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F.I.R.E. followers, who are in their 30s and 40s, need to be extra vigilant as their retirement nest eggs need to last decades longer than those who retire in their 60s and / Getty Images

The stock market fallout during the early days of the COVID-19 pandemic put retirees living off their investment income at risk. That was especially the case for those following the “financial independence, retire early” (F.I.R.E.) movement.

F.I.R.E. investors are largely people in their 30s and 40s who save aggressively and invest early to build up a seven-figure portfolio to retire early or work way less as they get older. Those plans can be thwarted when stock markets tank, as they did last March.

Investors who stuck it out were rewarded as stock markets roared back to record highs months later. Still, F.I.R.E. followers need to be extra vigilant as their nest eggs need to last decades longer than those who retire in their 60s and 70s.

“You may need to over-save and underspend longer than you might think when you’re pursuing the F.I.R.E. movement,” says Jason Heath, an advice- and fee-only certified financial planner at Objective Financial Partners Inc. in Markham, Ont. “When you’re retiring at age 40 versus age 65, there’s so much more margin for error.”

For example, Mr. Heath says someone can do a great job of saving, but see those funds quickly disappear because of costs associated with an extraordinary event, such as a serious injury or illness that requires long-term care or having a child with a disability.

“If you don’t budget for the unexpected, that could really compromise your early retirement plan,” he says.

F.I.R.E. investors do have time on their side to regain any investment losses should the next downturn not see the same quick recovery. Many also have the option to go back to work.

In addition, just having a plan puts them ahead of many investors, Mr. Heath says, citing various industry surveys showing investors with a financial roadmap are more prepared for retirement.

“There is something to be said about F.I.R.E. [adherents] and how much long-term planning these people do,” he says. “Someone who is pursuing F.I.R.E. and really knows their numbers is more likely to have more confidence with something like stock market volatility or sustainable spending in retirement as a result.”

Mathieu Martin of Quebec City started his F.I.R.E. journey in July, 2019, at the age of 41, about six months before the pandemic hit.

He was inspired to retire early, instead of at age 60 as previously planned, after reading an article showing how it was possible through the simple strategy of spending less and investing more, taking advantage of the power of compound returns.

“To me, the key really is the spending: The less you spend, the more you save,” says Mr. Martin, now 42, who had a career as a safety engineer in France and the Middle East before moving with his wife and two young children to Canada in 2019.

Even when stock markets dropped in February and March of 2020, Mr. Martin wasn’t too worried because his F.I.R.E. plan includes having about one year’s worth of cash set aside to live on.

“We felt more confident because of that,” he says. “When it comes to early retirement ... even when you’re not retired, what’s important is your available cash. You can have the biggest investment in the world, but if you have no cash, you’re screwed. ... We put our plan to the test and it passed.”

He believes his background in crisis management and emergency preparedness also helped him stay calm as the markets went into panic mode.

“I wasn’t surprised. It was sort of expected,” he says of the market drop.

Mr. Martin didn’t adjust his investment portfolio or asset allocation, either, which was a smart move in hindsight given the markets’ record run.

In fact, he and his wife are planning to buy a house this year instead of next year, as originally planned, thanks in part to the additional savings from the pandemic and the stock market comeback.

Today, Mr. Martin’s retirement life includes doing things he loves, such as building furniture for the new house, playing sports and walking his kids to school each day.

Furthermore, while his financial plan says he doesn’t need to work, Mr. Martin did take on a short-term government contract last spring to help municipalities with their business continuity amid the pandemic.

“I wanted to be part of it and to use my skills to do what I could to help the community,” he says.

Bob Lai, 38, a married father of two who works in Vancouver’s technology industry, says his F.I.R.E. journey remains on track amid the pandemic.

For Mr. Lai and his wife, financial independence means having the option to work when they want and for as long as they want.

It might not mean full retirement in the near future, but they do have options such as taking a year off to travel when it’s safe to do so again.

“It’s about being financially independent,” he says. “That’s the empowerment behind the F.I.R.E. movement that we like, to not be tied to your paycheque every two weeks.”

Mr. Lai says his family will be financially independent when its dividend income is greater than its expenses, which he notes is a bit different than the F.I.R.E. movement’s technical definition of when your net worth reaches 25 times your expenses.

The family got closer to that goal after investing about $115,000 in the markets last year, including a big chunk of money after equities dropped in the spring. A good portion of those funds was from money saved from having to stay home during the pandemic, as well as some investments the couple sold in February, just before the market crash.

Mr. Lai says he wasn’t worried about his existing investments being down significantly at the time, particularly after seeing the bounce back during the global financial crisis.

“I knew the market would recover eventually; it was just a matter of time,” he says. “It was a good opportunity; [stocks] went on sale.”

Most of his investments, which he makes on his own, are in stable, dividend-paying stocks such as banks and in diversified exchange-traded funds.

For others interested in being financially independent, Mr. Lai suggests sticking to their plan and not making bets on risky investments such as Bitcoin.

“If you are always jumping back and forth between investment strategies, you may not get there,” he says of financial independence.

And while he and his wife don’t have a specific date for meeting their F.I.R.E. goal, “we are enjoying the journey.”