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Can you save half your income so you can retire early? FIRE advocates say it’s possible.

Tips from the millionaires next door

Treasure chest full of money. Photo by iStock. (iStock)

For many people, retiring early isn’t a reality. They just aren’t earning enough money to save in the double digits to quit work.

But there are those among us who are working hard to save 40 to 50 percent of their income so they don’t have to keep working until they’re 70 or older. They count themselves part of the FIRE movement, which stands for “Financial Independence, Retire Early.”

Recently, personal finance guru Suze Orman found herself in the crosshairs of FIRE followers when she said that people couldn’t retire unless they had $5 million to $10 million saved.

FIRE folks were ballistic. Clearly, Orman didn’t understand the movement, they argued.

Read more: Do you need $5 million to retire early? Suze Orman says so. But ‘FIRE’ devotees say no.

All this fuss within this community started with Paula Pant’s Afford Anything podcast. I asked Pant to address the debates that started with her podcast with Orman.

Q: Were you surprised by the controversy stirred up by Suze Orman's comments about FIRE?

Pant: Yes, absolutely. First, I didn't intend our conversation to be centered on FIRE. While I was preparing for the interview, I read her most recent book and I brainstormed a list of standard personal finance questions.

The day before the interview, I asked my audience to tell me what they'd like me to ask her. The most popular response I heard was that they wanted to know what she thought of the FIRE movement, so I led with that question. I was shocked when she replied, “I hate it, I hate it, I hate it.” I wasn’t expecting such a strong reaction.

As Suze and I spoke, it became clear to me that she misunderstood the concept of FIRE. Her objections reflected the same knee-jerk responses that I often see in online comments from people who clearly only skimmed the article and are eager to jump in with an opinion.

Every objection that she voiced has been answered ad nauseam

by the FIRE community. As we spoke, her misunderstanding about the FIRE philosophy became increasingly clear.

Q: As a supporter of FIRE, what did Orman get wrong?

Pant: First, in fairness, Suze now seems to have a much stronger understanding of the FIRE movement, as evidenced by the retraction that she published on her Facebook and LinkedIn pages.

During the interview, she voiced a number of objections that reflected a deep misunderstanding of FIRE. Here's the biggest one: “What will you do with your time, anyway?”

Suze seems to interpret “retirement” as watching TV, or traveling for a few years, or living on the beach. This is an image of retirement that we see in stock photos of the grey-haired couple taking sunset strolls.

"Retirement” in the FIRE context means that work is optional. This might be expressed as:

— Switching from full-time to part-time work

— Switching from a highly-paid career to lower-paying but more fulfilling work

— Both parents staying at home with their children when the kids are young, and then re-entering the workforce when the kids are older

— Taking entrepreneurial risks, such as starting a business or launching a local nonprofit without feeling stressed about the need to pay yourself a salary for the first year or two.

— Taking artistic risks, such as writing a novel (in which all the work must be performed on spec, with no assurance of income)

Let's say that you're a corporate lawyer for a major firm. You work 60-hour weeks, you rarely see your family, and you're stressed out. You represent clients whom you don't really like. You represent cases you don't really believe in.

You and your spouse reduce your living expenses to $40,000 annually, living a lifestyle that's a little better than the lifestyle that you led when you were in law school. You amass an investment portfolio of $1 million. You're now FIRE.

You resign from your corporate job and accept a position at a local nonprofit with a small budget. You earn one-fourth of your former salary, work 20 hours a week and enjoy knowing that your work benefits causes that you believe in.

In the FIRE context, this would be a perfect example of “retirement,” which we use as a synonym for a well-funded career and lifestyle change.

Read more: An early retirement is doable. Here’s how.

Q: What appeals to you about FIRE?

When I graduated from college in 2005, I accepted a job as a newspaper reporter with a starting salary of $21,000. I worked at this newspaper until 2008, and my salary at the time I resigned was $31,000. That's the highest income I've ever earned working for someone else.

