How the FIRE movement keeps burning in a tough economy

In today's challenging economy, dreams of FIRE — "financial independence, retire early" — are like a candle in the wind. In a time of historic inflation, rising interest rates and an unreliable stock market, is it possible to keep the flame alive?

Surprisingly, many Americans believe the answer is yes. Financial advisers across the country say their clients haven't given up on their hopes for early retirement. But to keep the FIRE burning, many have had to change what it means to them.

"I've definitely seen a major shift in attitudes towards FIRE in the clients that I work with," said Will Brennan, a certified financial planner and the founder of Park Hill Financial Planning in Denver. "In a post-pandemic world, I think more and more young people are shunning true FIRE and gravitating toward more flexible work arrangements that still allow enough time for social and personal pursuits."

The term FIRE has a long history. Though its exact origins are unclear, it was first popularized by the 1992 bestseller "Your Money or Your Life," by Vicki Robin and Joe Dominguez. The book outlined a lifestyle of careful frugality, which it promised could allow readers to work less and spend more time on things that mattered to them. Dominguez, a former Wall Street stock analyst, also led by example: He retired at age 31 and lived off his savings.

Decades later, FIRE exploded into a movement of penny pinchers. True believers try to save up to 70% of their salaries and retire in their 30s or 40s. On Reddit, where many FIRE practitioners congregate, the "Financial Independence/Retire Early" group has 2 million members. A subreddit for "lean fire" — the most frugal version of the dream — has 276,000 members, and a "fat fire" group — the more opulent end of the spectrum — has 374,000.

Even in 2023, Americans still hold out hope for early retirement. The average expected retirement age among U.S. adults is 57, according to a study by the personal finance website NerdWallet. A quarter of the respondents said they wanted to retire before age 50.

All of this flies in the face of real-life retirement, which has been happening later and later for decades. From 1990 to 2019, the average retirement age in the U.S. inched up from 62.6 to 65.6, according to the American Enterprise Institute. Another study, by the market research firm Ipsos, found that 20% of Americans think they'll never be able to retire at all.

What could explain this disconnect? In an age when even retiring on time is a challenge, how do millions of people hope to retire early? The answer, many financial planners say, is that FIRE itself has changed over time.

"Over the last few years, I've noticed that Americans seem to be focusing a lot more on the financial independence part of FIRE and not as much on the retire early part," said Heath Biller, a wealth manager at Fiduciary Financial Advisors in Grand Rapids, Michigan. "Once people obtain financial independence, they don't necessarily want to retire but want to have more freedom and flexibility to contribute to society via things they are more passionate about."

Read more: Advising the FIRE client: Fan the flames or put them out?

Some savers have learned this the hard way. Noah Damsky, a principal at Marina Wealth Advisors in Los Angeles, recalled a client who attempted the FIRE lifestyle a few years ago. A tech worker in his early 30s at the time, he decided he was going to retire in his 40s.

"He just liked the idea of hanging it up earlier than what was typical," Damsky said.

Like many FIRE practitioners, the client started saving over 70% of his salary — which was about $150,000 — and eliminated every unnecessary expense in his life. He stopped traveling and eating out, canceled his gym membership and ceased working with his personal trainer. As his savings increased, other aspects of his life began to suffer.

"It made dating a challenge," Damsky said. "What his peers … were used to wasn't necessarily what fit his lifestyle goals, so it became a really tough match."

Specifically, women expecting dinner with a successful tech professional were unimpressed by sandwiches in the park. Meanwhile, other quality-of-life issues — using public transportation instead of a car, buying "generic brand everything" — began to add up.

"He compared it to his high school wrestling days when he was dieting without an end date or a cheat meal," Damsky said. "The complete and permanent lack of flexibility weighed on him mentally to the point he needed to see a therapist … but he couldn't afford it."

Read more: Many Americans are 'forced' into early retirement, study finds

After about a year, the client called it quits. As Damsky recalled, it was the maximalism of his plan that made it untenable.

"I think he realized to do that was going to take a huge sacrifice for a really long time, really in the prime years of his life," Damsky said. "And I think after giving it a shot for a while, he realized that extreme financial dieting was not going to be feasible for the long term."

In one sense, Damsky's client gave up on FIRE. On the other hand, he never stopped saving for retirement — he just started doing it in a less extreme way. Today the tech worker expects to retire later than his 40s, but he's also returned to the gym and has found a long-term girlfriend.

In essence, Damsky's client did what many FIRE practitioners have done: He adjusted his dreams for the future to allow for a better life in the present. It's a trend that Damsky has noticed in the movement in general.

"I'd say that folks aren't quite as gung ho as they used to be," he said. "A year or two ago, there was a lot of chatter around it being a lifestyle to shoot for, and I think since then it's kind of moderated."

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Some advisers believe this was the true message of Robin and Dominguez's book all along.

"Leaders in the FIRE movement went to extreme ends of frugality and deprivation," said Mary Ann Sullivan, a financial planner at South Bay Financial Partners in Torrance, California. "As time has passed, the movement has matured."

Others are happy for their clients to focus more on the present.

"I used to be a card-carrying member of the FIRE movement but have since determined it's not the best way to design your life," said Kyle Simmons, founder of Simmons Investment Management in Broomfield, Colorado. "Having significant savings provides opportunity and reduces money-related stress, but I think the better approach is to design a life and career that you don't want to retire from."