You want more time to spend with your loved ones and work on your hobbies, but you can’t afford to quit your job. Waiting until 65 to retire doesn’t appeal to you, so you dive headfirst into the Financial Independence, Retire Early (FIRE) movement, socking away 50% or more of your income each month so you can tender your resignation as quickly as possible.
But a few years — or maybe a few months — in, you’re burning out. You’re tracking where every penny goes. You’re turning down fun activities with your friends because they’ll cost too much money. And you’re wondering if it’s even worth it anymore. But you still want to retire early.
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Fortunately, this isn’t an either-or situation. You can still retire well before your 60s without running yourself into the ground. Here are three strategies you can try to find a happy medium.
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1. Save less than you’re saving now
Typical FIRE advice says you should save at least 50% of your salary for retirement each year. Some goes as far as to say 75%, especially if you’re opting for fat FIRE, a subset of FIRE that often involves annual expenditures of $100,000 or more in retirement. This can be a big ask and often requires giving up a lot in the present.
If you feel like your life has become an endless grind and you don’t have any money left for fun activities after setting aside money for retirement and essential bills, consider cutting back your savings rate. This doesn’t have to be extreme. Maybe just 5 to 10 percentage points less will give you the money you need to enjoy your life more today while still working toward your retirement goal.
Conventional advice says to save about 15% of your income for retirement. So even if you only save 25% of your income for retirement each year, you’re doing great.
2. Bump your retirement date back a little
You may want to retire at 45, but if you’re struggling to save as much as you need to pull this off, consider pushing your retirement date back a little. This reduces how much money you need to save for retirement and it may allow you to reduce your monthly savings target, too.
If you move your retirement date from 45 to 50, you’re still enjoying an early retirement. This small change might be all you need to make your present a little more enjoyable.
3. Try a different type of FIRE
Fat FIRE promises a luxurious retirement, but the large savings required make people who pursue this type of FIRE especially prone to burnout. But there are other options for you. For example:
Lean FIRE: This assumes you’ll live on an income of about $40,000 per year, adjusted for inflation, in retirement.
Barista FIRE: This is where you plan to work a flexible, part-time job throughout your retirement so you’re not wholly dependent on your personal savings.
Both of these strategies let you reduce your savings goal so you can reach your target more easily.
You could also use these strategies in combination for even greater effect. For example, you might reduce your savings rate and delay your retirement a little bit to give yourself even more breathing room in your budget.
Decide which changes you want to make. Then, give them a try for a month or two. After that, reevaluate and decide whether you need to make further changes to keep FIRE sustainable for you.
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