Sarah and Mike saved 60% of their income for eight years. They had $850,000 in the bank. They quit their jobs at 35, ready to retire early.
Three years later, they went back to work.
What happened? They made mistakes that millions of FIRE followers make. Small errors that destroy decades of planning.
You don’t want to work until 65. But these 12 mistakes will force you to do exactly that. Some will cost you 10 extra years of work. Others will cost you 20.
Here’s how to avoid them.
1. You Calculate Your FIRE Number Wrong
Most people use the 4% rule. Take your yearly expenses. Multiply by 25. That’s your FIRE number.
However, this rule has a significant issue. It was made for a 30-year retirement. Not 50-year retirements.
Sam Dogen from Financial Samurai puts it best: “The biggest mistake is miscalculating your future expenses, your future self, and how you’ll be living.”
Here’s what goes wrong:
- You forget about lifestyle inflation. You spend $40,000 now. But in 10 years, you might want to pay $60,000. Kids get expensive. Houses need repairs. You want to travel more.
- You ignore taxes. That $1 million in your 401k isn’t $1 million. After taxes, it might be $750,000.
- You assume your expenses stay the same. They won’t. Healthcare gets more expensive. You might want to move. Your needs change.
- The fix: Add 20% to your FIRE number. If you calculated $1 million, save $1.2 million instead. Use a 3.5% withdrawal rate, not 4%. Plan for your expenses to grow 2% per year on top of inflation.
- Quick check: When did you last update your FIRE number? If it’s been over a year, recalculate it now.
2. You Ignore Healthcare Costs
Healthcare will destroy your FIRE plan faster than anything else.
Here’s the reality: Fidelity research shows that an average 65-year-old couple today will spend upwards of $172,500 on healthcare costs in retirement. That’s $172,500 just from age 65 to death.
But early retirees face even bigger costs. You can’t get Medicare until 65. You need private insurance for 20+ years.
Real example: Sam Dogen pays $1,760 per month for family health insurance through an ACA plan. That’s $21,120 per year for a healthy family.
Think about that. $21,000 per year just for insurance. Plus deductibles. Plus out-of-pocket costs.
Many FIRE plans budget $500-800 per month for healthcare. That’s not even close to reality.
The hidden costs:
- ACA premiums: $1,000-2,000 per month for families
- High deductibles: $5,000-15,000 per year
- Dental and vision: Not covered by most plans
- Long-term care: Could cost $100,000+ per year
The fix: Budget $2,000-3,000 per month for healthcare as an early retiree. Max out your HSA now. Plan to pay full ACA prices without subsidies.
Action step: Go to healthcare.gov. Put in your expected early retirement income. See what insurance costs in your area.
3. Your Tax Strategy Is Broken
Bad tax planning can cost you hundreds of thousands of dollars. Most people have no withdrawal strategy.
They just pull money from whatever account is easiest. This is expensive.
Proper withdrawal sequencing can reduce lifetime taxes by over 40%. That could mean keeping $300,000 more of your money.
Common tax mistakes:
- Taking all money from 401k first (high tax years early on)
- Ignoring Roth conversions in low-income years
- Not planning for required minimum distributions at 73
- Forgetting about tax-free long-term capital gains
Example: Joe has $500,000 in traditional IRAs and $300,000 in taxable accounts.
Bad strategy: Take from the traditional IRA first. Result: 23 years of retirement income, $57,000 in total taxes.
Good strategy: Mix withdrawals from all accounts. Result: 24 years of retirement income, $34,000 in total taxes.
Same money. One extra year of retirement. $23,000 less in taxes.
The fix: Create a withdrawal order plan:
- Take from taxable accounts first (usually)
- Do Roth conversions in low-income years
- Use traditional accounts to fill lower tax brackets
- Save Roth for last (grows tax-free longest)
Quick action: Calculate what tax bracket you’ll be in during early retirement. If it’s lower than now, start Roth conversions immediately.
4. All Your Money Is Locked Up Until 59.5
This mistake forces people back to work more than any other.
You save everything in 401ks and IRAs. Smart for taxes. Terrible for early retirement.
Why? You can’t touch that money without penalties until 59.5. You need money for ages 35-59.5. That’s 24 years of expenses.
The 72(t) trap: Some people try early withdrawal rules like 72(t). These are complex and risky. Make one mistake and you owe massive penalties on everything you’ve withdrawn.
Rule of 55 problems: You can access your 401k at 55 if you quit that job. But only that specific 401k. And you need to work until 55.
