Retiring early is looking more difficult. The new game plans.

The concept of saving to retire early, or FIRE, an acronym for “Financially Independent, Retire Early,” has evolved as a result, as adherents salt away more money and prepare for volatility in future markets.

“Pursuing FIRE has never been entirely smooth, and today’s economic landscape adds new challenges,” said Alexander Marek, senior wealth advisor at Arizona-based Ironwood Wealth Management.

The original tenets of the FIRE movement were to put away a large portion of income into savings and invest it. Over the years, investing in low-cost stock index funds that climbed steadily made it possible to retire early.

At first glance, now would seem to be a good time for the FIRE crowd. Stocks have soared since the 2007-2009 financial crisis and remain near record highs. Many would-be early retirees are sitting on big portfolios.

There are two potential flies in the ointment. Early retirees, who quit working years or even decades before they start collecting Social Security, are unusually vulnerable to sequence-of-return risk, the possibility that a market plunge early in their retirement will permanently impair their investment portfolio. If you are still working when stocks tumble, you can allow them to recover before you start selling them. Not so if you are retired. And a number of market experts are predicting that stocks will underperform for a decade or more as a result of their high valuations.

The second worry is inflation, a risk that disappeared for decades and returned with a vengeance after the Covid-19 pandemic. Price gains have slowed but they remain above prepandemic levels, and President Donald Trump is pushing for a low-interest policy for the Federal Reserve, which could reignite inflation. Bad inflation, like that of the 1970s, can quickly rip a hole in a retirement portfolio.

Kathleen McDowell, a money coach and founder of the blog “Live Richly,” says she has noticed people these days have a more tailored approach to FIRE.

It’s no longer about saving 50% to 70% of your income for decades, living in relative deprivation to stop working at 40, she said. The modern version looks more like saving 25% to 35% of income, investing consistently, then slowly pulling back on work as your financial base grows, she said.

“It’s still FIRE, just on your terms,” she said.

To make up for potentially challenging economic times ahead, FIRE advocates aim for emergency cash covering at least 12 months of expenses, rather than six, added Marek of Ironwood Wealth Management. “This larger reserve can allow people to weather market downturns without liquidating investments and provides peace of mind for unexpected expenses.”

FIRE followers are also pondering moving to cut spending, such as retiring abroad or choosing cheaper suburbs and regions to move to, said McDowell.

Scott Trench, a FIRE advocate who runs a YouTube channel called BiggerPockets Money, said healthcare costs have also been a big topic of conversation for FIRE enthusiasts, who typically retire long before they are eligible to go on Medicare.

“Healthcare is a FIRE killer for some, a delayer for others, and forces hard choices around self-insurance or taking insurance alternatives like health shares,” he said, referring to groups where members pool money to help cover each other’s medical bills.

As for work, people try for several income streams instead of one, according to McDowell. “Instead of one big side gig, people build several small streams—consulting, tutoring, digital products, rentals, based on the skills they’ve acquired over their full-time working life.”

When it comes to retiring, Trench says FIRE proponents now plan for a higher level of wealth before bowing out, to make up for higher inflation and potentially lower returns. While a few years ago, people of the FIRE community envisaged $1 million to $1.5 million invested was enough to retire, they now look to reach wealth closer to $2.5 million as a target.

More ambitious FIRE advocates aim for over $3 million in assets—a strategy some refer to as “Chubby FIRE” to live with higher purchasing power in retirement, while others look to retire once they have over $6 million in assets, an option called “Fat FIRE,” he said.

As for handling a bear market, FIRE proponents are considering investing in a more diversified portfolio, rather than the traditional passive index funds approach. That includes investments in European and Asian equities, which are considered less overvalued than U.S. stocks, as well as commodities including gold. And they are investing their cash in high-yield savings accounts.

Overall, FIRE enthusiasts aim to invest in a range of assets that aren’t correlated to each other to help mitigate risks of lower market values, said Marek. This allows for “flexibility to choose where to source withdrawals during downturns,” he said.

Besides riskier investments and a longer time horizon, Mindy Jensen, who runs “1,500 Days to Freedom,” a site about FIRE strategies, says people on the path to FIRE are now focused less on money, and more on work-life balance, incorporating flexibility into their current lives to make saving sustainable.

“They’re not trying to run away from their lives or build something great in the future but instead are focused on enjoying life now,” she said.

The concept of “Barista FIRE,” for instance, zeroes in on saving enough money to live off investments for most expenses, then taking a part-time job to cover the remaining costs.

Another option called “Coast FIRE” points to an income target that once invested can accrue to secure a healthy retirement. Individuals can then stop aggressively saving and take on a less-pressurized job instead.

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