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The future may be filled with uncertainty, but some Americans are still planning to retire in their 30s, 40s and 50s — regardless of the pandemic.
Many members of the FIRE community, short for “financial independence, retire early,” say they’re still going through with their early retirement plans. The pandemic may have shifted some retirement dates, or given a new perspective on how they feel about their current jobs, but for many, achieving financial independence has never been more important to them.
Divorce inspired this woman to learn about money and she retired early
In the midst of market volatility, high unemployment rates, shuttered cities and a health crisis that hasn’t yet been solved, financial independence is a solution, they said.
“All of the saving for the last decade has really been paying off and helping me not feel stressed during this time,” said a blogger with the moniker “A Purple Life,” who plans to give her notice of resignation in about a month.
See: This early retiree found her calling during the COVID-19 pandemic
A Purple Life has maintained her calm during these last five months, and has been fortunate to keep her job in marketing and experience an uptick in the market in the last few months despite the pandemic, she said. She also created contingencies. Because she works in a sensitive market — companies tend to slash marketing budgets when they’re strapped for cash — she set up alerts for remote jobs she could apply to if she was laid off. When people around her were frantic about the market falling, she stayed invested.
The pandemic has also allowed her to save even more than she anticipated, because she had to cancel her postretirement travel plans for now. “I started recalculating what I would be spending because originally when I planned to quit in the fall, I did not foresee a global pandemic,” she said.
Critics have predicted the pandemic will bring an end to the FIRE movement but people who have already left the workforce at an early age said the current events will only make early retirement a stronger choice for workers.
“If anything, we should expect to see more people interested in securing their financial security permanently, most especially workers who are too young to have been scarred by the Great Recession in 2008-2009, an event that certainly pushed a great many of us who’ve already retired or who are pursuing FIRE to take their financial future into their own hands,” wrote early retiree Tanja Hester, author of “Work Optional: Retire Early the Non-Penny-Pinching Way.”
FIRE may change, however. Some will have to push back their retirement dates, others may see their progress toward their financial independence slow down and those who did not save enough for their early retirement may need to re-enter the workforce to supplement their income, she said. People may also rethink the proper withdrawal rate, their safety nets and how much is “too much” to have saved before early retirement.
Spending less and saving more than fellow workers gives FIRE members the “flexibility and confidence” to focus on the jobs they love and leave when they’re no longer happy, said Ed, the blogger behind Educator FI. He and his wife are teachers, so they have seen the pandemic impact Americans in numerous ways, including families juggling their jobs with new work and school schedules.
Their retirement date is flexible — somewhere in two to three years — but having to work from home as a teacher has shown his wife how much she loves her job. As a result, even when they reach financial independence, she may keep working, he said. They also still plan to stay within the confines of education when they retire, such as by supporting nonprofits or volunteering with students.
Because of their path to financial independence, money stress isn’t as much of an issue as it may be for other Americans. Instead of worrying about spending and saving, “all of our time is going to figuring out what it will look like in the fall or as a hybrid model,” he said. Still, the pandemic has made him and his wife realize how important it is to keep a sturdy emergency fund so when they’re back to school, they will be putting more away to that account instead of investing, he said.
Preservation of capital and building cash is crucial — for everyone, not just those who are pursuing early retirement. Drew, who blogs at Guy On Fire, intended to leave his job in March, but then chaos struck. He chose to stay with his job and increase his cash reserve to five years’ worth of living expenses. “I decided to hold on to a steady paycheck as long as I can right now,” he said.
Drew, who went from $20,000 in student debt to $500,000 within four years, also generates income from rentals and has not experienced any collection issues this year, he said. There have been a few vacancies that are slow to fill as people are not moving homes as much, but overall occupancy has been good, he said.
When he does finally get to leave the workforce, Drew will be climbing mountains. The blogger, who plans to hike the Appalachian Trail with a friend next year, climbed Mount Kilimanjaro in February. “Then I came home and the world shut down,” he said.