The fix: Build a “bridge” of accessible money:
- Taxable brokerage accounts (no age restrictions)
- Roth IRA contributions (withdraw anytime penalty-free)
- Cash savings for 2-3 years of expenses
- HSA (becomes a regular IRA at 65)
Target split:
- 60% in retirement accounts (401k, traditional IRA)
- 30% in taxable accounts
- 10% in Roth IRAs
Quick check: Add up your taxable accounts and Roth contributions. Can you live 20 years on this money? If not, stop putting everything in your 401k.
5. You Don’t Understand Sequence of Returns Risk
Two people retire with $1 million each. Same withdrawal rate. One runs out of money in 17 years. The other’s money lasts 30+ years.
What’s the difference? When the market crashes.
Two retirees with identical portfolios and annual withdrawals could see very different results depending on when a market downturn occurs.
Example from Schwab research:
- Investor 1: Market drops 15% in years 1-2 of retirement. Portfolio dies in year 17.
- Investor 2: Same 15% drop in years 9-10. Portfolio lasts 20+ years.
Early retirement makes this worse. Your money needs to last 50 years, not 30. One bad decade early on destroys everything.
Why this happens: You’re selling stocks when they’re down. You lock in losses. Those shares can’t recover because you sold them.
The fix:
- Keep 3-5 years of expenses in bonds or cash
- Use this during market crashes instead of selling stocks
- Consider a “bond tent” – more bonds as you approach retirement
- Have a plan to cut spending if markets crash early
Stress test: Run your plan through the 2008 crash scenario. Started retirement in 2007. Market drops 37% in year 2. Does your plan survive?
6. Inflation Eats Your Plan Alive
Inflation is at 3% in 2025. Social Security only went up 2.5%. Retirees are losing money every year.
This gets worse over 50 years. Something that costs $100 today will cost $432 in 50 years at 3% inflation.
Your $40,000 budget today? It needs to be $173,000 in 50 years to buy the same things.
Most FIRE calculators use 2-2.5% inflation. Real inflation is often higher. Social Security benefits lost about 20% of their buying power between 2010 and 2024, according to the Senior Citizens League.
Hidden inflation hits:
- Healthcare: Usually 2-3% above general inflation
- Housing: Varies by location but is often higher than inflation
- Education: If you have kids, college costs grow 5-6% per year
- Taxes: Tax brackets adjust slowly to inflation
The fix:
- Plan for 3-4% inflation, not 2%
- Own assets that beat inflation (stocks, real estate, I-bonds)
- Build flexibility into your spending
- Consider geographic arbitrage (move somewhere cheaper)
Reality check: Take your current monthly budget. Multiply by 2.5. That’s what you’ll need in 30 years at 3% inflation. Scary, right?
7. You’ll Become Lonely and Bored
Work gives you more than money. It gives you people, purpose, and routine.
Lose those, and early retirement becomes early depression.
A ResumeBuilder.com survey found that 34% of retired Americans who plan to return to work in 2024 say it’s to combat boredom. They have enough money. They just can’t handle retirement.
The isolation problem: Your friends work 9-5. They can’t hang out on Tuesday afternoon. You lose your work friend group. Making new friends as an adult is hard.
The purpose problem: Humans need meaning. “Do whatever you want” sounds great for a month. Then what? Many early retirees feel lost without goals.
The identity problem: You spent 20 years being “John the engineer.” Now you’re “John the guy who doesn’t work.” That’s harder than expected.
The fix:
- Build friend groups outside work before you retire
- Find purpose beyond work: volunteering, passion projects, part-time work you enjoy
- Create structure: routines, goals, commitments
- Consider “Barista FIRE” – work part-time at something you like
Test run: Take a month off work. How do you feel by week 3? That’s a preview of early retirement.
8. Your Emergency Fund Strategy Is Wrong
Workers need 3-6 months of expenses saved. Early retirees need 2-3 years.
Why? You can’t just “get another job” when you’re retired. Going back to work after years off is hard. Age discrimination is real.
Plus, you face different emergencies:
- Market crashes lasting several years
- Major healthcare costs
- Home repairs when you’re home all day
- Family emergencies requiring travel or support
Traditional advice: Keep emergency funds in savings accounts.
Problem: Inflation destroys cash over decades. $50,000 today is worth $27,000 in 25 years at 3% inflation.
Better approach:
- 6 months’ expenses in cash
- 1-2 years in short-term bonds or CDs
- 1-2 years in conservative investments (bond funds)
Quick math: If you spend $50,000 per year, you need $100,000-150,000 in emergency money. This is separate from your FIRE number.
9. Lifestyle Inflation Destroys Everything After You Retire
You did it. You retired early. Now you want to enjoy life.
You start traveling more. Eating out more. Buying things you couldn’t afford while saving 60% of your income.
This kills FIRE plans fast.
