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Practical Money Skills
Early Retirement Lessons Offered
Hugh Norton

How do you envision your retirement? For some, there’s an idealistic image that many share of days spent walking along a warm beach, endless travel and a leisurely lifestyle. On the other end of the spectrum, some people haven’t had the opportunities that would afford them the ability to stop working when they want, never get to retire in the traditional sense and struggle to live on a fixed income once they’re no longer able to work.

There’s also a middle ground, those who can afford to stop working and live a modest lifestyle. But the financial requirements for seniors have changed and grown over the years, and so this middle option may be less common as a result. Employer pensions and other retirement benefits aren’t as prevalent or plentiful as they once were. Longer life expectancy and a rising cost of living can make it more difficult to live purely on Social Security benefits and retirement savings alone.

However, there are individuals and families who have been lucky enough to be in the position to retire decades before their 60s. They’re part of a social movement known as FIRE – financial independence and early retirement – that has its own values, rules, subgroups and lingo.

The idea of becoming financially independent, when you can live off the income from your savings and investments, and retiring early, a notion that can seem too good to be true. Even if the end goal is desirable, it may not be possible for many, and in cases where it is possible, some may not be up for the journey. Early retirees may live in small homes, drive old cars and avoid eating out prior to retirement – all with the goal of accumulating enough savings to live on after retirement.

There is more than one way in which people have achieved FIRE. However, there are a few basic rules to live by that could help you get there. Live a modest and frugal lifestyle and put most of your earnings (often over 50 percent) into savings and investments. Try to find ways to increase your savings rate by cutting expenses and increasing your income. Creating and closely monitoring a budget can help. Look for opportunities to increase your investment returns and grow your money faster.

Reaching financial independence doesn’t necessarily mean you have to quit your job. However, you now have that option and the freedom that comes with it.

Realistically, reaching FIRE may not be an option for everyone. But increasing the gap between your income and expenses such that you have more money coming in than going out could help your financial situation even if you don’t think you can retire early (or event want to).

Here are a couple of ways to incorporate the guiding principles of the FIRE movement into your life without going to extremes.

Evaluate your priorities. If you take the time to evaluate what you want and what’s important to you, it can help you set clear goals to strive for and a benchmark by which to measure the decisions that shape your financial future.

Decrease expenses. No matter your aptitude for a frugal lifestyle, look for ways to cut costs in different areas of your life. Housing, transportation and food are often major monthly expenses, so it could help to focus on these areas.

Even if early retirement is not in your game plan, there are still valuable lessons and takeaways from the examples of those who have been able achieve this goal.


Hugh Norton directs Visa’s financial education programs. To follow Practical Money Skills on Twitter: