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  • The movement known as FIRE, which stands for Financial Independence, Retire Early, is based on the idea that managing your money super effectively can help you achieve financial freedom sooner.
  • Two experts weigh in on how they saved more, cut their living expenses and increased their incomes to reach their early retirement goals.

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Saving enough money to retire comfortably later in life can seem like a daunting, unattainable goal.

But some are challenging themselves to reach that goal even earlier than usual.

The FIRE movement, which stands for Financial Independence, Retire Early, is based on the idea that managing your money super efficiently can help you reach financial freedom sooner.

In a session at CNBC’s Financial Advisor Summit, two experts shared the steps they took to become wealthier than they ever imagined.

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“The FIRE movement is built around the principle that the higher your savings percentage, the higher your savings percentage, the faster you can achieve financial independence,” says Grant Sabathier, author of Financial Freedom. “, who saved 1.25 million dollars by the age of 30.

Alex Trias, a former lawyer who now lives in Portugal, retired at age 42 thanks to long hours and aggressive savings, along with a financial boost from an inheritance and small real estate investments.

Both Sabathier and Trias offered advice on how others can follow in their financial footsteps and retire early if they want to join the movement or simply improve their financial outlook.

Today, the average savings rate in the US ranges from 2-5%, Sabatier noted.

That rate ensures that most Americans will never be able to retire, he said. For those who may retire in their 60s or 70s, they may have much less money than they think.

But by saving about 50% of your income, the average person can achieve financial independence in 10 years or less, Sabathier said.

Between 2010 and 2015, Sabatier saved up to 82% of his income and placed it in a common stock market index fund that he allowed to compound and grow.

“I now have a lot more money than I ever thought I would save and invest, and more money than I’ll ever need,” Sabatier said.

To achieve a high level of savings, you need to reduce your living expenses.

Sabathier did this by moving from a $1,700-a-month apartment to an $800-a-month apartment. He also chose to buy an $800 used car instead of a new one.

“I basically lived as a college kid in my mid-20s,” Sabatier said.

Trias took the idea further by moving to Portugal, where he was able to reduce his living expenses in Washington.

His annual property taxes dropped from about $11,000 to about $184.

What’s more, Trias said his health insurance costs are now 10% to 15% of what you would pay for an unsubsidized plan in the US.

Prescription costs are also significantly lower, with one drug that used to cost about $600 a month in the U.S. now takes just $60 out of his budget, he said.

Of course, it’s easier to save more when your income is higher.

Sabatier said he realized he needed at least $23,000 a year to live on. But when he was making more than $250,000 a year, the savings started to add up quickly, he said.

To reach that level of income, Sabatier added a number of side hustles, including helping a friend’s company move, building websites and running Google ad campaigns. He also started writing online and building an online business.

“It’s never been easier in history to start a side hustle because the barrier to entry is so low,” Sabatier said. “There are so many different ways you can make money online in ways that didn’t even exist 10 years ago.”

There are worse problems than waking up at 45 with $1 million in the bank.

Grant Sabatier

Author of the book “Financial Freedom”.

In contrast, Trias made managing his portfolio and working for himself his top priority in achieving his financial goals.

Both acknowledged that the FIRE lifestyle comes with sacrifices and risks.

Therefore, it’s important to check in with yourself every year to assess whether or not the trade-offs you’re making are worth it.

Not everyone sticks with the FIRE strategy until they can retire. Some do it for five or 10 years and then enjoy the freedom of having more money in the bank than they ever thought they would, Sabatier said.

“There are worse problems than waking up at 45 and having $1 million in the bank,” Sabatier said.