From the outside, the FIRE community appears to be full of young people — millennials and iGens — who are striving to reach financial independence and retire in their 30s and 40s. But when you spend more time *inside* the FIRE community, you realize how diverse it is! People from all walks of life, all ages and backgrounds, helping and supporting one another to live the best financial life possible!
Today’s post is from LateStarterFIRE, who talks about how she discovered the FIRE movement, felt like an outsider at first, quickly became an insider, and now is a community leader! She proves that you can start your journey to Financial Independence at any age, and although the benefit of *time* may not be strong, there are several other advantages to focus on.
- 1 Starting Late on the Path to Financial Independence
- 2 Am I Too Late for FIRE?
- 3 A Community Within a Community
- 4 Time Is Not on Our Side
- 5 Time Can Be on Our Side
- 6 We Are Wiser
- 7 Been There and Done That
- 8 We Have a Higher Income
- 9 Start From Wherever You Are
- 10 Define Your Priorities and Accept Your Reality
- 11 So How Do We Get to Our Destination of FIRE With a Restricted Timeline?
- 12 Be Kind to Yourself
- 13 Final Thoughts for Late Starters on the Path to Financial Independence
Starting Late on the Path to Financial Independence
I woke up one morning in a cold sweat.
To a single recurring thought — will I be able to retire at 60, 65, or will I have to work until 70 and beyond?
It is 2018, the year I turn 47. The thought of working another 18 years or more is unbearable. My job was highly stressful and demanding at the time, and I was experiencing burnout.
And so began my path to Financial Independence (FI).
I listened to my first ever podcast — The Pineapple Project Season 1 — and learned about the basics of personal finance — emergency fund, reducing debt, investing. A friend gave me a copy of Scott Pape’s The Barefoot Investor. I devoured it in one afternoon. This was personal finance in its simplest form.
I then stumbled upon FIRE blogs and podcasts while researching how much money I needed to retire. I started reading about safe withdrawal rates, the 4% rule, rule of 72, saving rates, net worth, geoarbitrage, index funds etc — it is a whole new exciting language. A foreign language, to be honest.
But it seemed that everyone was in their 20s and 30s — heck, some have already achieved FIRE before 40. What an amazing achievement! It never even occurred to me that it was possible to retire so early in life.
Am I Too Late for FIRE?
I am too old, I think — who am I kidding? I am starting at 47 when they’ve retired in their 30s. But early retirement is relative. I may have missed the boat of retiring early at say, 40 but if I can retire at 55 or 60, it is still earlier than the traditional retirement age of 65 (or 67 in Australia when you are entitled to receive a Government Aged Pension).
And let’s face it, in my late 40s, traditional retirement is looming whether I am prepared for it or not. We also may not have control over when we retire. That decision may be made by our bosses or our ill health or the state of the economy. Look at what is happening now in the current pandemic crisis. I know plenty of people whose companies do not have enough work right now, and they’ve been asked to take annual leave or a pay cut. Or worse, they’ve lost their jobs.
So really, what did I have to lose? I decided I should just start implementing these strategies and see where that leads me. If the young ones can retire in 10 years, then maybe I can, too. Being financially independent at any age is surely a good thing and is worthwhile pursuing at any age.
A Community Within a Community
Because I couldn’t find anyone else who started late on the financial independence journey, I started writing about my own journey, hoping to add an older voice to the FIRE community. I also wanted to be held accountable, as I knew I would be tempted to give up when the going got tough.
And since I started writing at Latestarterfire, I have discovered a whole community of late starters within the FIRE community. Maybe I was bad at research or my googling skills were not up to scratch, but these others were not visible to me at the beginning.
I wanted to share their stories too, and the Late Starter to FI series was born. It is time for us Late Starters to be visible and heard!
I love learning from others’ stories — these are real people who are also grappling with the same goal and starting later than usual.
We have diverse personal stories — single, married, divorced, gay, black, white, Asian, lots of children, no children, sandwich generation and more. We reside in Australia, US, UK, South Africa, Canada, New Zealand; living in big cities, country towns and villages.
Some of us are big earners while others earn an average income.
Some of us are extra tough, having raised children on a single income or having recovered from a life of addiction. You can’t help but be inspired by our stories and our determination to make it to financial independence.
Young ones too can learn a lot from our stories. You can see what happens years later if you give in to lifestyle inflation, spend without mindfulness, or rack up debt while funding your lifestyle. And what happens when you don’t pay attention to your finances, cruise along, and arrive at a crisis point later in life.
You also learn that life is unpredictable, that sh*t happens, that passions and hobbies can change, that what is important to you right now may not be as important decades later.
And that we can all cope better if we don’t also have to cope with financial stresses at the same time.
