to personal finance education and entrepreneurship.
To say Robin is an unlikely financial guru is an understatement. She didn't spend any time on Wall Street, and she seems more inclined to pass along her favorite kombucha recipe than the name of a favorite mutual fund. She speaks not in the empathetic bursts of Suze Orman but in the melodic voice she uses to sing soprano in a local choir. Her look these days is Golden Girls chic—and while she would seem like a blast to live with, she lives alone above two tenants, whose rent more than covers her housing expenses.
Having paved the original FIRE path decades ago, Robin hasn't worked for a traditional paycheck in 50 years. After stints as an actress and in film production in New York City, she parlayed an inheritance at age 23 into a modest income that sustained a groovy 1970s lifestyle in which she lived in an "intentional community," which is kind of like a commune, but less marginalized and more centered around mutual values—"the sharing economy before it was the sharing economy," she says.
There, Robin taught herself practical skills, from auto repair and hunting to "making booze from dandelions," a DIY strategy to become self-reliant by acquiring know-how that would enable her to tread lightly and travel cheaply through life.
It was only when people began asking how she lived on so little money that Robin realized she had a story to tell. She and her friend Joe Dominguez, with whom she had lived in the intentional community, teamed up to give financial education workshops around the country. They spread their money values, including planet-friendly frugality, the old-fashioned way in those pre-Internet days. Dominguez, who retired from a brief career on Wall Street at age 31, gave the lectures, and Robin produced them.
The two used their experiences to cowrite the first version of Your Money or Your Life in the early 1990s, a process she says took just nine months. The book first hit shelves in 1992, when she was 47.
The revised second edition of Your Money or Your Life is due out this spring. Robin wanted to write something for today's millennials, whose prospects she worried were crimped by student debt. She had already begun working on the new draft — without Dominguez, who passed away in 1997 — when she discovered that the original still lived on Reddit; had she known that, she says, she might not even have embarked on the reboot. "It was providential," she says.
Your Money or Your Life takes readers through a nine-step program intended to transform your relationship with money. It's not about becoming rich; it's about figuring out how much is enough. Once you buy less stuff, you won't need nearly as much money to sustain your lifestyle as you previously did. Wisely invest the difference and wait until the interest thrown off by your portfolio exceeds your expenses. That's the "crossover point," Robin writes, and once you reach it, you can peace out of the paid workforce decades ahead of schedule.
The FIRE movement looks at this text as a bible of sorts, one that legitimizes its followers' path to financial success and offers freedom from being a corporate drone, and ultimately a more satisfying life— a life typically sought after by the 65-and-older crowd. It sounds great. Who wouldn't want to be in retirement bliss by 40, learning how to make his or her own version of dandelion wine?
But is it realistic?
It's a very different world today than it was in 1992, when Robin's book came out. Back then, government bonds—long a favorite source of retiree income—threw off a respectable yield of around 8%. But interest rates haven't been that plump for a long time, and the 2018 version of the book acknowledges this new reality. Instead, Robin writes about a favorite investment of the FIRE folks: low-cost index mutual funds or exchange-traded funds (ETFs). She also suggests buying real estate, as she has done—in particular, you should consider small duplexes, triplexes, and quads, where you can occupy one unit yourself and have your mortgage covered by your tenants.
This approach isn't far-fetched, but it does come with certain risks, according to financial advisors. In order to retire at any age, a general rule of thumb holds that you need to save up at least 25 times your annual expenses. Say you need $50,000 to live on each year—you'll need to accumulate around $1.25 million in order to withdraw 4% from it each year in perpetuity, adjusted upward for inflation. Robin's calculations assume a 4% withdrawal rate, with a caveat: "Remember, this is a general example and not specific financial instructions."
If the stock market posts strong gains, you can wind up with more money than you started with, even as you withdraw your inflation-adjusted living expenses of 4% each year. But if the stock market tanks, and you're withdrawing on a declining balance, then you face the risk of running out of money.
The 4% rule is a solid method, but it came from research that assumed a traditional retirement of no longer than 30 years, says John Salter, a professor of financial planning at Texas Tech University and a partner in the planning firm Evensky & Katz/Foldes Financial Wealth Management. All bets are off if your retirement lasts 60 years. You'll have to watch your withdrawals closely and dial back your spending, potentially significantly, if the market declines, he says.
Early retirees also have a longer runway to experience inflation. Prices for regular goods and services roughly double every 25 years, so a 30-year-old early retiree will see general prices rise fourfold over his or her lifetime, Salter says. (Medical costs rise at an even sharper rate.) In other words, you had better hope that stocks continue posting inflation-beating gains.
All the Flavors of FIRE
To be sure, there are many subcultures within the FIRE movement that all have their own spending goals and takes on Robin's prescriptions. Some are more drastic than others. There's regular FIRE, for all those people who want to exit the rat race early but might like to occasionally enjoy a good restaurant on the way, or hire a plumber to fix their broken toilet instead of breaking out the wrench themselves. There's also barista FIRE, for those who might need or want to supplement their savings with a part-time job at a place like Starbucks for the health insurance—a key necessity for early retirees.
