Choosing freedom over a paycheck

Did you consciously choose the path you’re on or are you simply doing what society expected? Is it possible to want something different from your career without knowing what it is? And what would you do with your life if you had the freedom to walk away from your paycheck?

These are some of the questions that Professor Laura Sonday of UNC Kenan-Flagler Business School spent two years exploring while embedded in the Financial Independence Retire Early (FIRE) community. Her research findings are a portrait of a movement pushing back against work’s grip and are published in Administrative Science Quarterly.

FIRE’s premise is to give followers greater choice over how to spend their time. Members aggressively save and invest an enormous portion of their take-home pay — often upwards of 50% — to secure economic freedom decades before the standard retirement age.

Drawing on 141 hours of field observations and interviews with 55 FIRE adherents, Sonday found that while reimagining a radically different life was one thing, following through on it was where many people faltered.

What made a difference, her study suggests, is community support.

“Someone could absolutely build a nest egg of investments, quit their job and change careers on their own, but being part of a community makes it easier,” she says. “You’re with other people who also are questioning the same taken-for-granted beliefs about work and that gives you a safe place to experiment with lifestyle changes and still feel like you belong.”

Her findings have implications both for people who feel something is missing from their work lives and for the communities and organizations like FIRE trying to help them make lasting change.

Questioning the “ideal worker” norm

Sonday conducts research on the meaning of work and how jobs are intertwined with people’s sense of purpose and identity. Most research in the field, she says, overlooks how money influences the choices we’re able to make. FIRE offered her a way to study how people think about work once money stops being the primary factor dictating their choices, whether they’ve reached financial freedom or are still chasing it.

The topic was personal, too. Both of Sonday’s parents grew up poor and worked hard to escape it.

“Life was a struggle for them at first. Once they earned their college degrees and saved enough money for a rainy day, that financial stability opened up new possibilities for everyone in our family. For that reason, I’ve always been sensitive to the role that money plays in people’s lives and how it affects their life choices and chances.”

Sonday immersed herself in the FIRE community as an ethnographer, attending monthly meetups and multi-day retreats where followers often described how they’d spend their time if work were optional. Some wanted a life of leisure; others wanted to shift into work they otherwise would have considered too risky or low paying. Still others planned to stay in their jobs but wanted more security or flexibility.

They were drawn together by a shared question of what work should demand of them, says Sonday. “There’s a sacred creed that we hold as a society to work hard and give everything to your employer.”

Sociologists call this the “ideal worker” norm: the belief that good workers are fully devoted to their jobs and available round the clock. In the postwar era, the employee-employer relationship was marked by mutual loyalty. If workers were loyal to their employer, the tacit understanding was that employers would take care of them by offering them lifelong employment, advancement opportunities, benefits and a secure retirement.

But loyalty no longer buys what it used to. Long-term employment with full benefits and opportunities for promotion is becoming less common. And doing a good job today is no guarantee that you will still have a job tomorrow. In many states, employment is “at will,” meaning employers can fire workers without notice or reason.

“That might be one reason why we are seeing groups like FIRE crop up. People are questioning why they’re devoting all their time and energy to work, when work doesn’t always love them back,” she says.

That disillusionment, at meetings and retreats, is often coupled with idealism and a hunger for something different, she says. “They’re thinking: what would I do with my life if money were no object? And what are some sources of meaning in my life that are taking a backseat because work can be so demanding?”

Searching for — and finding — meaning

For a group organized around personal finance, the conversations at FIRE events involved surprisingly little discussion about money. Instead, retreats often felt more like religious gatherings. “Most of the discussion was on the existential questions of life,” she says. “Why are we here? What are my values? What makes life meaningful?”

During her fieldwork, Sonday met many people who made big life changes after becoming involved in FIRE: a market researcher who became a missionary, an English teacher who left her job to parent and write romance novels, and a physician who went part-time to make room for poetry and podcasting.

Not everyone who encountered the FIRE credo overhauled their lives to the same degree.

Sonday found that two things — the appeal of the new work ideal and its perceived attainability — determined the extent to which people were willing to make changes.

“There was first a question of how attractive this idea of not having to work for money felt to people,” she says. “Those who were unhappy with work and had a very specific dream for what they’d like to be doing instead felt a strong pull to change their lives. Other people could see the benefits of financial independence, but liked their jobs, and didn’t feel like there was anything else they’d rather be doing.”

The second factor concerned how realistic FIRE felt for people based on their income, location and family demands.

Pursuing FIRE means calculating a target “FI number,” multiplying your anticipated annual retirement costs by at least 25 and then funneling as much as possible into tax-advantaged investments like low-fee index funds until you hit your “FI number” — the point at which your passive income exceeds your annual expenses and you no longer rely on a paycheck to sustain your lifestyle. Some people believed that level of saving was within reach; others did not.

The savings goals people set for themselves varied widely and wasn’t always based on their objective spending level, says Sonday. “Some people just had more financial anxiety than others.”

Some people considered themselves financially independent after saving $500,000, while others aimed to save at least $4 million. Most were aiming for between $1 million and $2 million in invested savings.

Sonday identifies four tactics FIRE evangelists use to win over newcomers and persuade them to commit to the movement.

For starters, they use anti-work rhetoric to stoke disillusionment even among people who were previously satisfied with their jobs.

Next, they use “directed dream building,” which prompts people to articulate a vision and aspiration for their post-FIRE life. They also promote the financial strategy itself, encouraging followers to pick up side gigs and cut costs, to make the goal feel achievable.

Finally, they construct a shared nonconformist identity, referring to themselves as “frugal weirdos,” she says. “It created a community and a sense of belonging for people as they were going through this process, even if they were getting backlash or judgement from other people outside of the community for living on such limited means or stepping away from high-status occupations.”

At one FIRE gathering, a facilitator asked people to raise their hands if their cars had more than 100,000 miles, then kept raising the threshold. Eventually one lone hand remained in the air. He told the audience his car had about 270,000 miles and the room erupted in applause.

The psychological benefits of building a nest egg

Not everyone can afford to attempt FIRE. The vast majority of followers in Sonday’s sample — 94% — held a four-year degree and the median household income was near six figures.

But the movement offers relevant lessons for everyone from burnt out 9-5ers to community organizations trying to galvanize change, says Sonday. “If you’re frustrated with work, feel like you’re stalled or that you’re shadow boxing with societal beliefs about what you should be doing with your life, joining a community that’s also asking these questions could provide relief,” she says.

“Should work be central to our identity? Is a big house or a nice car the source of happiness? Just asking those questions can be cathartic.”

There’s also a mental benefit that’s not dependent on fully reaching financial independence. Building even a modest cash cushion can change how secure people feel day to day. They might, for instance, feel more liberated to speak their mind at work or leave a job that is no longer fulfilling.

“It provides a greater sense of autonomy,” she says. “It changes the psychological experience of work when you feel that you have a safety net.”