The FIRE (financial independence, retire early) movement may have taken a few backward steps amid inflation. With the costs of everything (fast food included) rising steadily in the past two years, it can feel like retirement is more of a goal that seems to be inching just outside of striking distance.

However, if you’ve stayed ahead in your wealth-creation journey despite all the macro headwinds and pressures, then you may have what it takes to follow through with your early retirement. Indeed, it’s no easy feat, but if the numbers make sense, you may have what it takes to hang up the skates many decades earlier than most!

I came across an intriguing post on the ChubbyFIRE subreddit about a Millennial couple in their 30s who may have what it takes to retire with no debt. They also happen to have unrealized gains on an investment portfolio and a house that’s within striking distance of being paid off.

Undoubtedly, this couple has many options. And while Chubby FIRE, which is just one notch below Fat FIRE (the most extravagant of all early retirements), may be achievable, it’s notable that many prospective early retirees in their 30s may overestimate their nest egg’s ability to support them through their golden years. Indeed, if you’re retiring in your 30s, you haven’t even reached midlife yet!

Also, many of today’s young people can expect to live well into their 90s. So, this begs the question: just how much does one need to embrace a chubby FIRE without paving the way for second thoughts at some point down the road?

Key Points About This Article

• A couple in their 30s may have what it takes to comfortably retire early, but should they?
• Easing into moderate FIRE can make more sense than diving straight into chubby or fat FIRE.

A Big Nest Egg in Your 30s Needs to Last for Decades.

This is a challenging question when you consider the many black swans that can (and most likely will) swim by in the coming decades. Nobody expected a pandemic to hit in 2020 or the inflation spike that would ensue. Additionally, medical emergencies and other unforeseen financial fiascos can happen out of the blue.

The good news for the couple in the Reddit post is that they have the option to pay off their mortgage sooner rather than later. And with a paid-off home and no rent to factor into the monthly budget, this couple can certainly make a comfortable early retirement happen with all the perks like travel. That said, the couple in question also has a toddler. And, as you may know, kids can really take a toll on one’s budget. Raising a child from birth to adulthood can cost well north of $300,000.

Of course, the figure will depend in large part on where you live. If you’re in Manhattan, that number would probably be markedly higher than if you lived in a rural part of West Virginia. In any case, the couple may need to budget accordingly for their child’s education as well, which could lead to far greater expenses than initially realized.

Can you imagine the impact if the child would want to attend medical school upon graduating if the pace of tuition increases continues on? That could be enough to derail a retirement and send one or both parents back to work in their 50s. Not ideal. Further, if more children are on the way, the couple would probably need to revisit the drawing board and consider whether Chubby FIRE is the best “flavor” of early retirement for them.

Here’s What I’d Do If I Were in the Reddit Couples’ Incredibly Fortunate Situation

As always, the couple should consult a professional financial planner rather than Reddit. However, if I had to chime in, I would personally not jump off the deep end with anything more than moderate FIRE, at least to start.

Moderate FIRE entails annual income in the ballpark of $32,000 to $70,000, about enough for the occasional splurge, night out, and even the odd vacation, but perhaps not frequent, five-star cruises to exotic locations.

By downgrading one’s retirement lifestyle a notch, there will be more financial flexibility for those unforeseen costs that aren’t yet on the couple’s radar. Additionally, there will be more extra cash to gradually chip away at the mortgage while, most importantly, not having to liquidate one’s investment portfolio.

Sure, you may never go broke taking a profit. But if you’re cashing out on the market entirely, you could run the risk of kicking yourself as America continues to grow as we advance further into the artificial intelligence revolution, one that could entail greater gains for stocks over the next decade.

As always, it’s impossible to know what’s ahead in markets. But if you’ve got options, as this couple in their 30s has, you should seek to exercise them.

Perhaps selling out of all stocks to pay off the mortgage and fund a somewhat more lavish retirement is too extreme. The optimal move may lie somewhere in the middle ground (moderate FIRE, keeping the stock portfolio, and chipping away at what remains of the mortgage), in my humble opinion. Of course, the couple will need to weigh moderate FIRE with staying in the workforce a bit longer if they’re keen on something more opulent.

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