Retire in your 30s with the FIRE movement
After nine years of working as computer engineers, Toronto natives Kristy Shen and Bryce Leung are retired. They are 35 years old.
“I became financially independent at 31,” said Shen.
“This makes us, technically, the youngest couple in Canada to retire,” Leung said.
Shen and Leung are part of a newish movement called FIRE: Financial Independence, Retire Early. Young people who are using extreme saving and investing to flip the whole 9-to-5-work-until-you’re-65 thing on its head.
“The way I used to see life was: Here’s a guidebook our parents told us to follow. Buy a house, work until you’re 65. There is no other way to do this. This is the path to success. Everybody does it. You have to do it,” said Shen. “Now it’s like, why? Why do we have to do this? This guidebook doesn’t work anymore. Times have changed and we have to rewrite the rule book. And when we actually followed the one we wrote ourselves, our health and lives improved drastically.”
Shen and Leung invested the money they were saving to buy a house, stopped eating out and used public transportation and the share economy instead of a owning a car. At one point they were saving 78% of their monthly income.
“You put your money into what are called index funds, which are ETFs or Exchange-Traded Funds, that are low cost, don’t cost a lot of fees and track the stock market index,” explained Leung. “So rather than investing in any one individual company, you invest in all companies. You take these index funds, as well as bond funds, and you build a portfolio with it.”
That’s obviously an abbreviated explanation, but Shen and Leung lay out how they saved a million dollars by age 31 on their popular blog, millennialrevolution.com. They also explain how to protect your money from a recession or stock market crash.
One reason the couple has gotten so much attention is that they have been living nomadically for three years, traveling the world. They Skyped me from Latvia.
“We discovered that traveling is a way to actually reduce the amount of money you spend by spending more time in places like eastern Europe, Portugal, Spain, southeast Asia,” said Leung. “When we retired we had a million dollars. Right now we’re sitting at $1.3 million. So our savings have actually grown since we’ve been traveling, which is nutso. I guess you can say we got paid to travel.”
This is not the typical FIRE lifestyle. Most people live in one place, many own homes and have families.
Tanja Hester and her husband, Mark, recently retired in Lake Tahoe. She’s 38 and he’s 41. They were political consultants who raked in high incomes and a lot of stress working around the clock. It only took them six years to retire and five years to pay off the house they bought at the bottom of the market in 2011. But Hester says you don’t have to make six figures to retire with FIRE.
“There are great examples of people who weren’t in tech who barely earned six figures combined, in a couple, who were able to do this. Like Robin and Robert Charlton who wrote the book, ‘How to Retire Early.’ It’s just a question of your timeline. Considering that most people intend to work until 70, the average retirement age is actually 62. If you can even retire at 55, that’s a huge achievement. You’ve gained seven years of your life back that most people spend at work. I think the people who you hear about retiring in their early or mid-30s are probably making a pretty good income. That doesn’t mean it’s out of reach for others. It might take you a little longer but retiring in your 40s or 50s is still an amazing thing.”
Hester says a common misconception is that FIRE followers are spending their retirement doing nothing. Most young retirees are actually highly productive and active. She writes a FIRE blog, produces two podcasts and just wrote a book. Some people pick up a part time job at places like Starbucks or Trader Joe’s just for the insurance benefits.
If you’re wondering if you can pull this off, know that both couples say were not financially savvy when they started their research, but they learned how to invest. And, of course, they all say their quality of life improved hugely. Shen got off depression and anxiety medication. And The Hesters get outside every day.
“Oh, my gosh. We are getting so much more sleep! Which is wonderful!” said Tanja.
Millenials are often blamed and bashed in the headlines for pretty much any and everything, but there’s no denying they’re definitely onto something with FIRE.
“Question everything,” advised Shen. “I mean, how we really got here was questioning the advice our parents gave us. Question whether it makes sense to be loyal to a company when you may not have a job in the next five years. Question whether it makes sense to buy a house in this low interest rate environment. So the reason why we’re able to do this, successfully, is the fact that we refuse to just follow the herd and did something contrarian. It may be harder but it’s definitely worth it in the long run.”