Since 2016, Allison and I have written dozens of blog posts, authored books, taught courses, and spoken to audiences about how to achieve FIRE (aka Financial Independence / Retiring Early).
We’ve heard from tons of people about how excited they are to implement different tactics or strategies to get to FIRE. But we also, inevitably, have people tell us why they could never reach FIRE.
It’s usually mentioned in an offhand way. “I loved your book, but I’m too old for FIRE.” Or “That blog post makes a lot of sense, but I could never reach FIRE with kids.”
Everyone has their own obstacles to overcome to get to FIRE. For some, it might be lack of knowledge, resources, or career opportunities. For others, it may be health issues, family obligations, or just being dealt a more difficult hand in life.
Of all the reasons people tell us they can’t FIRE, there are three that we hear most often. Let’s take a closer look at the biggest obstacles to achieving FIRE and unpack the strategies to overcome each one…
1) I’m Too Old
We hear this one a lot, especially with anyone over the age of 45 (it doesn’t help that our website is called Retire By 45). Many people assume that if you haven’t FIRE’d by 45, then it’s too late.
The Reality: According to Investopedia, early retirement happens before age 65, normal retirement occurs between 66 to 70, and late retirement is considered after 70 years old. So, unless you’re 65 or older, there’s still time to retire early. We had always hoped to retire by age 55, but we managed to accelerate that timeframe by doing all the things we’ll be discussing.
As for our website name, we picked that name simply because the URL was available and 45 seemed like a good target. We were fortunate to FIRE just before the age 45, so we can actually say we practice what we preach!
What to Focus On: Rather than worrying about reaching FIRE by a specific age, work on improving each aspect of your finances: eliminating debt, increasing income, lowering expenses, and upping your savings rate. It’s much better to build a solid financial foundation than it is to be able to say you FIRE’d at some magically young age.
Let’s look at two scenarios with two people of different ages and FI numbers (the number of years of annual expenses saved in their nest egg).
Person A is 50 years old and is just now planning to FIRE. They wanted to get their FI number to 30X before taking the plunge. They have no debt, they have over six months of expenses in emergency cash, and they have a plan for healthcare after quitting their job.
Person B is 40 years old and is Lean FIRE. That means they FIRE’d with a FI number of only 20X. They also have some high-interest rate debt, no health insurance, and no emergency cash account.
Which situation sounds better? Personally, I’d much rather be Person A. They’re taking longer to get to FIRE, but once they get there, they will be much better positioned for success. We’ve always been proponents of waiting until your FI number is 30X or more before leaving your full-time job.
The bottom line is just to start wherever you are. Allison and I didn’t get serious about our careers and finances until our late 20s. Then we hunkered down and FIRE’d after 17 years of work. It’s also good to know what your target numbers are for a successful FIRE (we could have actually FIRE’d even sooner if we understood how much we needed to retire early).
2) I Have Kids
This is another obstacle to FIRE that we hear very often. Since we don’t have kids, many parents will read our story and say “Oh, you don’t have kids. No wonder you were able to FIRE. It’s just not feasible for parents.”
The Reality: Sure, it may be a bit more difficult, but many people have been able to FIRE with kids. For example, several popular bloggers are parents: Karsten (Big ERN) from Early Retirement Now, Pete Adeney from Mr. Money Mustache, and Leif from Physician on FIRE (just to name a few).
One of our favorite podcasters, Andy Hill from Marriage, Kids & Money, has two kids and recently paid off his mortgage and quit his corporate job to focus on podcasting. We also have personal friends who have done it. One couple, Tom and Tina, just used geo-arbitrage to pay off their mortgage in full (by moving from a large house in the Oakland Hills to a smaller house in the South Bay).
What to Focus On: The biggest challenge we hear from parents is the cost of raising their children. Like just about every situation in life, there are many ways to reduce your expenses if you’re willing to work at it and be a bit creative.
Let’s look at some examples. Since kids are constantly outgrowing everything, it doesn’t make sense to buy everything brand new. Rather, try to get these items secondhand from other parents whose kids have moved on to the next stage. This can include baby furniture, strollers, clothes, shoes, and toys.
