How to Retire Early Even If You Have Kids

The Financial Independence Retire Early (FIRE) movement encourages followers to reach early retirement through a combination of frugal living, smart investments, and passive income. Here's how to meet that goal while raising children.

Jillian and Adam Johnsrud didn't start out rich. When they married, they had $55,000 in student loans and medical and credit card debt between them. Together, the couple never earned more than about $85,000. But Jillian grew up in a chaotic household where money was always tight, and she didn't want to live like that again. So, after the Johnsruds got married, they followed advice they got early on: Live on half your income. Within a couple of years, the couple paid off their debt and had $10,000 in the bank. Three years later, they had $100,000. Today, their net worth, including investments and rental property, totals about $900,000. The Johnsruds entered retirement about four years ago when Jillian was 32 and Adam was 37.

Now, when their five kids, ages 4 to 12, head off to school, the couple, who live in Montana, works out and eats lunch together. Before the kids get home, they might run errands, volunteer, or spend time on hobbies. The Johnsruds' retirement, or as Jillian, 36, likes to call it, their mini-retirement, was made possible by the FIRE—Financial Independence Retire Early—movement. Through a combination of frugal living, smart investments, aggressive saving, and passive income, FIRE followers seek an early retirement age, often in their 30s or 40s, to live a life that will never again require a steady paycheck.

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It isn't a massive movement. A recent Gallup poll says about one-half of one percent of all non-retirees are on the FIRE bandwagon or, at least, are saving more than half their income to retire early. But it is a vocal one with blogs, books, and plenty of evangelists. And, more than a decade after the 2008 financial crisis that sparked massive job losses, it's an appealing way of life to some parents who are looking for alternative ways to support their families that don't rely on an employer.

As a family, the Johnsruds live frugally. Jillian focuses on buying food at the grocery store that costs $1 per pound or less. To outfit her kids, she buys boxes of used clothes from friends. But they also splurge on experiences together. Last year, they went on a 10-week trip to 10 different national parks. This past summer, they bought a camper and spent four days a week camping. Renting their home on Airbnb while away helped cover much of their vacation costs.

The Johnsrud family
The Johnsrud family. Courtesy of Jillian Johnsrud

"We have the option to lean into whatever season we're in, especially with our kiddos, and just show up however we need to show up," says Jillian. "We can be a lot more courageous in our choices and in our boundaries. I say 'no' a lot more than I ever did."

The Financial Independence Retire Early lifestyle is a laudable goal, says Emily Boothroyd, a Connecticut-based certified financial planner, because it promotes a good habit: Saving for the future at a time when many aren't socking away enough for their golden years. In a recent Gallup poll, 46 percent of respondents said they were "largely unprepared" for retirement.

Emily Boothroyd

Your mindset, your lifestyle, and your desires at 60, 70, 80 are going to be very different from what they are when you're 30.

— Emily Boothroyd

But, says Boothroyd, parents also need to be mindful before wading into FIRE. Retiring early can come with obstacles. "I think people don't understand the changes they truly have to make on a daily basis to get there, and they also don't understand some of the risks involved," she says.

If you're looking for financial independence or to retire early, here are four steps to start your FIRE journey.

How to Retire Early

1. Comb through your expenses.

Elizabeth Williard Thames, the mom of two behind the Frugalwoods blog and author of Meet the Frugalwoods: Achieving Financial Independence Through Simple Living, recommends taking a hard look at every item you spend money on.

"If you have a partner, have a conversation about each thing," says Thames, who lives in Vermont with her family. "Is this bringing us value? Do we even remember these takeout meals? For me, it was really eye-opening."

At the same time, says Boothroyd, be realistic about how much you can cut. Living frugally now to retire early isn't for everyone. "They need to understand their lifestyle and what they can actually give up," she says.

2. Plan for emergencies.

For plenty of FIRE families, the 2008 financial crisis was a wake-up call. "We saw either ourselves or our family members who followed every rule and did the right thing lose their homes and their jobs and burn through all their savings," says Jillian Johnsrud.

Now another recession could be on the horizon and take a devastating toll on stock market investments that are intended to generate money needed for a decades-long retirement. But Boothroyd says major economic upheaval isn't the only potential emergency for FIRE families. A debilitating accident, chronic illness, or a child's special needs could throw a long-term savings plan off track.

"You can't bomb-proof anything, but I would overinflate my retirement expenses," says Boothroyd, who recommends families talk with a professional before they wade into FIRE. "Whatever my retirement expenses are, I would just add a 10 perfect buffer at least."

The Johnsrud family
The Johnsrud family. Courtesy of Jillian Johnsrud

3. Consider the lifestyle you want for yourself at 85.

Your plans to live on an organic farm in Costa Rica may be the dream now, but what about when you're 85? You may be happy to clean your own house now to save some cash, but do you really want to be scrubbing floors at 85?

"Your mindset, your lifestyle, and your desires at 60, 70, 80 are going to be very different from what they are when you're 30," says Boothroyd. "It's really important to allow room for you to back down on the austerity plan."

Liz Gendreau, who writes about financial freedom on her blog Chief Mom Officer, recommends regularly checking in on your progress toward your goals, making adjustments as needed. "My life has changed significantly at different points along the way," says the Connecticut mom of three whose husband has survived serious health issues. "That changes your goals. That changes your timelines. It might change your priorities."

4. Be patient

It took 13 years of scrimping, saving, and savvy investing before the Johnsruds became financially independent. It starts slow, says Jillian. During the first few years, she says, try to take pleasure in the immediate tangible benefits of your efforts such as a lower debt load or a small, but growing nest egg. Eventually, she says, you'll get there. And, for the Johnsruds, the hard work has been worth it.

"With our kids in our life, Adam and I have been given 40 hours a week back to really be able to lean into the things that matter most to us," she says. "Anything that was in our heart, that we wanted to give a go, we have no excuses not to."

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