Real example from Physician on FIRE: Dr. B was on track to retire with $3 million at age 50. Then he upgraded his lifestyle from $120,000 per year to $200,000.
Result? Instead of 6-9 more years of work, he now needs 17-42 more years, depending on market returns.
Why does this happen?
- You feel “rich” when you stop working
- You have more time to spend money
- You want to reward yourself for all that saving
- Your retirement activities cost more than your working activities
Common cost increases:
- Travel: You have time to go places
- Hobbies: That woodworking shop isn’t cheap
- Healthcare: You use it more as you age
- Housing: You want upgrades since you’re home all day
The fix:
- Build fun money into your FIRE number
- Track spending closely in early retirement
- Set spending limits for different categories
- Plan for lifestyle increases, but control them
Reality check: If your expenses go from $40,000 to $60,000 per year, you need 50% more money saved. That could mean 10+ more years of work.
10. You and Your Partner Want Different Things
Money fights destroy marriages. FIRE amplifies this.
One person wants to retire at 40. The other wants a nice house and vacations now. One person is okay eating rice and beans. The other wants to live a little.
These differences seem small when you’re working. They become huge when you’re retired.
Common conflicts:
- How much to save vs. spend now
- When exactly to retire
- Where to live in retirement
- How much risk to take with investments
- What to do if the plan isn’t working
Financial planners report it’s “not uncommon to work with a couple that have completely different expectations around retirement,” according to Kiplinger research.
The fix:
- Talk about money regularly, not just during fights
- Set shared goals with specific timelines
- Compromise on big decisions
- Consider working with a financial advisor for an outside perspective
- Plan for one person retiring before the other
Relationship check: Ask your partner right now: “What does our ideal retirement look like?” If your answers are very different, you need to talk.
11. Investment Fees Slowly Kill Your Wealth
A 1% fee sounds small. Over 50 years, it’s huge.
Example: $500,000 invested for 50 years at 7% returns.
- With 0.1% fees: Final amount is $14.7 million
- With 1% fees: Final amount is $9.8 million
- Difference: $4.9 million lost to fees
That’s not a typo. High fees cost you nearly $5 million over a 50-year early retirement.
Fee sources that add up:
- Mutual fund expense ratios: 0.5-2% per year
- Financial advisor fees: 1-2% per year
- Trading costs: $5-20 per trade
- Account maintenance fees: $50-200 per year
- 401 (k) plan fees: Often hidden, but can be 1%+
The fix:
- Use low-cost index funds (under 0.2% expense ratios)
- Avoid actively managed funds
- Minimize trading
- Choose low-cost brokers
- Understand all fees you’re paying
Fee audit: Add up every fee you pay on investments. If it’s over 0.5% total, you’re paying too much.
12. You’re Fighting the Last War
FIRE advice from 2015 doesn’t work in 2025. The world changed.
What’s different now:
- Remote work is normal. You don’t need to retire to escape a bad commute
- Interest rates are higher. Bonds pay something now
- Healthcare costs exploded beyond old projections
- Tax laws keep changing
- The job market is more flexible
Many FIRE followers are finding they don’t want traditional retirement. They want flexibility.
New FIRE approaches:
- Barista FIRE: Work part-time at something you enjoy
- Coast FIRE: Save enough early, then coast on lower savings rates
- Geographic arbitrage: Move somewhere cheap instead of saving everything
- Sabbatical approach: Take breaks from work instead of permanent retirement
The changing landscape: Post-pandemic research shows ~70% of employees are not engaged at work, but remote work gives them more freedom, according to Gallup polls mentioned in Financial Samurai analysis.
The fix:
- Stay flexible with your plan
- Consider if you want a full retirement
- Keep skills updated in case you want to work again
- Build multiple income streams
- Plan for rule changes (taxes, Social Security, healthcare)
Future-proofing question: If your industry changes completely, do you have other skills? Other income sources? Other plans?
Don’t Let These Mistakes Steal Your Freedom
These 12 mistakes have forced thousands of people back to work. People who saved for decades. People who did everything “right” according to basic FIRE advice.
The difference between retiring at 40 and working until 65 often comes down to avoiding just 2-3 of these mistakes.
Start fixing your plan today:
- This week: Recalculate your FIRE number with realistic healthcare costs
- This month: Check your withdrawal strategy and fix tax problems
- This quarter: Build your accessible money bridge and emergency fund
- This year: Plan for inflation and lifestyle changes
FIRE is possible. But only if you avoid the traps that catch everyone else.
The goal isn’t just to retire early. It’s to stay retired.
These mistakes will keep you working until 65. Now you know how to avoid them.
Your early retirement depends on it.