Time Is Not on Our Side
The principles required to achieve financial independence are the same whether you are in your 20s or 50s — spend less, save more and invest the difference. There just isn’t a magic bullet.
But for us late starters, there is one refrain in our head, on repeat — we don’t have enough time!
We don’t have enough time for compound interest to work its magic. We lament the lost years — why didn’t I start investing when I was a teenager?
And we are petrified of taking the wrong step forward — we don’t have time to make investing mistakes because there is not enough time to correct the mistakes and then change course at this late stage (unlike the youngsters who have decades to ride out a bad investment or a bear market).
Unfortunately, we cannot change this one universal challenge – it is true that we have a limited timeline to achieve Financial Independence. So let’s embrace it and change the narrative.
And let this shortened time frame be a motivating factor for us — get the fire under our backsides and propel us to do SOMETHING. Finally.
Time Can Be on Our Side
This lack of time can work to our advantage. Seriously.
Compared to the youngsters, we are a lot closer to the age when we can access our retirement accounts. For the young ones, it could be 20 – 30 years before they can access them. For us, it may be a mere 5 – 10 years away.
Therefore, we don’t need as much savings to bridge the gap from when we retire to when we can access our retirement accounts. We are saving for maybe 5-10 years as opposed to 30 years for those planning to retire at 30. Is that not a comforting thought?
And if we are lucky, we may also be able to access pensions from work or the government (Social Security) sooner rather than having that money be decades away.
The young ones are always worried about whether government-funded pensions will be available by the time they reach pension age. They are right to worry, as governments are increasingly stretched for resources to pay for health care and aged care as the population ages.
But since late starters are closer to pension age, our risk that the government may change the rules is not as high. The government may push it out by a year or two, and you would hope that it would be done progressively and that would-be pensioners given lots of notice. We are, after all, a major voting block.
I’m not advocating that we rely on a government pension, but it is comforting to know that it is there as a safety net should our retirement savings not be sufficient.
We Are Wiser
Sure, our finances may be a mess now. We may wish we knew about FIRE in our teens. But who is to say that we would have listened and acted on that knowledge at that stage of our lives?
Now, after we’ve lived our lives a little, made some mistakes, faced adversity and challenges such as divorce, bankruptcy, crippling debt, substance abuse and addiction, failed businesses, burnout, ill health, job losses and more, we are READY to commit to this next phase of our lives.
This is where I think we have the biggest advantage over the youngsters.
We have already done the hard stuff — decided to have or not have children, start a business or not, climb the career ladder or not, stay with our partner or not, go back to university or not, change careers or not, etc. We’ve tried living our lives in different ways and survived.
The youngsters are still figuring all this out as they debate how much they need to save to live their lives fully for the next 60 years. Will they need to factor in marriage? Children? Failed relationships? Poor health? More education? Home purchase?
We should know ourselves pretty well by now — our strengths and weaknesses; what rocks our boat and what doesn’t. Surely we are wiser and more mature than we were in our 20s … and are confident in our decisions moving forward.
Been There and Done That
We have lived the high life and experienced the easy access to money via credit cards and home mortgages. We know what lifestyle inflation is, how easy it is to buy a new car every five years, to upgrade to a bigger home, to enjoy fine dining and have exorbitant overseas holidays.
None of these luxuries are inherently right or wrong, but if we can’t afford them or if we need extra cash to save for our retirement, then hey, those are the expenses we can eliminate or reduce almost immediately.
We have filled our houses with stuff that we don’t need so there is no urgency to buy any more gadgets (kitchen appliances are my downfall!). Indeed, we may be able to sell this stuff for some extra cash … and use this cash to pay off debt or invest in our retirement account or build that emergency fund.
We Have a Higher Income
The good news is that as late starters in our 40s and 50s, we are most likely earning a higher income than in our 20s. We are good at what we do, having had the time to build up our skills over the years.
Increasing our income may or may not be feasible at this stage of our lives. Some of us are burned out from our day jobs and the thought of side hustles is enough to crush us. Some of us are recovering from burnout and do not want extra responsibilities in exchange for a bigger paycheck.
It is a matter of balance — our mental health is more important than chasing after every dollar.
Start From Wherever You Are
Everyone’s situation is unique. We don’t all start at the same place. Our life circumstances may be different and how we got here may or may not be similar to others’ paths.
But as late starters, we are not starting from zero.
So start by assessing your own financial position: your net worth.
Net worth = assets minus liabilities
Make a list of ALL your assets and liabilities. Most of us have a vague idea but until we see the stark numbers and know our financial situation, we can’t formulate a plan of attack.
Your assets include savings in bank accounts, retirement accounts, share portfolio outside of retirement accounts, the equity in your home and any investment properties. (You can choose to exclude your home later as you track your net worth but start by including it here so you have the whole picture)
Next, look at your liabilities or debts. Who do you owe money to and how much? What is the interest rate? List them all. It is time we are honest with ourselves and lift our heads out of the sandpit we’ve dug ourselves into.
