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Why saving for an early retirement may not be worth it after all

The dream of retiring super early is enticing many younger adults and fueling a frugal movement of extreme saving, aggressive investing and many hours of overtime and side hustles. 

But achieving FIRE – short for financial independence, retire early – can come at a hefty price to your everyday life, according to former FIRE followers and a personal finance expert.

The sacrifices you must make, such as turning down weddings or skipping date night, may end up eroding the happiness you experience now. Instead of abandoning early retirement altogether, adjust your expectations and maybe expand your deadline, so you can enjoy life today and later on.

“If you have a minimum income level where you are already barely eating and can hardly go out to see your friends, then pursuing FIRE doesn’t make sense,” says Carrie Rattle, principal at Behavioral Cents, a firm dedicated to helping women manage their money. “The stressor comes when people aren’t taking care of themselves [and] then [they try] achieving this longer goal.”

Sacrificing too much now

Would you miss your friends’ weddings just to retire early? 

That’s what Alex Tran, 34, did when she started her FIRE journey with her partner in late 2016. Tran stumbled upon the movement after browsing through online financial articles, and quickly set her eyes on retiring at 40. 

Alex Tran, founder of an athletic apparel reviews site, saved aggressively to retire early from late 2016 to early 2017 before burning out.

Nine months later, she quit. 

“We were saving more money, but then we were also sacrificing,” said Tran, a digital marketing strategist and owner of Schimiggy.com, an activewear review site. “I opted to not be a bridesmaid or travel to go see our friend’s newborn.” 

It’s not just once-in-a-lifetime events that FIRE followers miss. 

Lisa Harrison sacrificed weekly coffee dates and Friday pizza nights after marrying her husband to stick to their 70% savings rate. She also let go of her aspirations of buying a home in the suburbs two months in advance of her wedding to save for that special day.

But they always focused on the future instead of living in the present, she said.

“We want to enjoy our life now, not just later,” said Harrison, a microbiologist and founder of Mad Money Monster. “I realized I don’t hate my job. I quite enjoy it.”

Too much work

Lisa Harrison, founder of the personal finance blog Mad Money Monster, abandoned her early retirement dreams after the sacrifices were making her and her husband unhappy.

Building up passive income – a pillar of the FIRE movement – is also not as effortless as it’s made out to be, Harrison said. 

Even though her blog brings in additional income on top of the $100,000 she earns from her day job, it’s still a full-time gig. 

“A side hustle is nothing more than a job,” Harrison said. “You might quit your corporate job and be a blogger, but you’re still going to have a boss. Whoever’s paying you is still your boss.”

Similarly, to save an estimated $400,000,Tran had to work a full-time job, mine for bitcoin, invest in stocks and blog.

“I’m okay with finding different streams of income,” Tran said, “but not sacrificing everything.”

Bad real estate hacks

Another route for passive income championed by FIRE followers is becoming a real estate landlord. But it’s not as simple as some suggest. Just ask Gwen Merz, author of the blog Fiery Millennials.

The 29-year-old IT support professional left behind her full-time job to blog full time and bought a triplex in Davenport, Iowa, to earn additional income.

She took a chance on an ex-convict who was recovering from an opioid addiction and rented out a room to him. But within a couple months, he quit his job and wasn’t paying rent. Before Merz could confront him, he left the building with the house keys.

Gwen Merz, founder of the personal finance blog Fiery Millennials, quit pursuing early retirement after five years of sacrifices and a real estate setback.

“I never saw him again,” she said. 

The experience made Merz question whether she was cut out to be a landlord. Her professional life revolved around customer service and making other people happy.

“You can’t do that when you're a landlord,” she said. “You’re going to have to be in it for the money.”

Merz eventually sold her triplex at a profit and moved to Washington D.C. from Minneapolis to take a full-time position as an IT executive support at defense, aviation and information technology company.

After successfully saving $210,000 in five years, her real estate setbacks and recent relocation have made her rethink her early retirement goals. She doesn’t blog full time anymore, but posts a couple of times a month. 

“If I was trying to save that much money in D.C.,” she said. “I would be miserable.” 

Lessons learned

While the trio throttled back their FIRE paths, none regret the journey.

Tran no longer becomes “flustered” when her friends request her to attend social events. She’s focused now on financial independence — where you don’t necessarily quit your job but have the option to do so if you want — rather than retire early. She’s also a better chef.

“We ate at home a lot and I was really able to home in on my cooking skills,” she said. “There would be months where I wouldn’t buy [food].”

Harrison, who kept her full-time job, has reassessed her life priorities, focusing on building a financial nest for her daughter. Her family still socks away an impressive 50% of their income, instead of 70%. It’s also a relief to have health insurance through her job in case of any medical emergency.

“I just like knowing we have good healthcare,” said Harrison. “And look, we like going on vacations. We don’t want to travel hack. It takes a lot of time to figure out which credit card to get and how to hack.”

Merz has put the brakes on rushing any major life step. She’s considering a move back to the Midwest to be closer to her family and to work a less stressful full-time job.

“I’m working on figuring out what I enjoy in life and doing more of those things,” she said.

Merz still practices healthy savings habits and she’s changed her retirement goal to 50 versus 35.  “I don’t think that retiring early is possible for everyone,” she said. “Maybe the goal is to have a healthy retirement at age 65.”

Dhara is a writer for Yahoo Finance. Follow her on Twitter @dsinghx.

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