Look for stuff and connect with other parents on Nextdoor, Craigslist, and Facebook Marketplace. Just be careful about certain items such as cribs and car seats, because older ones may not meet current safety standards. Parents.com has a good guide for buying used baby items.
You can also raise your kids with a frugal mindset and instill in them smart money habits from an early age. Teach them entrepreneurial habits like earning extra money helping your neighbors mowing lawns, walking dogs, or running errands.
Fast forward to the teen years: encourage your teen to get an inexpensive used car they can pay off easily instead of taking on a car loan. Read our tips on buying a used car. (Fun fact: my first car cost me $350, and my second car was only $50!)
Of course, college expenses are always a huge hurdle. There are several strategies to explore to reduce these costs. First, start investing in a 529 plan when your kids are still young. By the time they’re ready to apply for college, you’ll have a decent head start.
Next, research and apply for grants and scholarships. My friend Joe started a small business helping people in his HCOL area find financial aid for their kids. Most of them didn’t think it was possible due to their income, but there are so many sources of aid and ways to qualify, that it’s definitely worth your time to explore. Check out the Federal Student Aid website for resources.
This brings us to the third major obstacle...
3) I Don’t Have a High Paying Job
You may think you have no chance to FIRE if you don’t have a fancy high-paying job. The three bloggers referenced above all had impressive careers: Karsten was a financial analyst, Pete was a software engineer (as was Brandon, the Mad Fientist), and Leif was (obviously) a physician.
So, if you don’t have a job like that, are you doomed to keep working until you’re 70?
The Reality: Sure, it helps to have more money coming in, but income isn’t the only key to achieving FIRE. You also have to manage your debt, save and invest wisely, and (perhaps most importantly) keep your expenses under control.
Living in the SF Bay Area, Allison and I know many people who make what most would consider astronomical incomes. Interestingly, very few of them have been able to FIRE. Why? Because they’ve become accustomed to spending almost everything they earn. They have huge mortgages (sometimes more than one), outrageous property taxes and insurance costs, expensive cars, extravagant travel and entertainment budgets, etc.
What to Focus On: If you don’t make a lot of money, you can still get to FIRE by controlling your expenses and investing wisely. We were able to shave about nine years off our path to FIRE by using geo-arbitrage. We moved 10 miles from San Francisco, across the Bay, to Oakland. We bought a condo with the same square footage (and more amenities) for half the price!
There are so many ways to be smarter about your money. I like to talk about some of the frugal lessons that Allison taught me over the years about buying in bulk, getting stuff used (or free), and DIY projects. We’ve also found many other ways to reduce expenses. This post was from a few years ago, but it gives an idea of our spending.
For your investment strategy, go with the tried and true method of contributing as much as you can to retirement accounts first. Then, if you have additional money, put that into a taxable account. Set everything up with automated investments, so you can “set it and forget it.”
Don’t try to outsmart the market, but rather just focus on low-cost index funds like VTSAX (Vanguard’s total US stock market fund) and VBTLX (Vanguard’s total US bond market fund). If this strategy is good enough for Warren Buffet, Jack Bogle, and JL Collins, then it’s good enough for the average investor. To make things simple, use the formula (100 - your age = stock %) for asset allocation (note: you can also use 110 if you want to be a little more aggressive).
Embrace the Journey
We all know that getting to FIRE is not easy, and it certainly helps to have some help and a little luck along the way.
Allison and I were fortunate to have good educations, good health, and good friends and family for support. We also managed to be working in the right place at the right time to build wealth: the SF Bay Area during the tech boom from the late ‘90s to the early 2010s.
Of course, it wasn’t always smooth sailing. We survived two major economic downturns, I almost died from pneumonia, and I had to get my hip replaced. And like everyone else, we’re all dealing with the challenges of the COVID-19 pandemic (see our posts FIRE in the Age of COVID-19 Part I and Part II).
The point is that life is always going to throw you some curveballs and obstacles. Whatever your circumstances, do your best to make the most of it. And whether you FIRE in your early 40s like we did, or it takes you a little longer, just make sure to enjoy the ride and embrace the journey!