How to retire before you turn 50

A radical group of savers who call themselves the Fire movement have designed their lives around making enough money to retire — years earlier than their peers. Clara Strunck reports
Clara Strunck6 September 2019

It’s a warm Wednesday evening in August and I’m at a picnic in St James’ Park. Nothing too unusual about that, you might think — except this is a picnic with a difference.

The sandwiches, doughnuts and crisps aren’t gathered from the local supermarket, but from food sharing app Olio. The chat isn’t about our days at work and approaching holidays, but centres on investment plans and saving tips. And the crowd? They’re far from your average London workers, heading to the park for a drink and a catch-up after a long day at the office.

This is one of the regular meet-ups of the London chapter of Fire — an acronym for Financial Independence Retire Early. When statistics say one in three millennials will never own a home and half of twenty-somethings in the UK have no savings, this underground movement is bucking the trend. The idea behind it? To live as frugally as possible, saving half your income or more each month, with the aim of retiring in your 30s or 40s.

‘I’ve always been a big saver,’ says Luke Morton, a former copywriter and stockbroker who, at 46, has already achieved financial independence and found this meet-up through the Financial Independence London Facebook group (1,600 members and counting). ‘As a teenager, I was addicted to reading the money pages of newspapers. I was brought up to spend carefully and save, and one day I just realised, partly by finding like-minded people and joining FI groups, that I probably had enough to retire. The motivation for me was getting back my time.’

Morton is typical of the other Fire followers I meet in that he’s naturally frugal. He owns his flat in east London (which he bought in the Nineties, when house prices were lower), saves air miles for holidays and says he’s not interested in buying expensive clothes or owning a car. Morton transitioned out of full-time work gradually, going freelance for several years before stopping altogether. Now he works on community radio, builds websites, travels and cooks. Nearly every Fire follower I speak to is evangelical about valuing freedom first, whether that means travelling, seeing their families more or just pursuing hobbies, from brewing to pottery. Many work or used to work in the financial or tech sectors, which typically command large salaries, and they are canny about how they save — Listia (a goods swapping app) and voucher websites Groupon and Wowcher are popular among the younger followers. Many also use credit cards with points systems, take packed lunches to work, shop nearly exclusively at charity shops and are always searching for sales and online discounts.

Fire first gained popularity in the United States as a 1990s newsletter called The Tightwad Gazette, but it’s only in recent years that the movement has gained worldwide recognition. An online search throws up hundreds of Fire-dedicated chat forums, blogs and Reddit threads, plus financial independence podcasts like Fire Drill, which receives more than 7,000 monthly downloads. Tanja Hester, who runs the Our Next Life blog with her husband, has even authored a book on the method — Work Optional: Retire Early The Non-Penny-Pinching Way. The most prominent Fire resource is the cult blog, Mr Money Mustache, which gets 1.5 million hits a month. Its founder, 45-year-old Peter Adeney, is something of a hero among Fire followers and in 2017 he unveiled The MMM World Headquarters Building in his Colorado home town.

Peter Adeney aka Mr Money Mustache

Guy Diamant, 31, who lives in north London, became interested in Fire through Adeney’s blog. ‘I decided that I wanted to clear all my debts by the end of 2016,’ he tells me. ‘My wife recommended an article on Mr Money Mustache and I was hooked.’ Diamant, who works as an accountant for a beer company — which he says has helped him understand the maths behind Fire — hopes to be completely financially independent in about 10 years. ‘At the end of the day, I can spend all my salary on things, on holidays and experiences or to buy my freedom. All employees sell their time for money.’

Most Fire followers are happy to forgo home comforts — such as dinners out, trips to the cinema and even taking public transport — in exchange for liberation from the corporate machine. ‘People spend so much money on useless stuff, it staggers me,’ says Kris Danielson, 28, who lives in Maidenhead and hopes to achieve Fire by 2026. To him, extreme saving makes more sense than spending; he switches bank accounts regularly, collects coupons and recently test drove a car in exchange for an Amazon Echo. As for his fiancée, who works as an interior designer, it took ‘six months of preaching the gospel’ to win her over. Danielson says that children are on the cards, and he doesn’t see Fire as a barrier to having a family: ‘Kids are as expensive as you want to make them — they don’t all need a PlayStation 3.’

