Work & Money

Six surprising lessons we can all learn from early retirement gurus

Cut costs to live large.

Cut costs to live large

(Courtesy of Kristy Shen and Bryce Leung, Millennial Revolution, pictured in Santorini)

This article was originally published July 6, 2018.

In the age of out-of-control housing costs, stagnant wages, marathon work hours and precarious jobs, it's hard to keep one's head above water, let alone get ahead.

But a growing online movement may have stumbled upon a solution. The early retirement community is also known as FIRE, for "financial independence and retire early," or Mustachianism, after the uber-popular blogger Mr. Money Mustache (aka Colorado-based Canadian Pete Adeney). It's a personal finance model based on the 1992 bestseller Your Money or Your Life. And it's not for the faint of heart.

The formula goes like this: radically reduce your living expenses, asking yourself questions like: "are those $200 shoes you'll wear three times really worth a twelve-hour day chained to your cubicle"? Next, ditch luxuries like cars, cable bills, Starbucks addictions and even smartphones (gasp!), and eliminate your debt. Then, save a good 60% of your income, for a decade or so, and invest wisely. When you can live off your investment income, kiss the stressful work world goodbye and pursue passion projects, travel the world and volunteer for causes you care about.

To someone like me, living in Vancouver — where the median total income for one-person households is $38,000 a year and the average one-bedroom apartment rents for a whopping $2090 a month — this strategy initially looked daunting, if not downright insane.

But despite my skepticism, I have successfully used its principles to pursue a freelance career and work way, way less. I'm debt-free and don't own a home or a car. I bike, cook and enjoy free hobbies like hiking. I haven't saved much money, it's true (stay tuned?). But my lifestyle is already infinitely better.

Here are six surprising lessons I've learned from early retirement gurus like Mr. Money Mustache, Early Retirement Extreme'sJacob Lund Fisker and Kristy Shen and Bryce Leung of Millennial Revolution.

1. You need less money than you think

Pretty early on in this process, I made a shocking discovery: the more time I have, the less money I need. If I don't work at an office, I don't need a fancy wardrobe, a transit pass or daily caffeine, sugar and takeout fixes to keep my spirits up. Add to that: I have time and energy to meet my needs in creative ways, like borrowing, bartering and sharing. Another awesome discovery? Designer handbags don't make me any happier, but waking up every day without an alarm sure does. It's a shift in perspective that Mr. Money Mustache has written about extensively. "The first thing is to set your standards correctly: as long as you get enough food and shelter to remain energetic and healthy, you are not experiencing poverty or deprivation," he tells CBC Life. "Secondly, we do have a form of poverty even in rich countries: a poverty of free time and physical exercise, and too much stress. Reducing your spending on optional items like car upgrades and restaurants and gasoline can give you back free time and reduce stress, which allows you to build up your life in more important areas, like friendships and mental and physical health."

2. The more skills you have, the less you spend

Learning skills to make the frugal life work takes time, but small changes do pay off. Early Retirement Extreme author Jacob Lund Fisker says teaching yourself to cook a few delicious dishes is a great place to start. (He has a number of other suggestions in the sidebar "21 Day Makeover" on his site.) "It's a learning process that takes years for everybody during which time one becomes more and more skilled at solving problems without spending money," Fisker stresses. "The more you know, the less you need to spend."

3. You don't have to spend money to have a social life

One of the most frequent criticisms of the early retirement lifestyle is that frugality necessitates social isolation. But I've found most friends are thrilled to be invited for a home-cooked meal — not to mention a seaside barbeque, bike ride or forest walk. "The best substitute for a restaurant is any nearby beautiful public park or beach or natural area," Mr. Money Mustache says. "So if you take leadership as the event planner in your own social circle, you can start to shift the gatherings away from expensive restaurants and towards outdoor gatherings where people bring their own food and drink, and get there by bike. I've been doing this since I was a teenager, with great results and many great memories." Millennial Revolution's Bryce Leung agrees: "You don't have to spend money to be social!" Plus, as Fisker points out, getting stuck in the earn/buy cycle often means you work long hours and have no time to see your friends anyway.

4. Frugality does not rule out family

Another frequently raised objection to early retirement is that it's not feasible if you have children. But Mr. Money Mustache, who's a father, says this just isn't so. "Kids cost very little to keep around," he says. "They only need a few sandwiches, a cozy bed, and lots of attention. It's the optional activities that we pack into their lives that rack up the big bills: private schools and lessons, vacations to distant places, and the transportation costs of shuttling them around between all of these things. It's all optional. You can scale it all way back and focus your living in a much smaller, bikeable radius and your kids will still prosper. And the lower costs will allow you to work much less and be a better, more attentive parent because of it."

5. You can help save the planet

When dire media reports threaten to overwhelm, it's comforting to know that you're making a contribution to the greater good, however modest. "The most obvious way [early retirement helps the planet] is that it gets the fortunate people of rich countries like Canada and the US to consume less fossil fuel and fewer natural resources," Mr. Money Mustache explains. "Every dollar you spend leaves a corresponding hole in the Earth somewhere." And that's not all, he says. "Even more important, I find that getting a comfortable nest egg can make us better people. Once you realize you no longer need to work for money, you are forced to re-evaluate why you are doing it. At this point, you might make a point of prioritizing work that benefits other people, instead of taking shortcuts to pad your own pocket."

6. Early retirement is about abundance, not deprivation

The Toronto couple behind Millennial Revolution,  Kristy Shen and Bryce Leung, have been retired since 2015, travelling the world, living on less than $40,000 a year from investment income. Reached on FaceTime in Europe, I question them whether the early retirement budget leads to deprivation. "We're in Germany right now and we're just going to fly to Singapore and lie on a beach," Leung says with a laugh. "Does that sound like deprivation to you?" He adds: "People think that spending less money means having less of a good time. No! We're spending less money and having a better time. You break the system when you do this."

Tara Henley is a Vancouver-based writer and broadcaster. Her work has appeared on CBC Radio, and in the L.A. Times, the Guardian, the Walrus and the Globe and Mail. She is a books columnist for the Toronto Star.