On the extreme ends, there are the frugal FIRE adherents, who base a lot of their ideology on the writings of Pete Adeney, a.k.a. Mr. Money Mustache, a FIRE hero who in 2011 started blogging about his retirement at age 30 from his short career as a software engineer and the frugality and DIY spirit that contributed to his success. Adeney, now 43, is so prominent, he's inspired a loose network of camps in his name. Devotees gather in spots like Gainesville, Fla., and Seattle for Camp Mustache, where talk of churning credit cards for points mixes with traditional camp activities like archery and bonfires. Adeney himself attends the annual Seattle retreat. The $425 tickets for this year's event, to be held over Memorial Day weekend, sold out last November in less than a minute, as if they were for a Taylor Swift concert.
On the other end of the spending spectrum, you have fat FIRE, for people who want to spend a healthy amount in retirement, maybe because they want to keep living in an expensive city. They have higher savings goals, starting around $2 million, according to a young fat-FIRE devotee in New York City.
Despite their different strains, FIRE walkers have more in common than not. "You're kind of an oddball in our society if you make a lot of money and choose not to spend it," says Darrow Kirkpatrick, a former software engineer who retired early at the relatively ripe age of 50.
FIRE folks love meeting up in real life so they can geek out on stuff they might not feel comfortable sharing with friends or family. You know you've found your tribe when you can call Roth IRA conversion laddering "beautiful" and have a sea of faces nod earnestly in agreement, as happened at a recent FIRE meet-up in New York City.
For Early Retirees, What Next?
Of course, reaching financial independence is only part of the equation. Once you get there, you have to figure out what to do with the rest of your life—how you'll spend a retirement that could last 50 or 60 years. That's a whole lot of downtime, and most people planning on retiring early aren't thinking about the looming void. "The vast majority are focused on numbers and calculations," says Grant Sabatier.
He's now a business partner with Robin in the new website yourmoneyoryourlife.com. He believes many FIRE followers neglect the "spiritual transformation" that can happen when you change your relationship with money. The community remains overwhelmingly male and is heavy on those who naturally organize their thoughts in spreadsheets, like tech types and engineers. Some look down from their huge pile of savings on the masses who, the perception goes, mindlessly go through the motions in their day jobs so they can mindlessly spend on weekends.
Missing is any acknowledgment of the privilege embedded in the ability to save 50% or 75% of your income to begin with. The FIRE movement, to a large extent, remains a culture of "very entitled white men who are very proud of themselves when it wasn't much of a stretch for them anyway," says Emma Pattee, 27, a writer based in Portland, Ore., who retired last year at 26 after making successful real estate investments. Many FIRE followers, she says, are already high earners who "disdain all the Midwest minions who can't get out in front of their truck loan."
Another unforeseen hazard: Some FIRE bros flame out months after pulling the plug on their jobs. When you're clocking 14- or 18-hour days at a startup, it's easy to fetishize a life of home brewing and farming in bucolic Vermont or rural Virginia. But actually home brewing and farming can be lonely and backbreaking work, says Pattee, who knows people who have had to publicly walk back their much-celebrated retirements when the reality fell short of their fantasy. "That's the problem with just trying to win," she says.
So how do you fill all those decades when you no longer have to work for pay? It's not an idle question: There's a body of research linking early retirement to premature death. "We think it's not about taking Social Security per se, but it's about the act of retiring," says Maria Fitzpatrick, an associate professor at Cornell University, who found that men who retire at age 62 have an increased early-mortality risk of about 20%.
Although her research isn't on the exact FIRE demographic—after all, it focuses on those who retired at 62 as opposed to 32 or 42—some FIRE followers are well aware of it. Adeney says retiring very early makes it easier to live a longer life than people who retire in their early sixties.
In many ways, FIRE followers are forging into uncharted territory. We don't have any data on whether extreme early retirees have a tendency to get sicker or even die earlier in greater numbers than their traditionally employed peers, whether they burn out from all the leisure time and return to paid work, or whether they instead live decades in fulfilled contentment, nurturing their passions and giving back to their communities.
Tanja Hester, a FIRE follower who leans toward the frugal strain of the movement and retired late last year at age 38 from her career as a consultant for political and social causes, realizes she's in a privileged position. "I feel like one of the luckiest people to ever live, and if I can't use some of it to help others, it will feel like a waste," she says. She and her husband, who live in the North Lake Tahoe area of California, volunteer at the local humane society and plan to start teaching financial basics in their community.
For her part, Robin gives back by investing in local businesses. Aside from using royalties to pay for cancer treatments in the mid-2000s, she says she's given away a significant portion of the money she's made over the years from her bestseller. And she still thinks our society places too much stock in paid work.
She knows the FIRE walkers have an uphill battle, both in their personal finance goals and in the cultural norms they're bucking. Still, she wishes the best for those who would follow in her footsteps. "If they can endure the identity crisis, then they're the folks who are woke, and they can take action," she says. "There's another generation, hallelujah, that's adopting these values."
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