"Kids are as expensive as you want to make them — they don’t all need a PlayStation 3"

Kris Danielson 

Fire may sound like an appealing option, especially when recent research has shown that in the UK we’re unhappier in our jobs than ever before. Fewer than six in 10 of us feel a strong sense of commitment to our employer, a five per cent decline since 2002. But the maths behind the movement proves saving enough to retire at an early age isn’t as easy as Fire followers promise, especially for those living in London, which regularly tops lists of the most expensive cities in the world. If you’re looking to pursue Fire and earn an average salary (in London that’s approaching £40,000 a year) the forecast is bleak.

Proponents of Fire generally follow the rule set out by the Trinity Study, an influential 1998 paper by three finance professors at Trinity University in Texas. It states that a person has enough saved to retire if four per cent of their assets are enough to cover a year’s expenses, as a four per cent withdrawal rate will not, based on the historical return rate of the stock market, affect the underlying value of your portfolio. The average weekly household spend in London and the South East is around £650, which amounts to £33,800 a year. According to the Trinity Study, you’d therefore need £845,000 put away to retire. Financial experts generally suggest that you save from 10 to 20 per cent of your income. For Fire followers, that figure rises to between 40 and 50 per cent. To achieve financial independence in the capital on an average London salary you’d need to save nearly £20,000 each year for just over 42 years — hardly an early retirement. Even if you raise your savings rate to a whopping 70 per cent (which some Fire followers do), it would still take you more than 30 years to reach financial independence. The four per cent rule isn’t an exact science and many financial experts have argued that it should only apply to a traditional retirement time frame of 30 years, as there is a lack of evidence it works over a longer period. Add all this to the shocking reality that about 28 per cent of Londoners live in poverty — unable to meet basic needs, let alone save money — and Fire seems an unreachable fantasy for most.

‘The cost of housing is so high relative to how much most young people earn, that a huge chunk of earnings goes towards paying rent, and there’s little left to save,’ says Laura Whateley, author of the bestselling Money: A User’s Guide. ‘The movement might suggest you change your life to free you from having to pay a lot towards rent or a mortgage, but it only works if you have few ties.’

There is also the argument that our jobs give us a sense of self-satisfaction and identity and help us to make social connections — one in five of us meet our partners at work. Doesn’t not working from the age of 30 leave you, well, a bit bored? Kathrin Spinnler, who is 26 and lives in Lewisham, started pursuing Fire in October last year and has reached 13.5 per cent of her target savings amount. She works as a self-employed Pilates and language teacher and has no plans to stop. ‘Being self-employed means my earnings fluctuate. If I don’t depend on my work for income, I can be more relaxed and do a better job, fully focusing on my clients’ needs.’ While she’s encountered some difficulty along the way (‘in an effort to reach financial independence faster, I sometimes overload my schedule’) she’s keen to stress that the benefits outweigh the positives. ‘Fire is about living a happier and freer life,’ she says. ‘I try hard to be frugal, not cheap, so it doesn’t affect my relationships with my family and friends.’

Guy Anker, deputy editor at Money Saving Expert, agrees that this is an important point. ‘I think Fire is just a label on people’s desire to enjoy their life as much as they can. For lots of people, that means not working,’ he says. ‘There’s nothing wrong with saving a lot of money, but I’d caution against people not enjoying themselves. What’s important in your life are your experiences, as well as your financial security. It’s about getting the balance.’

There are good arguments behind Fire, despite its critics’ dismissal of the movement as restrictive and elitist. But even if the prospect of saving enough to retire before you’re even going grey isn’t practical for you, there are still helpful take-homes, says Whateley. ‘People can lose perspective on what ‘wealth’ looks like, comparing themselves to richer people and never really feeling they have enough,’ she says. ‘It’s better to flip this. Success is about achieving what you actually want out of life.’ Whether that’s enough money to buy yourself out of the rat race altogether? That’s up to you and your bank balance.

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