Retire early: Can ordinary Americans find financial independence and stop work by 50?

What would it take to retire at 50 or 40, or even 30? It seems almost unrealistic to spill ink over when many Americans are already so behind on saving for retirement.

But there’s a movement growing in popularity, especially among younger adults, that preaches extreme saving, side hustles, long work hours and aggressive investing to achieve FIRE – financial independence/retire early – on an accelerated timeframe, often within 10 to 15 years.

But given the dismal statistics on Americans’ financial well-being, is FIRE only attainable for just higher-earning workers? After all, 40% of people can’t pay for a $400 emergency with cash on hand; only half have three months in emergency savings, and almost half carry credit card debt month to month.

What is FIRE?

While the "retire early" part typically turns heads, FIRE adherents focus more on financial independence, with the goal of building up enough in assets to pursue the kind of life they want as early as they can.

Many still work after achieving financial independence, but on their own terms without concern over how much money they make.

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FIRE is as much a philosophy as a financial strategy.

"It was born out of dissatisfaction of the status quo of working in corporate America until you're 60 or 70 years old and finally retiring and living a great life after that," says Sam Dogen, founder of the blog Financial Samurai.

It also rejects American consumerism. Those seeking to "FIRE" learn to live on less by questioning the value of how they spend their money.

"Before, I succumbed to lifestyle creep. It’s baked in our society," says Scott Rieckens, author of "Playing with Fire," who has a forthcoming documentary on the movement. "But now I’m able to refocus my life and align my spending with my values."

Can I FIRE?

Many of those who have popularized the FIRE movement did make around the median household income – when they first entered the workforce in their early 20s, supporting no one but themselves. After that, their income quickly escalated to several times the median.

For instance, the well-known Mr. Money Mustache – also known as Peter Adeney – started his first job in 1997 making $41,000.

But he and his then-wife ended up earning $195,000 when they reached financial independence at age 30 in 2005, according to an accounting on his blog.

Dogen started his FIRE journey with a $40,000 salary in 1999 in Manhattan and was pulling in more than $300,000 – with his wife – when he reached financial independence 13 years later.

Leif Dahleen, the author of the blog Physician on FIRE and an anesthesiologist by trade, was making about $400,000 when he realized he could retire early, but he’s keenly aware that accomplishing FIRE is a lot harder for those making the median income of $62,000.

“After taxes, they have a $50,000 budget. If you can live off half of that, you can achieve financial independence in 15 years,” he says. “But you have to give every dollar a job. You need to really want it and prioritize it over everything else.”

There are examples. For his book, Rieckens noted that he met several people pursuing FIRE on more middle-class incomes, including a family living on $70,000. Others point to Jillian Johnsrud of the blog Montana Money Adventures.

A real-life example

Johnsrud achieved financial independence in 13 years on a low-to-middle-class income and hampered by $50,000 in debt. She and her husband’s combined income started at $15,000 and went as high as $60,000 as they worked toward financial independence.

Johnsrud, who never completed college, worked a variety of retail and sales jobs, while her husband, who has a civil service degree, enlisted in the Army.

They saved big and small. When her husband was stationed in Washington, D.C., they took on a roommate, saving $800 a month for three years. “That’s $25,000 tax-free that we used to buy our first rental property,” she says.

When they finally bought their first house – in cash – they bought the cheapest one on the market at the time for $50,000 in Kalispell, Montana. Together on evenings and weekends for five years, they remediated its mold issues and renovated using YouTube as their guide.

They drove old cars such as a 1996 Honda Civic they had for 15 years. They ate bagged peanut butter and jelly sandwiches for lunch. They didn’t dine out. They still have "Rice and Bean Monday" and aim to eat less than $1 per pound. That keeps their monthly food bill for seven – they have five children now – at $700.

Overall, her family spends $26,000 to $29,000 a year. She doesn’t pretend the path to FIRE was easy, but she celebrated small victories along the way to stay focused.

“It’s an incredible feeling, especially that first $100,000,” she says. “Even if you don’t have financial independence yet, it’s still freedom. That’s three years of income.”

Back to reality

Johnsrud’s journey is inspiring, but is it easy to replicate?

“It’s an attractive idea to think you can power-pay yourself over five to 10 years and transition into that kind of lifestyle,” says Bruce McClary, the spokesman for the National Foundation for Credit Counseling. “The reality we see is there are so many woefully unprepared for retirement at any age, and they have so many financial obstacles.”

For the lowest-earning 40% of American households, it may be close to impossible. This group spends more annually than they earn and have little fat to cut from already frugal budgets.

“You can’t get around the math," Dogen says. "If your basic living expenses are $25,000 and you make that, then it doesn’t work."

The middle 20% are better off, spending just under what they earn. They still would need to slash their annual budget of $48,000 by about half – like Johnsrud did– to make FIRE possible.

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They must do this as they watch costs of the biggest budget busters – health care, education, housing and child care – continue to outpace wage gains, says Amy Traub, an associate director of policy and research at Demos, a public policy organization.

A lot of things need to go right for middle-class workers on their way to financial independence, she says.

"You can’t lose a job for a prolonged period of time. You can’t have a child get sick. You can't help out a loved one financially," Traub says. “You not only have to be very disciplined, but also very lucky."

FIRE 101

Just like saving for regular retirement, it's easier to start early when you have more time to build up money and assets and no children to support. It is also important to realize that your FIRE journey could take longer than others who had a leg-up with a higher-earning job. Here are the basic steps.

Save: FIRE adherents aim to put away a significant chunk of their income – at least half, often more. To do that, they slash their costs, typically aiming for the biggest expenses first – housing, food and transportation – and then moving onto smaller bills and more discretionary spending like the internet, cellphone and entertainment.

House-hacking is a common strategy, usually taking on roommates to defray shelter costs. FIRE followers avoid dining out and get creative on food costs. For instance, Dogen squirreled away free food his employer handed out when he was in his 20s. As for transportation, many rely on just one older, cheaper model. Others choose public transit or bicycle for commuting.

Earn: While they save, FIRE aspirants work to increase their income, either logging in overtime or taking on outside gig work such as freelance writing, consulting or driving for Uber or Lyft. Many of them blog about their journeys as another way to earn extra income.

Invest: They max out their 401(k)s and IRAs, which help lower their taxable income. Leftover money is poured into low-cost index funds. Others buy rental properties to create a passive income stream. The goal is to reach the 4% rule, or building up a large enough nest egg that you can safely withdraw 4% a year in retirement without touching the principal.

This article originally appeared on USA TODAY: Retire early: Can ordinary Americans find financial independence and stop work by 50?