How the Pandemic Forged New FIRE Followers, With a Difference

Newcomers to the “financial independence, retire early” movement, if fortunate enough to stay employed in 2020, were inspired to clean financial house — albeit less aggressively than early adherents.

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On March 16, 2020, as coronavirus panic gripped Wall Street and markets took a historic plunge, Traci Williams, a psychologist in her 30s, made her first-ever stock purchase.

“A friend of mine told me that stocks were going on sale,” she recalled. “I didn’t know anything about the stock market, but I did have a Robinhood account that I never used. So I bought one share of Disney.” Since then, its price has nearly doubled.

That day marked the beginning of a drastic financial overhaul for Dr. Williams, an immigrant from Trinidad and Tobago who is now 37 and works at a hospital in Atlanta.

“The pandemic made me realize how fragile our security really is,” she said. “Some of my patients were like, ‘Oh, we’re at our beach house and we’re fine.’ And others were trying to figure out how to stay in their home and feed their children. Seeing that spectrum really encouraged me to get my own financial house in order.”

When she looked for advice about saving and investing online, she stumbled across websites and discussion groups about FIRE (an acronym for “financial independence, retire early”) and its more laid-back cousin, FI (“financial independence”). Both philosophies involve the goal of hitting a FIRE or FI number — the amount of money invested that will theoretically generate enough income through returns to support you for the rest of your life. In most cases, the number is calculated using some version of the 4 percent rule, a popular formula that guides retirees to withdraw no more than 4 percent of their total savings each year so that they don’t outlive their money.

Before the pandemic, Dr. Williams had never considered the possibility of retiring early; she had never even looked at her retirement savings account. “When I finally checked it, I was like, ‘Oh, my goodness, I actually have money in here!'” she said.

A less exciting discovery: $30,000 in credit-card and car debt that she had never confronted, and is working to pay off completely by next spring. Now, if she sticks to her financial plan, she’ll hit her FI number (between $1 million and $1.5 million, she estimates) by her 50th birthday.

“I love being a psychologist, so I don’t want to stop working then,” she said. “But when I reach a point where I won’t need a paycheck to support myself and my son, that will give me more options.”

This mind-set is a stark departure from the previous FIRE archetype, which fostered a competitive environment of frugality in order to retire as young as possible. Now, most newcomers to the movement are less motivated by quitting and more interested in having choices — without sacrificing too many of life’s pleasures in the meantime. This objective also makes the movement more accessible; early retirement is just not possible for most Americans.

“I’m not about to quit my job,” said Rashad Muhammad, 41, a school principal in Fort Worth who recently started his own YouTube channel about financial independence, Wealth Building Educator. “I love what I do. But at the same time, I want to provide flexibility for myself to be able to quit when I am ready, so that I can enjoy my retirement.

“I don’t want to be the guy that works until I’m 65 years old because I have to, and then I’m six feet under two years later. And I think a lot of people relate to that now more than ever, since they’ve seen how precarious life can be.”

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Rashad Muhammad, a 41-year-old school principal, started a YouTube channel on financial independence.Credit…Cooper Neill for The New York Times

The pandemic also showed people that they couldn’t take their employment for granted.

“Although my job was secure, I realized that I couldn’t necessarily depend on that to always be the case, and I needed to double down on paying off my loans and optimizing my investments,” said Christal Pearson, a 32-year-old from Hasbrouck Heights, N.J., who works in talent acquisition for a tech company.

“Because everything shut down during the pandemic,” she continued, “I had a lot more time to sit and think about what I wanted my life to look like, and how I could have more control.” For her, that meant shedding the last $57,000 of her student loans, which she accomplished by living off 50 percent of her income.

For others, gaining control meant affording a much-needed break.

“I think a lot more people would have stepped back from work during the pandemic if they had the means to do so, especially if they had kids stuck at home or didn’t feel safe at their jobs,” said Jamila Souffrant, 38, who runs Journey to Launch, a website and podcast about financial independence.

“Financial independence is a privileged endeavor, and it’s not realistic for most people — they’ve got mouths to feed, and they might not even be making a living wage,” she added. “But learning some financial basics can give you a little more flexibility, and that flexibility is more appealing than ever.”

Also more appealing than ever is the stock market, which made a quick comeback after its early pandemic dive and flourished even as the economy continued to founder. Suddenly, investing your money seemed like the smartest (and safest) thing to do with it, even if you didn’t have much. And with the rising popularity of retail investment platforms like Robinhood, many novice investors got curious.

“A lot of people started reaching out to ask about cryptocurrency, and I was like, ‘OK, we can talk about that, but first let’s talk about index funds,'” Ms. Souffrant said. “I think you should have the basics down first before you get into things like crypto. Do you know what a Roth I.R.A. is? Are you investing your 401(k)?”

For Kayla Marshall, a 28-year-old finance manager for a private university in Florida, the past year brought a new set of daunting responsibilities when she moved out of her mother’s house and bought her first home in Brevard County, Fla.

“I needed to feel like I was going to be OK if everything fell out from underneath me,” Ms. Marshall said. As a single mother of a 5-year-old, she also had a specific set of financial needs that often weren’t addressed in many traditional personal finance blogs or books. She finally got some answers by joining Facebook groups with women who were discussing FIRE and financial independence.

A year later, she may not be on track to retire early, but she’s in better financial shape than ever before.

“I’ve learned to find the pleasures in life more modestly,” she said. “I still love to travel, but now we go camping instead of spending money on a hotel room or an amusement park. I’ve realized that my son is just as happy going for a walk on the beach as he is in Disney World.” Paring back on trips and other discretionary expenses has allowed her to pay off about $10,000 of debt since 2020.

Financial preparedness didn’t inoculate anyone completely from the trials of the pandemic — but it certainly helped. Jess Fickett, 34, who lives in Denver and co-runs the personal finance website Bitches Get Riches, was laid off from her book publishing job in mid-2020.

“I had money banked and invested, as well as multiple income streams, so I knew I would be OK,” she said. “I was able to strategize my next move and look for positions I actually wanted, and not desperately run down to Kroger’s and be like, ‘I need a job!'”

Even better, her savings allowed her to help others. Ms. Fickett lent money to a friend whose business was struggling, and invited her brother to move in with her when he needed a place to live.

“It’s been a huge privilege to be able to support people in my family and my community without putting undue financial stress on myself,” she said. “And it doesn’t matter if it sets me back a little bit in hitting my FIRE number. It’s still an incredibly rich place to be.”

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