Bob Lai fills up at a local gas station in Surrey, B.C., on Friday. Mr. Lai says rising costs have put pressure on his plan to retire by 2030.Jimmy Jeong/The Globe and Mail
When Bob Lai, who’s now 43, began pursuing early retirement in 2011, his goal was clear: save steadily, invest consistently and live below his means. Inspired by the Financial Independence, Retire Early (FIRE) movement and its emphasis on aggressive saving and investing, the Vancouver-based product manager in the telecommunications sector spent the following years building the financial foundation to retire alongside his wife by 2030.
But over time, cost-of-living increases have put pressure on this plan. “We have two young kids, and groceries keep going up every year,” says Lai. “Gas prices too. We’re a one-car household, but we still spent over $300 on gas last month, which feels mind-boggling.”
Even as a family who have long focused on frugality, those costs are harder to ignore. Mr. Lai says they remain in “a stable financial position,” but he adds that rising expenses have made him more conscious of how much money he’ll realistically need in retirement in the future. “It definitely adds pressure and makes you think about what retirement costs could look like 10 or 20 years from now,” he said.
Opinion: Home ownership is out of reach for most Gen Zs, but there’s a better way to build wealth
That emphasis on long-term planning is central to the FIRE movement, which is built around disciplined saving and investing aimed at retiring well before the traditional age of 65. It has gained momentum in recent years, particularly among millennials and Gen Z, who are drawn to its promise of financial independence and greater control over their time.
But the strategy is being tested. Canada’s Consumer Price Index rose 2.8 per cent year-over-year in April, the highest annual inflation rate since May, 2024, as higher energy prices – particularly gasoline – pushed inflation higher amid geopolitical tensions in the Middle East. Meanwhile, grocery prices rose 3.5 per cent year-over-year in April, down from 4 per cent in March.
Many people who have followed FIRE principles for years say the approach has helped them navigate rising cost pressures. One example is the 4 per cent rule, a widely used retirement guideline that suggests withdrawing 4 per cent of savings in the first year of retirement, then increasing that amount annually to keep pace with inflation and reduce the risk of running out of money.
Other people take a more aggressive approach to saving, setting aside and investing as much as 70 per cent of their annual income.
Ben Mayhew, a financial planner at Aergo Financial Planning in Halifax, works with clients who pursue FIRE goals. He says that because these clients already live well below their means and closely track their finances, they do not always feel the full impact of rising costs right away. “Their ability to absorb increased costs is substantially greater than the average person,” he said. “So, while the cost of living does come up in conversations with clients, it’s more of a frustration than a make-or-break factor.”
Mr. Mayhew said housing is the greatest pressure for FIRE adherents. Many of his younger FIRE clients have not yet bought a home, and real estate prices have made that goal harder to achieve. “For many people focused on FIRE, retirement savings tend to come before homeownership,” he says. “For the average person, it’s usually the opposite. So when housing prices rise far beyond what people planned for, it can really disrupt the [retirement] timeline they expected.”
While he believes FIRE remains a viable path in a turbulent economy, he says it requires accepting trade-offs and leaving room for flexibility in financial plans. Instead of a strict “cut everything” approach, he encourages clients to regularly test their plans against different market conditions to ensure they can hold up over time.
Jerine Nicole Hernandez, 30, a Toronto-based nurse, said she has made some adjustments to her everyday spending to get closer to her FIRE goal. She became interested in the movement about five years ago after learning about it online. She initially aimed to retire with her husband between age 40 and 50, though she now believes a more realistic timeline may be closer to her 50s.
Ms. Hernandez said the largest impact of cost-of-living pressures has been on discretionary spending, with the couple cutting back on dining out and takeout, and now cooking most meals at home. “We used to go out more often, but with rent, gas prices, and everything adding up, we’ve had to set limits,” she said.
Looking ahead, she says their retirement timeline largely depends on how much they can change their savings rate. “If we don’t change anything in our current situation, we’d be looking at retiring around 55,” she said. “If we were to double our savings rate, we could potentially reach FIRE even earlier, but at the moment, that’s not realistic for us.”
To get there, she says investing has remained central to their strategy, with the couple investing consistently in the stock market. The couple also own a condo, which has helped build equity, and they typically put bonuses straight into their retirement fund. They are also building additional income streams through consulting, freelancing and content creation.
Mr. Lai, meanwhile, said his retirement plan remains intact, though he has become less focused on a fixed end date. “There’s some added pressure from higher prices, but we already have a bit of a buffer in our projections,” he said. With both he and his wife earning full-time incomes and spending below their means, they’ve been increasing their savings gap and continuing to direct most of their investments into stocks and index funds, a key part of their strategy.
He adds that he has made small adjustments to spending, particularly on groceries, such as cutting back on meat and dining out less. Even so, that flexibility is part of the plan. His focus has shifted more toward financial independence rather than a specific retirement timeline.
“FIRE is really about financial independence – setting yourself up for better financial well-being, whether you retire early or not,” he said. “Some people invest in stocks, some in real estate. The important thing is finding a strategy that works for you.”