I freelanced during the evenings and weekends, and my best-paying clients at the time offered 50 cents per word. This amounted to an hourly rate of $50 to $75.

It became clear to me that I could earn much more money as a freelancer than I could as a newspaper staffer, so I quit my job and dedicated my time to building a full-time income as a self-employed freelance writer.

But I knew that this path would create income volatility. As a “solopreneur,” there would be periods of feast and famine. I started aggressively saving and investing so that I could “self-insure” against the risk of needing to find another low-paying job.

Ironically, I didn't come to FIRE because I wanted to retire. I came to FIRE because I wanted to work, and FIRE allowed me to build a safety net — through my investments — that would allow me to remain self-employed, even if I had a few rocky months.

Read more: Retire early or keep on working? How to prepare for either choice.

Q: Do you think Orman was right about the amount people need to save for retirement to retire early?

Pant: No.

Suze cited the example of needing $5 million for retirement, explaining that you may need $100,000 for personal living expenses and $250,000 for long-term care for loved ones.

If that's true, then almost nobody in the U.S. could retire at any age.

The FIRE community holds that — unless you have a huge family — you don't need $100,000 for living expenses. You can live in a small home. Some people live in two-bedroom apartments or condos. Others live in tiny homes, or live full-time in an RV. Others live in modest middle-class or lower-middle-class homes, despite having seven-figure portfolios. We are literally the millionaires next door.

You can drive a used car. In our community, we take pride in driving vehicles that are 10-plus years old.

You can cook meals at home, rather than frequently dining at restaurants.

The median household income in the United States is less than $60,000 annually. At least half of Americans are living lifestyles in accordance with the median income. If you can earn an above-median income, but live like you earn significantly less, you achieve two things: (1) you supercharge your savings rate, and (2) you reach retirement faster because you need less to live on.

Obviously there are limits to this; you cannot shrink your way to greatness. There's a floor beyond which you cannot frugal down any further. Even within the FIRE community, most people don't want to live like a college freshman forever. But we also recognize that there's a lot of power that comes from living this way for a handful of years while you watch your investments grow, and then consciously “lifestyle inflating” to a reasonable, modest, middle-class life.

Q: One of the criticisms of those who promote FIRE is that they are earning lots of money writing about the movement thus they aren't actually “retired.” What do you say to critics?

Pant: Two words: Sampling bias.

The people who write and podcast about early retirement, myself included, are the most public and visible voices. But we're only a small handful of people — approximately a dozen people — among the tens of thousands who pursue this path.

The majority of FIRE followers are leading quiet, private lives. They're skiing instructors, Little League coaches and preschool volunteers. They're rock-climbing in Thailand and surfing in Australia. You don't hear about them because they're not sitting in front of a laptop writing articles and recording podcast episodes. Sampling bias shows only the people who take great efforts to go public.

On my podcast, I highlight stories of people I meet “in real life,” FIRE followers who don’t have an Internet presence. For example, Kim E. is a firefighter for the City of Austin. She began her firefighting career five years ago, with a starting salary of $42,000. She’s saved more than 50 percent of her income during her five-year career. She’s halfway to FIRE.

Listen to Afford Anything Podcast: How I Save Half of My Income as a Firefighter, While Living in an Expensive City

Most people don't hear about individuals like Kim, because she's leading a private life. She's not a blogger or podcaster. She's a regular person who saves half of her income. She represents the average person in the FIRE community.

Your thoughts

How much money do you think you’ll need to save to retire early? Send your comments to Please include your name, city and state. Put “FIRE” in the subject line.

Retirement rants and raves

I’m interested in your experiences or concerns about retirement or aging. What do you like about retirement? What came as a surprise?

If you haven’t retired yet, what concerns you financially?

You can rant or rave. This space is yours. It’s a chance for you to express what’s on your mind. Send your comments to Please include your name, city and state. In the subject line put “Retirement Rants and Raves.”

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