Super savers

Luke Byrne is arranging light wood chairs around matching tables to ensure they face the front of the room. It’s a sunny Saturday morning outside a public library in Ellicott City, Md. Children are skipping in through the front door followed by their parents. Inside a library meeting room, Byrne and 20 other adults take their seats for a serious discussion. They are focused on their common goal of extreme saving, part of a small, dedicated movement called FIRE—Financial Independence, Retire Early.

For many Americans, retirement seems like a pipe dream. About 20% of those age 50 and over have no retirement savings at all. Nearly half of Gen Z adults say they don’t expect to get a dime of Social Security. FIRE holds out hope that not only can you retire, you can retire while you’re still young. But is FIRE a goal worthy of lifelong devotion?

Byrne opens the meeting by asking attendees to submit their “win of the month” via a QR code projected on a screen at the front of the room. Submissions include “cancelled Washington Post” and “invested the money in our solo 401k that had been transferred from another brokerage.” Next comes a presentation by Michael Scepaniak, a former software developer who retired seven years ago at the age of 43. He shared 16 questions he asks himself annually to evaluate his financial health.

The FIRE formula for early retirement is simple. You calculate how much your annual expenses will be in retirement. After that, you save up until you reach 25 times that amount. For example, if you want to spend $50,000 per year, you’ll need to save $1.25 million. You carefully invest the money, and once you retire, you can draw up to 4% a year.

The FIRE formula may be simple, but saving up so much money is a significant challenge. FIRE devotees often save 50% or even up to 70% of their take-home pay. They argue many Americans waste vast sums on mindless consumption. FIRE, they say, is less about monastic self-denial and more about carefully limiting your spending to those things that truly make you happy.

Byrne, 30, is an electric vehicle charging engineer in Baltimore. He’s been working toward FIRE since he was 22 and hopes to reach it around age 40. Byrne takes a conventional approach to saving. He often bikes to work rather than driving his older-­model car. He cooks most meals at home and packs lunches for the office. But he spends money on going out to dinner with friends nearly every weekend because friendship is important to him.

FIRE traces its roots to the 1992 bestseller Your Money or Your Life by Vicki Robin and Joe Dominguez, who popularized many of the concepts. From there, the FIRE movement developed its own sprawling subculture, including insider lingo. For example, “lean FIRE” refers to a minimalist lifestyle after retirement, which requires saving up less money. “Fat FIRE” is for those who want to live it up after they exit the workforce. A host of gurus blog and podcast about the FIRE lifestyle. Byrne is president of the local chapter of ChooseFI, a podcast and website hosted by Brad Barrett and Jonathan Mendonsa. They encourage FIRE devotees to start local groups for advice and encouragement.

After Scepaniak’s presentation, one participant raises her hand and asks him how he tells people he’s retired. “Oh, I don’t tell them,” he answers, eliciting laughter from the room. Personal finances are one of America’s last social taboos. A survey last year found that over 60% of Americans feel uncomfortable talking about money. That’s where the support group comes in. “This is a safe space for people to talk about finances,” Byrne said. “We have millionaires. We also have people who are in debt who come here to ask for advice on how to get out. The common thread is that people are comfortable talking about money.”

ONE ASPECT OF FINANCES that doesn’t get talked about as much is charitable giving. FIRE gurus occasionally mention it as a worthy practice, while acknowledging it slows down savings rates. Mike Kuckel is the CEO of Sovereign Private Wealth. When clients talk to him about how much money they want to save, he tries to reframe the conversation into one about how much they hope to give. As a Christian, he believes giving is a central component of stewarding your money. “We find real freedom in the charitable aspect of financial planning, even more so than in the saving aspect of it,” he said. “The cure for greed is generosity.”

FIRE is not for everyone. You can only save a lot of money if you already have a good income. Byrne admits the support group consists of “mostly white-collar professionals working in STEM,” though hastens to add it also includes artists and people with nontraditional careers. A survey last year found that nearly half of American households describe themselves as living paycheck to paycheck. Approximately 1 in 3 U.S. adults ages 18 to 34 live in their parents’ home, according to U.S. Census Bureau data.

Achieving FIRE also becomes more complicated with family. Byrne and Scepaniak are childless and single. Barrett and Mendonsa of ChooseFI have children, but Barrett recently announced his divorce. After the meeting, some attendees talked about the place of children in a FIRE lifestyle. No one had a clear answer. “FIRE is definitely achievable with kids, but it just takes more planning and maybe working a bit longer than DINKs,” said Byrne, referring to couples with dual incomes and no kids.

No one at the meeting questioned whether early retirement was a worthy goal. But Kuckel notes the Bible contains only one example of retirement—a negative one. In Luke 12, Jesus tells the parable of the rich fool who saved up his surplus grain so he could live a life of merriment. In verse 20, God said to him, “You fool! This very night your life will be demanded from you. Then who will get what you have prepared for yourself?”

A study by the National Bureau of Economic Research found that over one-third of retirees wish they had worked longer. Kuckel believes that’s typically because “there hasn’t been a real goal or plan for what’s next.” He has observed that these retirees go through a difficult period of adjustment but eventually “pick up another ‘vocation.’ I don’t want to call it going back to work.”

Scepaniak founded a nonprofit where he says he works around 20 to 30 hours a week. One of his biggest challenges is forcing himself to spend more money after years of careful saving. Byrne is interested in becoming a financial coach postretirement. “I love my job,” Byrne said. “I just don’t want to do it till I’m 65.”

Average retirement age by state

Source: Madison Trust Company

The average retirement age in the United States is 64, with the average retirement age in individual states ranging from 61 to 67. The minimum retirement age to receive full benefits started at 65, but started to rise with those born in 1955. Full retirement age this year is 67, and it will continue to rise by two months each year.

Average retirement savings by age

The average retirement savings for U.S. families is $333,940, according to the 2022 Survey of Consumer Finances (the most recent available). Many financial pros recommend putting away 10% to 15% of your income for retirement. Average account balances vary by age, with those 55-74 having the most money saved.

Source: Nerd Wallet/Survey of Consumer Finances

Median retirement savings by age

The median retirement savings for U.S. families is only $87,000. Since averages can be heavily skewed by the outliers of over- and underachievers, the median often provides a more representative number than the average. These median retirement savings figures trend much lower than the corresponding averages on the left.

Source: Nerd Wallet/Survey of Consumer Finances

Annual cost for a comfortable retirement

Source: Madison Trust Company