- Gen Z and young millennials may have a bad reputation for wasting money on avocado toasts, designer bags and luxury holidays—but there’s a small but growing pool of young people saving away and hoping to retire by 40. They’re part of the FIRE movement.
It’s no secret that Gen Z and young millennials have fallen out of love with the idea of hustling five days a week until they’re in their late 60s. Now, thousands are sharing how they’re living frugally to be able to quit their jobs and retire decades early.
“I eat a 50p ($0.65) breakfast every day so I can retire by 40,” Mia McGrath shares what she spends in a day with her 106,000 TikTok followers—adding that usually, she starts the day with humble eggs.
The Gen Z influencer who works full-time by day in account management, outlines how she opts out of expensive habits like grabbing coffee to go and monthly manicures, favoring DIYing as much as possible to bring costs down.
While many white-collar workers brush off forking out daily for sandwiches or salads as an associated cost of working in an office, as “a financially responsible 24-year-old who is trying to spend as little as possible”, McGrath sticks to leftovers instead. “You won’t see me buying a £15 ($19.40) salad,” she adds.
McGrath is part of the FIRE movement—that is, “financially independent, retire early.”
Essentially, by being disciplined with her dictionary spending in her 20s and 30s, the Gen Zer can max out the amount of money she invests each month and benefit early from compounding interest.
“My goal is to soft retire, and that’s to have the freedom to support myself while working less,” McGrath explains in another video, while adding that she’s “on a journey to retiring early”.
“It means hustling extra hard in my 20s and cutting back on things like daily coffees and getting my nails done, but it also means that at 45 I won’t have to ask my boss for a random Wednesday off.”
Already, McGrath saved £70,000 ($90,000)—and she says her “FIRE number,” the amount she needs to save to live off her passive incomes is £1.25 million.
Gen Z’s FIRE movement
FIRE isn’t a new concept, with many pointing to the 1992 book Your Money or Your Life as the inspiration behind the trend. But as young people increasingly struggle to get by, it’s making them want to take control of their finances and fuelling renewed interest in the FIRE movement.
Previous research from Credit Karma shows that the majority of Gen Z describe traditional 9-to-5’s as “soul-sucking”—and they’re embracing a penny-pinching lifestyle to turn that dream of escaping the conventional grind into a reality.
For the majority (43%), this looks like cutting back on nonessential spending like shopping and dining out. Over a third of respondents said they’d even work odd jobs to make ends meet—otherwise known as polyworking.
Although various attempts have been made to raise the full retirement age to 70, another study highlights that less than 2% of Gen Z and millennials predict retiring after their 70th birthday.
“I tell people I want to retire at 40, they laugh, but I have a plan,” a young New Zealander who goes by @girlsthatinvest echoes on TikTok, adding that she already has over $1 million invested and plans to live off $50,000 a year from the interest.
“I know not everyone is lucky enough as me to have begun investing so young, but the truth is, you can start now, and you do not have to wait till 65 to retire. You can get there at 50, at 45—maybe even sooner. But it really pays to get started.”
“At 25, I was earning $83,000 and managed to invest $12,326,” shared another TikToker. Using the #FireMovement hashtag—which now boasts over 6,000 posts—she detailed how she grew her investments to an impressive $350,000 by age 29.
While most are sharing how they plan to retire early, one content creator in the U.S. goes one step further and says she’s already done it at just 25 years old. According to her TikTok channel and coaching website, @cherrytung ditched the rat race in 2021 and is now living off various passive incomes. Nearly 50,000 people are taking her word for it and following the investment advice on her page.
There’s no harm in early retirement planning
Indeed, it may eventually turn out that Gen Z’s early retirement plans are unrealistic. After all, many boomers are being forced to unretire after realizing that the cost of living is now much higher than they’d planned for. But it’s never too soon to start retirement planning.
The renowned financial expert Suze Orman previously echoed that Gen Z and millennials could indeed retire as millionaires if they make the most of compound growth.
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Depositing a monthly investment of $100 into an account with a 12% yield would net someone approximately $1,188,342 in 40 years’ time. But the longer you delay your investment journey, the lower the accumulated amount of money will be.
A millennial who started their investment journey just five years later, at age 30, would accumulate around $649,626 by age 65.
While many analysts peg the historical annual rate of return after inflation to be 6-7%, Orman says a 12% annual average rate of return, which would make a Gen Z worker a millionaire before the age of retirement, is a conservative percentage. She estimates that with smart investing you could get up to a 25% rate of return on your money.
“You want to play and have fun, that’s on you later on in life when you can’t pay your bills,” she warned. “If there’s anything the younger generation needs to understand, it’s that the key ingredient to any financial freedom recipe is compounding.”
Are you aggressively saving so that you can retire early? Fortune wants to hear from you: orianna.royle@fortune.com
