The Early Retirement Revolution: Can Millennials and Gen Z Hack Their Way to Financial Freedom Faster?

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Many Gen-Zers and Millennials grew up watching their parents dedicate their lives to work, only to see their dreams either downsized or put on hold indefinitely. Many Americans are now anticipating a later retirement, with the data showing that Gen Xers expect to retire around age 66, while Baby Boomers are pushing that expectation to 71.

This is why many young people view “the grind” as more of a hamster wheel than a ladder to a better future. Add to that burnout, inflation, and growing economic inequality, and it’s no wonder they’re looking at traditional retirement timelines and questioning, “Why wait?”

Enter the “FIRE” Movement

FIRE stands for Financial Independence, Retire Early, and it’s exactly what it says on the box: a strategy to make work optional well below your late 50s or 60s. This is achieved by aggressively saving and investing to buy back your time and gain full control over how you live later.

The idea first gained traction in the 90s with the book Your Money or Your Life by Vicki Robin and Joe Dominguez, which challenged readers to rethink how they trade their time for money. It’s now riding a new wave of popularity among Millennials and Gen Z, especially after the COVID-19 pandemic, when many realized just how fragile their financial situation really was.

Today, FIRE has grown into a thriving online movement. You’ll find TikTokers and YouTubers tracking their net worth and documenting their paths to retiring before 40. On communities like Reddit, people who have adopted the FIRE way of life swap savings hacks, ways to ditch debt, and even their monthly budgeting templates.

The Different Paths To FIRE

Over time, the movement has evolved into several variations to fit different lifestyles and income levels:

• Lean FIRE: Retire early by living frugally and keeping expenses extremely low.
• Fat FIRE: Mostly for high earners who want to retire early without cutting back on comfort. This path requires a larger investment portfolio and careful planning.
• Barista FIRE: Reach partial independence, then take on flexible or part-time work for benefits like health insurance.
• Coast FIRE: Save heavily in one’s 20s and 30s and then let your investments grow while you “coast” to retirement.

All of the above involve a mix of some or all of the following common themes:

Minimalism

The younger generations aren’t chasing the Joneses anymore. A lot of them don’t care what the Joneses are doing in the first place. If anything, they are drastically rejecting consumer culture and status signaling, having seen how it can lead to burnout, debt, and a loss of personal freedom.

This shift towards minimalism translates into lifestyle choices like living in smaller homes or with roommates, even well into their 30s, using public transport or opting for used cars, cooking at home, skipping the latest tech drops, thrifting, and more.

They are also very careful about avoiding lifestyle creep, even after getting a raise, preferring instead to invest or redirect any extra income into their 401(k)s and other pension plans.

Becoming Debt-Free

The FIRE approach emphasizes strategies like rapidly paying down student loans, accelerating car payments to minimize interest, and avoiding further debt from credit cards or hire purchase installment plans. Debt is no doubt one of the biggest obstacles to financial freedom. The faster they’re out of it, the sooner they can start building their wealth.

Many achieve this by cutting their spending to the bone, while others take on freelance work or extra shifts at work, which brings up the next strategy…

Building Side Hustles

A lot of early retirement hopefuls are freelancing, selling digital products, building online brands, or finding creative ways to turn hobbies into income.

Not all of it is scalable, but a few extra dollars can go a long way. However, some do end up turning their side gigs into serious income streams.

Investing

Ultimately, early retirement depends on investing surplus income to generate long-term returns or passive income streams that can sustain them after they escape the rat race.

As such, they invest as much as they can in lower-cost investment vehicles like index funds.

Since a longer investment horizon fosters a healthy risk appetite among younger investors, not all choose to play it safe. Some are exploring more volatile strategies like cryptocurrency and short-term stock trading.

Is Early Retirement Realistic?

The idea of ditching the 9-to-5 lifestyle in one’s 30s or 40s is undeniably appealing. Who wouldn’t want to live life on their own terms? But while the FIRE movement provides a helpful framework, it’s quite vulnerable to real-world turbulence.

For one, inflation continues to lower purchasing power, and the rising cost of housing, food, and healthcare makes extreme frugality hard to maintain. Also, unexpected life changes like illness or job loss can derail even the best-made plans.

Then there’s the fact that many FIRE followers, particularly younger ones, don’t have a formal financial plan beyond aggressive saving and chasing high investment returns. Unfortunately, market volatility can wipe out years of investment gains in a single quarter.

Critical aspects like medical, health insurance, and long-term care costs are also usually underestimated in the FIRE plan, yet few Gen Zers are contributing enough to traditional retirement plans that could cushion them for such expenses when they are older.

The Bottom Line?

FIRE isn’t unattainable—it certainly helps to cut the excess from today’s overinflated lifestyles. However, long-term success requires a well-structured, financially sound plan that can withstand unexpected life events and thrive under multiple macroeconomic environments.