These Folks Retired in their 30s and 40s: Can You Do It Too?

In Hester and Bunge's case, they both had high-paying jobs in political consulting and communications, but spent most of their paychecks on housing, food and fun in expensive cities (Washington D.C. and Los Angeles). Their early retirement awakening came when they decided to downsize to an inexpensive house in Lake Tahoe in 2011 and figured out they could pay it off entirely in just a few years.

The married couple ran the numbers and realized that by consciously cutting their expenses, staying debt-free and saving as aggressively as possible, they could sock away enough money in slow-growing investments to cover them comfortably for the rest of their lives.

The Holy Grail for many FIRE folks is to save up 25 times their annual living expenses. If you spend $40,000 a year, that means you'll need a net worth of at least $1 million.

The logic is that by investing those savings in boring bonds and stock market index funds, and continuously reinvesting the dividends, the money will grow steadily over time (the S&P 500, while experiencing short-term ups and downs, is reliably bullish over the long term), enough so that early retirees can withdraw 4 percent a year and never run out. It's called the 4 percent rule.

Early FIRE adherents were mostly men with high-paying tech-sector jobs and an engineer's obsession with maximum efficiency. On forums like Reddit's Financial Independence sub and Mr. Money Mustache, they'd swap financial life hacks for drastically cutting food costs, gaming credit card bonus offers, and building the perfect budgeting and investment spreadsheet, all in a race to see who could retire earliest.

For Hester, the FIRE movement has never been about monkish self-deprivation or who has the highest savings rate, but attaining a level of freedom that most people think is unavailable until 65, if ever.

"This isn't about winning at math," she says. "It's not about achieving optimal spreadsheet status. It's about life. Having control of your life. Doing what you want with your limited time here. Doing things that feed your purpose instead of pushing an employer's agenda. It's easy to lose sight of that."

So what exactly does life look like when you retire in your 30s? When you live in a gorgeous mountain town, like Hester and Bunge, it involves a lot of hiking and kayaking in the summer, and skiing and snowboarding in the winter. But it also means steering your creative energies (which Hester has in abundance) toward projects that are personally fulfilling, if not financially lucrative.

In addition to writing most entries on their blog, Hester just finished a book, "Work Optional" (available March 2019), she co-hosts the podcast The Fairer Cents about financial independence for women and organizes retreats around the same theme for Cents Positive. Hester is aware this is not the lifestyle most people envision when they think of retirement.

"The truth is, if you just looked at what we're doing, it would look in many cases like work," says Hester. "For me, it feels like play, so I'm happy to do it. There are no ads on the blog, because I don't care if it makes money or not. I don't want it to get tainted that way."

Not all FIRE bloggers are such purists. Several high-profile sites like Mr. Money Mustache and Millennial Revolution include paid ads and affiliate links to earn a modest post-retirement income for spreading the FIRE gospel.

Through her writing, Hester also wants to make it clear that early retirement is not always a "perfect rainbows and unicorns" existence. Making the switch from a job-centered life to a blank slate can be jarring. And if you're married or have kids, those relationships will need to adjust, too, now that you're home all the time.

"There's a well-documented spike in divorces in the first two years after traditional retirement, and I think that applies to early retirement as well," Hester says. "Even if retirement is really positive and done by choice, it's still inherently stressful because it's such a big life transition. A lot of people don't think that through."

With recent high-profile coverage in The New York Times, the FIRE movement is poised to go mainstream, which raises the question: how many American families can really afford to retire early?

Financial adviser Robert Schultz with Rollins Financial in Atlanta, Georgia, thinks that FIRE advocates in their 20s and early 30s may be too young to fully appreciate the financial crisis of 2007-2008, and have been somewhat spoiled by the longest bull market in history.

What if someone tried to retire early back in 2006 and withdrew just 3 percent of their investments each year for the next five years? Schultz calculates that by the end of 2011, their retirement nest egg would have shrunk by 18 percent.

"The bigger risk, though, is that someone would have sold to cash and then not participated in the bull market," Schultz says. "Timing the market is incredibly tough for anyone, so being able to think you would miss downturns is impossible."

Hardcore FIRE advocates believe they've taken such risks into account, namely by diversifying investments among the stock market, bonds and rental properties, and by not flinching when the market "adjusts" from time to time.

Karen Altfest, Ph.D. with Altfest Personal Wealth Management in New York City says that most of her clients are looking to keep working beyond the traditional retirement age, not retire decades before. With more and more people living into their 90s, Altfest is concerned that most people won't put be able to put enough away to cover 50 to 60 years of normal living expenses, let alone the hyperinflated medical costs that often accompany the last years of life.

Hester can't speak for all FIRE aspirants, but says she was very much "scarred" by the financial collapse and advocates the most conservative early retirement plan possible, one that will weather the worst market corrections. She's also written extensively about health care and early retirement, much of which hinges on the future of the Affordable Care Act.

Clearly, early retirement isn't for everybody. Hester admits that she and Bunge were "incredibly fortunate" in their situation, not only by having well-paying jobs and no debt, but also through the "dumb luck" of dodging serious health emergencies or accidents. Still, Hester believes that financial independence is within reach for lots of folks who have some extra money left over at the end of the month.

You might not retire in your 30s or 40s, but a few years early sure beats a few years late.