The Hidden Costs of Early Retirement — And Why You Might Want to Avoid This Trend

Would you be willing to make large sacrifices now, so you could retire decades ahead of schedule? Both Gwen Merz and Derek Sall thought so, until they began second-guessing their decisions. 

“Financial independence, retire early,” or FIRE, is a lifestyle movement that encourages you to build a cushy nest egg — at least 25 times what you’ll need for annual expenses in retirement — so you can leave the workplace before the typical retirement age. 

The FIRE movement hit the scene in 1992, but it really took off with millennials over the last 15 years. While the path to FIRE looks different for everyone, and there are various approaches within the movement, most of the journeys begin the same way: Land a well-paying job in your 20s, save a significant chunk of money (anywhere from 50% to 75% of your take-home pay), and live far below your means. Many FIRE participants also boost their incomes with a side hustle (or several side hustles) or through real estate investments.

It can also mean developing an obsessive focus on hitting your FIRE number, the specific amount of money you need to save to retire by your desired age.

The idea of retiring early has a universal lure that’s attracting plenty of followers, but FIRE is also getting its fair number of detractors. Some are dropping out because it’s exhausting. Others are realizing that it’s costing them relationships and experiences that no amount of money can recover.

Jovan Johnson headshot

Jovan Johnson

“It takes a lot of discipline and sacrifice,” said Jovan Johnson, a financial adviser at Piece of Wealth Planning in Atlanta. In order to save so aggressively, some FIRE participants give up years of doing important things like traveling with friends and family, Johnson noted.

That’s what happened to Merz, a 32-year-old IT professional from Missouri who went all-in on FIRE but became disenchanted with the lifestyle. “I could save a lot of money,” she said, “but I didn’t earn enough money to save a ton and also live the kind of life that made me a happy, fulfilled person.” 

For Sall, a 37-year-old personal finance blogger and founder of Life and My Finances from Michigan, being committed to FIRE meant putting his marriage at risk. After severely cutting back on spending, he focused on procuring more passive income, but that meant limiting quality time with his wife and newborn child. “Thankfully, I snapped out of it,” said Sall. “I wasn’t going to end another relationship just to achieve my goals versus our goals.” 

That’s not to say they didn’t learn any practical tips from the FIRE movement about paying down debt, saving or spending wisely. For many, striking a balance between extreme FIRE principles and living an enjoyable life is the sweet spot. This desire for equilibrium gave rise to offshoots of FIRE, like Barista FIRE and Coast FIRE, which still focus heavily on front-loading your savings, then switching to a lower-stress job to provide some residual income.

Tyler Dolan headshot

Tyler Dolan

Whether you’re fascinated with pursuing FIRE or are planning to retire at the standard age, stay in line with your values and priorities, said Tyler Dolan, a certified financial planner and vice president of the Boston-based Keenan Financial. “It really boils back to checking in with what are your financial goals, what are your personal money beliefs, how do you handle money, what’s important to you?”

An all-consuming quest to save every penny

Gwen Merz headshot

Gwen Merz

If you have the bandwidth to dive into FIRE, it can pay off significantly. In fact, both Merz and Sall found success early on when they started aggressively saving.

Merz went all-in on FIRE, living in the cheapest home she could find and keeping her expenses to around $22,000 a year. She earned $65,000 a year, plus bonuses, and took on multiple side hustles. At this rate, she planned to hit her FIRE number of $635,000 and retire by 35.

Sall was also on the path to financial freedom. After paying off his mortgage and all other remaining debts, he lowered his expenses to just over $400 per month (food, phone bill, car insurance and utilities) and put the rest toward investments and savings. To earn passive income, he bought a house, fixed it up and rented it out to tenants, a pursuit that required significant time and effort away from his family, though it was paying off. 

Derek Sall and family

Derek Sall

“At the age of 29, I was earning $60K a year at my job, I had just paid off my house, and I was cruising toward FIRE,” he said. What appealed to him most about early retirement was the idea that, in just a few more years, he could spend his time how he saw fit.

