SAN ANTONIO — Many people are lighting their retirement plans on FIRE in the Lone Star state. It is not what you might think. FIRE is the acronym for Financial Independence Retire Early. It means retiring or semi-retiring before the traditional retirement age of 65.
“Texas is one of the great places,” said Michael Lacy, a Texan from Houston who is part of the FIRE movement.
Those who FIRE start by keeping their expenses low and saving aggressively, usually 50 percent or more of their income. Then they invest that money with the goal of retiring in their 30s or 40s. They also look for ways to raise their income and/or find passive sources of income like book sales or real estate. There are many types of FIRE, but most in the FIRE movement live off the interest from their investments and passive income streams. Generally, that means investing 25 times the income you expect to live on and then living on about 4 percent of interest from those investments. That often equates to investing between one and two million dollars for most.
Lacy has been on FIRE for the last year. He is 31 and living off a combination of interest from investments, passive income like book sales and a virtual job he works for six hours each week. He also runs the website Winning To Wealth to help other families on their FIRE journey. He is using his FIRE retirement time to travel with his family.
“Our big goal is Niagara Falls,” he said. “So we’re going over to Florida, Panama City Beach, and then just up the East Coast. D.C. Philly, New York City.”
FIRE allowed him to work less and spend more time with his daughter.
“I actually have not worked for a traditional employer since May of last year,” he said. “I’m a full-time entrepreneur now and I built a business I pretty much run virtually.”
Magnify Money named two Texas cities in its Top 10 best places to FIRE. There are two components to a FIRE-friendly city.
“Basically, a cost of living score and a quality of life score,” said Ismat Mangla, the senior content director for Magnify Money.
Close to us, Austin came in at number 6. Native Texan Eryn Schultz is moving from the East Coast to Austin this year as part of her FIRE journey because of the active lifestyle and often free activities it offers.
“We love hiking, biking, getting outside. The access to nature there is great. It’s also a very walkable city,” she said. “We only have one car as a couple.”
“Austin had a great quality of life score, but also a relatively good cost of living score,” said Mangla.
Schultz runs the website Her Personal Finance to help others take control of their money and achieve financial freedom. Her goal is to use FIRE so she can pursue her passion for politics and nonprofits and not worry about what jobs in those industries pay.
“The idea is to hit a number where we’re financially independent, where our investments can cover our monthly expenses, and it gives us flexibility to be able to spend our time where it is most impactful and not necessarily where we’re most highly compensated,” she said.
El Paso came in at number 10.
“Cost of living in El Paso is great, cheap goods, very low tax rates,” Mangla said. “That makes it an attractive option for FIRE-minded folks, but where El Paso got weighed down a little bit was the quality of life.”
Yet those in the FIRE movement said Texas as a state is a great place to be on FIRE. Andrew Herring is starting his FIRE in Dallas.
“It’s very business-friendly, very tax-friendly. I think it’s just a good cost of living,” he said.
Herring continues to work but his FIRE investments in real estate allowed him to take positions based on his interest rather than a salary. He also runs the website Wealthy Nickel to help others find financial independence.
“I think a lot of people get caught up in retire early part and are like, oh well, I like my job,” he said. "I don’t want to retire. But I think, to me, what the most important aspect of it is the financial independence. It just gives you options because life can change. If you have the option to leave your job, if you need to find a new, lower-paying job or move across the country to be closer to family or whatever it is, I think the powerful part of it is the financial independence that gives you the ability to make choices you otherwise might not make.”
There is one major reason Texas attracts people in the FIRE movement said former Houstonian and personal finance advisor Dominque Broadway, CEO and Founder of Finances Demystified:
“No state taxes. Hello. You know what I mean? That’s one of the biggest reasons why Texas actually does have such a large influx of people moving in,” she said.
Yet, Austinite and financial expert with Lending Tree Matt Schulz said to add plenty of fuel to your FIRE so you do not burn through money too quickly.
“If you have goals set for FIRE, set them a little higher than you think and maybe set them a little higher because you just don’t know how life is going to go,” he said. “Life is expensive now. It’s going to be expensive in 15, 20 years.”
The study found the best city for FIRE is Minneapolis and the worst is New York.