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The so-called FIRE movement — “financial independence, retire early” — has been big for about a decade. The theory is that if you slash spending to the bone, save every nickel you can, and invest in stock market index funds, you might save enough and make enough, quickly enough, to escape the financial gravity of the working stiff.
It’s got a lot to recommend it.
But of all those who take early retirement, just 17% do so of their own free choice, after saving enough money.
The rest are either kicked out, edged out, or have to quit due to ill health.
So reveals the latest annual retirement survey from the Transamerica Center for Retirement Studies, after polling 2,100 retirees.
It also found that 75% of those who retired later than expected kept working because they needed the money or the benefits.
The picture doesn’t get much better when you look at those who haven’t yet retired. Among those still working over the age of 50, only 31% have a backup plan for income if forced into retirement sooner than expected.
The median retirement savings balance for those still working over 50 is just $133,000 — which isn’t enough to generate income of $10,000 a year. Despite the fanciful media talk of needing millions to retire, just 14% have $1 million.
No wonder 45% of workers over 50 fear outliving their savings, and the numbers terrified of cuts to Social Security, 41%, almost exactly match the numbers terrified of ending up old and helpless in a nursing home.
This dismal picture is why the so-called FIRE movement — “financial independence, retire early” — took off in the first place.
True, few people will have any realistic hope of achieving the FIRE nirvana of retiring in their 30s or 40s. But as the Transamerica survey reveals, they’ll be happy if they’re even able to retire roughly on time.
Maybe if they follow the strictures of FIRE gurus like “Mr Money Mustache,” and live frugally, save everything, and invest well, they might just have a chance.
