Retiring early is looking more difficult. The new game plans.

Subscribe to enjoy similar stories. The dream of working hard to retire early is eroding as higher costs of living cut into savings and frothy valuations leaves portfolios vulnerable to market dives. The concept of saving to retire early, or FIRE, an acronym for “Financially Independent, Retire Early," has evolved as a result, as adherents salt away more money and prepare for volatility in future markets.

“Pursuing FIRE has never been entirely smooth, and today’s economic landscape adds new challenges," said Alexander Marek, senior wealth advisor at Arizona-based Ironwood Wealth Management. The original tenets of the FIRE movement were to put away a large portion of income into savings and invest it. Over the years, investing in low-cost stock index funds that climbed steadily made it possible to retire early.

At first glance, now would seem to be a good time for the FIRE crowd. Stocks have soared since the 2007-2009 financial crisis and remain near record highs. Many would-be early retirees are sitting on big portfolios.

There are two potential flies in the ointment. Early retirees, who quit working years or even decades before they start collecting Social Security, are unusually vulnerable to sequence-of-return risk, the possibility that a market plunge early in their retirement will permanently impair their investment portfolio. If you are still working when stocks tumble, you can allow them to recover before you start selling them.

Not so if you are retired. And a number of market experts are predicting that stocks will underperform for a decade or more as a result of their high valuations. The second worry is inflation, a risk that disappeared for decades and returned with a vengeance after the Covid-19 pandemic.