Did you come up with a negative or positive number? The bigger the positive number, the stronger your financial health. Now you know the baseline number, it’s time to work at increasing your assets and reducing your liabilities.
But before you do that, you need to …
Define Your Priorities and Accept Your Reality
Money isn’t everything. We can live on a lot or very little.
It all depends on what you want out of the next chapter of your life, what brings meaning and purpose, what you value.
Why do you want to achieve financial independence? Knowing your “WHYs” will make it easier to move forward when you have to make the hard decisions.
Define your priorities and work toward them.
Did you always have a dream of what your life would look like in retirement? Sipping cocktails on a beach, admiring the sunset on an exotic island every day, perhaps?
Embarking on the path to financial independence forces you to define your values and assess what is truly important to you. You may be surprised that you no longer long for cocktails on a beach.
Instead, you may long to spend more time with your partner, children, grandchildren or friends. You may want a home to call your own. Or you want to volunteer and spend time on projects that positively impact your local community.
But if you do still want that sunset and think it is out of your grasp after looking at your net worth … you can do something about it.
You can set up a fund now to save for that one incredible holiday, that sunset in the Caribbean.
Or adjust your dream — maybe a sunset off Hamilton Island is more achievable than a holiday in the Caribbean (speaking as an Australian).
Or upon retirement, you can move to a lower cost of living country with lots of tropical beaches.
You always have options once you define your priorities.
So How Do We Get to Our Destination of FIRE With a Restricted Timeline?
By being creative, by thinking outside the box.
And working with what you have.
The formula or framework to achieve FI doesn’t change: We increase our net worth by increasing our assets and decreasing our liabilities; we do this by spending less, saving more and investing the difference.
There isn’t one strategy that will fit everyone’s circumstances. Look at your own circumstances and learn from others.
The late starters who are featured in the Late Starter to FI series share a variety of their strategies.
- Pay down debt, particularly consumer debts
- Reduce spending – every $ adds up – review every expense including insurances, subscriptions, utilities, bank fees
- Build up an emergency fund
- Increase contribution to retirement accounts to the maximum allowed
- Switch to low-cost index funds inside retirement accounts
- Start investing in low-cost broad market index funds, exchange traded funds (ETFs) or listed investment companies (LIC) outside retirement accounts
- Unlock equity from your house and invest in rental properties
- Unlock equity from your house and invest in shares
- Geo arbitrage to a lower cost of living area, even within your own city
- Renovate home to be able to lease rooms on AirBnB
- Increase rental properties portfolio
- Explore other streams of income
Our anxiety and fear can lead to us feeling paralyzed and too afraid to proceed OR to rush out and attempt everything at once.
Focus on what is important to you and what helps you sleep better at night.
Start by widening the gap between your income and expenses. You need every available dollar to work for you — whether it is paying down debt or investing in an index fund or getting the down payment on that rental property — whatever is your priority.
Be Kind to Yourself
We have a lifetime of bad money habits to overcome. And the consequences of bad financial decisions to reverse.
They will not disappear overnight.
Forgive yourself for past mistakes, missteps along the way. Let the past be the past and learn from them. Be confident that you will not repeat the same mistakes. You are wiser and more mature now.
Embrace your new future and the time ahead. Learn from the enthusiasm and laser-like focus of the young ones. Learn from other late starters on the same journey, such as Baby Boomer Super Saver, Fiafter40, Project Palm Tree and all the people featured in the Late Starter to FI series.
This may sound counterintuitive … but be patient!
As you implement one strategy after another, things will fall into place. You will breathe easier as debt is lifted from your shoulders. And feel lighter as you see your net worth increase.
You will achieve clarity and peace of mind as you redefine what is important to you and see your money working for you, toward your priorities.
Final Thoughts for Late Starters on the Path to Financial Independence
There is HOPE for us, late starters!
We may start on this FI journey later than others. But with our advantages of higher income, wisdom, maturity, and the ability to face adversity and challenges — coupled with a lower amount to save for — we will surely arrive at our final destination of FIRE.
And know that our lives up to this point have not been wasted. We just haven’t managed our finances very well.
What better time to start than now?
LateStarterFIRE began her FIRE journey at age 47. She writes about her wins and struggles as a late starter on her blog, LateStarterFIRE. She is passionate about sharing other late starters’ stories to encourage everyone that it is never too late to start and to learn from one another.
*Clocks pic up top by Alexander Schimmeck
Joel is a 35 y/o Aussie living in Los Angeles and the guy behind 5amjoel.com. He loves waking up early, finding ways to be more efficient with time and money, and sharing what he learns with others. Rise Early | Retire Early!