Want To Retire In Your 30s? Millennials Say They've Got The Formula

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A growing number of people are participating in a movement to allow them to retire as early as their 30s. It's called F.I.R.E. — Financial Independence, Retire Early. (rawpixel/Unsplash)
A growing number of people are participating in a movement to allow them to retire as early as their 30s. It's called F.I.R.E. — Financial Independence, Retire Early. (rawpixel/Unsplash)

A growing number of people are trying to make changes in their lives that will allow them to retire as early as their 30s. One movement called FIRE -- Financial Independence, Retire Early — promotes increasing savings, downsizing lifestyle and investing aggressively.

Here & Now's Robin Young talks with FIRE blogger, author and filmmaker Scott Rieckens about his experiences. Using a retirement calculator, Rieckens and his wife were able to determine how much they needed to save in order to retire in their 30s.

Rieckens (@PlayWithFIRECo), who previously worked as a creative director at an agency, says making these changes wasn't about not wanting to work. He says he really liked his job.

"For me, it was about freeing myself from this idea of mandatory labor," he says. "There's passions that I have that may not necessarily coincide with earning a lot of money, or earning money at all, and to have the time to pursue that felt more like the type of life I'd want to live."

What inspired Rieckens to enter to FIRE movement?

"It was this unintentional lifestyle creep. We originally moved into this little 500-square-foot apartment in this little beach town, and our costs were much lower then, and, you know, as we got older and we had a baby, some of our needs were changing, but also our tastes. We found ourselves eating out quite a bit. We found ourselves moving to a larger three-bedroom apartment, and we moved there when the recession was in full force. But, fast forward a couple years, and things were gaining steam, and rents were going through the roof, and I'll be honest, my financial literacy wasn't in top shape at that time. And so, to hear that someone was that happy living on $27,000 a year is what was so intriguing to me in the beginning."

How did he realize early retirement was possible?

"I implemented the retirement calculator to kind of understand our situation, and when I first plugged the numbers into what current spending was, it looked like we would probably be retiring in our 80s. And when I ran some models on what I thought we could live on reasonably based off of some major life changes, I realized we could probably retire in about 10 years if we really stuck to it. That's what put her over the edge."

Do most people in the FIRE community completely stop working?

"It's funny. I've now met a lot of people in this FIRE community, and the one thing that seems to stay very relevant and true is that you don't meet a lot of people who are just straight-up retired doing absolutely nothing. I haven't met anyone that's been like that."

How did Rieckens develop an investment strategy?

"One of the main draws for me was the ease at which the investment strategy takes place. And when I found out about index funds, these low-cost index funds, and how much money you could save by not having a financial adviser — you're essentially betting on the stock market, which in its history has always gone up. Now it goes through these big dips and dives, and if you can ride those waves, if you can ride those lows, you'll end up on the right side of that. When I realized it was as easy as set it and forget it, that was really, really a nice entry point for me."

How did he reach the FIRE movement goal of 70 percent savings?

"The whole framework is really flexible. If you increase your savings rate by 10 percent, you're 10 percent better off. My wife and I made it to a 70 percent savings rate. And to be completely honest with you, we were absolutely miserable, and we took great lengths to get there. The reason why we made the film and wrote the book is we're trying to share our story with people so that they can understand what it's like so that they can eliminate the excuses that [are] stopping them."

What specific changes did he make to reach 70 percent savings?

"One of the things that we did was we set a whole adventure up to go and find the new place to live. We wanted to make sure that our quality of life wouldn't suffer. There were a lot of different things that we implemented, but part of that was the sense we were on the road for a year. We actually we went and spent some time living with our parents for a couple of months to save as much money as we possibly could, get them a little bit of time with their new granddaughter, and we thought that'd be a nice combo punch. What we found was that being in our mid-30s with a 2-year-old living in the basement of our parents' house maybe was a little extreme, maybe a bad idea. And then on top of that I think there was a lot of unknowns leaving a community behind that we invested in, that we loved, leaving our friends, leaving what we knew, and I think we kind of dealt with that stuff while we were living in our parents' basement."

Does he ever worry about running out of money?

"We definitely have thought about that and that's something that we were definitely nervous about and asked a lot about in the beginning. And there's a couple of things to that. I think the first thing is the whole premise of financial independence and your investments making enough that it can sustain you is based off of this thing called the Trinity study, and it essentially works out the math to be about a 98 percent chance that you won't run out of your principal investments over the course of 30 years, if you draw four percent off of that.

"And the idea is that the stock market continues to grow, and if it continues to grow as it has in the past, then you can always sip a little bit off of the top, and you'll never run out of what you had. At the end of the day, one of my dear friends and one of my favorite FIRE podcasters, her name is Paula Pant, we were asking her this question and she said, you know, the worst case scenario is you go back to work. I think for us the real point here was gaining financial literacy and understanding how money works in our life and what our relationship to money is. And once we saw it as a tool and something that we had more power over, the freedom and the stress that was relieved, that's the magic of FIRE in its essence."

  • Here's more on the Trinity study, which helps investors determine how much they can withdraw from retirement portfolios

This segment aired on October 2, 2018.



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