Page 15 - Kiplinger's Personal Finance - November 2018

MONEY

EXTREME SAVERS

Racing to Retirement

The Financial Independence, Retire Early (FIRE) movement is catching on with a new

generation that is redefining what it means to be retired. BY EILEEN AMBROSE

SHORTLY AFTER MATT OWEN GRADUATED we were going to make more money,”
from college, he consulted with his Matt says.
parents’ financial planner, who told
him he would be lucky to retire at age A HOT MOVEMENT
50. Matt, now 29, and his wife, Alli, 28, The Owens are on FIRE. That is, they
had other plans. are part of the Financial Independence,
Starting four years ago, the Owens Retire Early movement that has taken
slashed their living expenses. They off in recent years, mostly among
cut back on dining out and expensive millennials. The goal is to reach finan-
trips. They rented out the spare rooms cial independence by socking away
in their Bakersfield, Calif., home, gen- 50% or more of annual income over,
erating enough income to cover their say, 10 to 15 years. Some race to
housing expenses. Each year, they achieve FI much earlier. FI is usually
increased their savings rate until they defined as achieving savings equal
were salting away as much as 70% of to 25 times annual living expenses—
their $250,000 annual income. In which allows you to follow the 4%
April, the Owens quit their engineer- withdrawal rule for the duration of
ing jobs, hit the road in a 2006 Dodge a decades-long retirement.
Sprinter with 395,000 miles on it and The “retire early” part of FIRE often
now blog—at www.owenyourfuture raises eyebrows—and skepticism. Like
.com—about their experiment to live the Owens, many “FIRE walkers” are
on $40,000 a year. refugees from high-paid professional
In their blog, the Owens post their or tech careers, and most have no
monthly expenses, which so far aver- plans to completely stop working. But
age just under $2,500—well below FIRE acolytes say they’re redefining
their target budget. And they haven’t retirement. “Retire early” for many of
completely quit working. The Owens them means having the financial free-
offer financial coaching to other dom to leave the “hamster wheel” for
couples for a fee via video conferences, work or pursuits that give them more
and in November they will launch control over their time.
courses to help people get their fi- “I define retirement as never plan-
nancial life in order. They also have ning to go back to a 9-to-5 job,” Alli
a side hustle selling healthy baked says. “We plan to work for another 30 ■ ALLI AND MATT OWEN QUIT
goods online. They are still six years years, but on our own terms, creating THEIR JOBS AND ARE TRAVELING
from reaching their financial inde- work that provides value to the world ACROSS THE COUNTRY WHILE
BLOGGING ABOUT LIVING ON
pendence number of $1.2 million. and aligns with our values.” $40,000 A YEAR.
“We launched early, knowing that Many FIRE practitioners have an

36 KIPLINGER’S PERSONAL FINANCE 11/2018

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