The idea of flexibility and financial freedom are key drivers of the FIRE movement. “What is most appealing about FIRE is just the idea that you kind of are truly free and independent from depending on a traditional job,” said Johnson.

Falling out of love with FIRE

Despite staying on track and saving a sizable amount of money, Merz wasn’t satisfied. She felt trapped in her corporate, 9-to-5 job, and wanted more control over her time. It didn’t help that her workplace felt toxic. 

But something deeper wasn’t clicking.

After five years of pursuing FIRE, Merz realized it was mathematically impossible for her to earn and save the same amounts as her married, dual-income friends. She was also burning herself out working multiple side hustles.

“I became really disenchanted with FIRE when I realized that it was difficult for one single person to retire incredibly early at a high-to-above-average salary,” said Merz. 

Plus, the effort it took to sustain this lifestyle was starting to catch up to her, and it was leaving her little time to relax or connect with friends. 

Sall’s relationships, most notably his marriage, were also starting to suffer as a result of his early retirement goals. He remembers the exact moment when he knew his FIRE obsession was destroying his personal life.

He was headed out to work on fixing his latest “project house,” which he planned to rent out for additional income. As he neared the door, his wife stopped him, angered over the fact that he was once again stranding her and their infant daughter.

“When is this going to end? I’m sick of it!” his wife said. “Is this what life is going to be like with you?” 

Something shifted in Sall, and he found himself reconsidering his priorities and reflecting on mistakes from his past. He’d become so hyperfocused on his goals, that he had forgotten about their goals as a couple — a problem that ended his previous marriage.

Finding financial balance

These days, Merz spends a fair amount of her income on a comfortable home in St. Louis. She no longer lives in cheap housing, and she has a new job at a nonprofit where she feels empowered and supported.

What’s more, she no longer has qualms about spending money to enjoy quality time with her friends. Recently she took out $200 in cash to spend the day with a friend at a massive annual garage sale that her former FIRE-focused self would have never even considered.

Though Merz has put the brakes on her FIRE pursuits, she doesn’t completely regret having saved aggressively. “I will have more money than I know what to do with when I retire at 55,” Merz said. “That money is going to compound and grow and become millions of dollars.”

Now, she’s built more room into her budget for things that make her happy. “It’s great to save,” Merz said. “But also don’t sacrifice your relationships and ability to make memories while you can.”

Sall’s decision to exit the FIRE movement helped rescue his marriage. He and his wife sold the project house, as well as their primary house, and bought a new place in the woods with the profits. 

“Looking back, I can honestly say it’s the best decision we ever made,” said Sall. “I’ll still likely retire early, but instead of doing it by 34, I might be 44. Better to do it with my beautiful wife and children that love me, versus achieving it broken and alone.” 

Both Merz and Sall are now in better financial positions because they attempted FIRE. But you don’t have to go to the extremes of the FIRE movement to prioritize saving. To start, Johnson recommends thinking about retirement and what it means to you so you can drum up a plan. Then come up with a budget, or a system to manage your money. Johnson said that instead of being extreme about budgeting, aim to be flexible. That way, you can enjoy life today while also saving enough to enjoy life later. 

Some tenets of FIRE are useful for anyone who wants to evaluate where their money is going, to make sure they’re not overspending and to keep prioritizing savings and paying down debt, according to Dolan. 

Both Johnson and Dolan agree that FIRE offers an excellent strategy for getting free from debt, but don’t get too consumed. You should still have wiggle room in your budget for nights out with friends, family trips or any other type of connection that is important to you.

What makes one person feel fulfilled and accomplished won’t be the same for another. “At the end of the day, everyone has their own money beliefs. They have their own values, they have their own kind of habits with money that have been developed throughout their lives,” said Dolan. And everyone should understand what those are for themselves.

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