Bob Lai began pursuing early retirement in 2011 with a clear objective: to steadily save, invest consistently, and live below his means. Now 43 and based in Vancouver, Lai has long been inspired by the Financial Independence, Retire Early (FIRE) movement, which encourages aggressive saving and investing to retire well before the traditional age of 65. His plan was to retire alongside his wife by 2030. However, rising costs of living, particularly for groceries and gasoline, have introduced new challenges to his timeline.

“We have two young kids, and groceries keep going up every year,” Lai said. “Gas prices too. We’re a one-car household, but we still spent over $300 on gas last month, which feels mind-boggling.” Despite these pressures, he describes his family’s financial position as stable but acknowledges that these increases have him reconsidering what retirement costs could look like 10 or 20 years from now.

The FIRE movement has gained traction among millennials and Gen Z, who are drawn to the promise of financial independence and control over their time through disciplined saving and investing. Central to the movement is long-term planning, including adherence to commonly used retirement guidelines such as the four-percent withdrawal rule, which recommends withdrawing 4 percent of retirement savings in the first year and adjusting for inflation thereafter.

Yet, the ongoing inflationary environment in Canada is putting these strategies to the test. Canada’s Consumer Price Index rose 2.8 percent year-over-year in April, driven by higher energy costs amid geopolitical tensions in the Middle East. Grocery prices also increased by 3.5 percent over the same period, slightly down from 4 percent in March.

Ben Mayhew, a financial planner at Aergo Financial Planning in Halifax, notes that clients pursuing FIRE are often better positioned to absorb rising costs since they already maintain frugal lifestyles and closely monitor their finances. “Their ability to absorb increased costs is substantially greater than the average person,” he said, adding that while housing costs pose the greatest challenge for these clients, inflation-related expenses are more a source of frustration than derailment.

Mayhew highlighted that many younger FIRE adherents have prioritized building retirement savings over homeownership. Given the escalation in real estate prices, this can disrupt anticipated retirement timelines, forcing adjustments in plans. He advises flexibility in financial strategies, encouraging clients to stress-test their retirement plans against varying market scenarios rather than adhering to rigid savings plans.

Jerine Nicole Hernandez, a 30-year-old nurse in Toronto, has also adjusted her approach as she works toward early retirement. Interested in FIRE for about five years, Hernandez had initially aimed to retire between 40 and 50 but now considers a timeline closer to her 50s more realistic due to rising everyday costs. The couple has curtailed discretionary spending, including dining out, shifting most meals to home preparation to manage expenses.

“Our retirement timeline largely depends on how much we can change our savings rate,” she said. “If we don’t change anything in our current situation, we’d be looking at retiring around 55. 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.” Despite this, investing remains central to their strategy, with steady contributions to the stock market, ownership of a condo to build equity, and supplemental income through consulting and freelance work.

Lai echoed a similar sentiment about maintaining flexibility in retirement plans. While rising costs have added pressure, he said the family’s financial projections include buffers, and the focus has shifted from a fixed retirement date to financial independence. “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.”

As rising inflation continues to strain household budgets, those pursuing early retirement through the FIRE approach are adapting their spending and savings habits but remain committed to the broader goal of financial independence amid uncertainty.