FIRE in the trades: electricians, plumbers, builders and more

The trades don't come up much in FIRE stories online. They should. Electricians, plumbers, pipefitters, HVAC techs, carpenters, welders, ironworkers and builders often start earning in their late teens or early twenties, sometimes while training, and many have access to a pension or can build a business.

That's a strong start. But a trades career also has its own risks: uneven work, physical wear, and for the self-employed, no one else setting up your retirement plan.

This is general education, not advice. Union plans, contracts and tax rules vary. Check your own plan documents and talk with your plan office, an accountant or another licensed professional before making decisions.

The trades' head start

Many trades careers start with an apprenticeship that pays while you learn. Compared with someone who spends four or more years in school and starts work with student loans, a tradesperson can start saving years earlier, often without much debt.

Time is the most powerful thing in investing. A dollar invested at 22 has ten more years to grow than a dollar invested at 32, and at a 5% return after inflation, ten years of compounding grows it by more than 60% (try it). If you're early in a trade, the habits you set in your first few years can matter more than any raise later.

Union pensions and annuity funds

Many union tradespeople earn benefits under a multiemployer plan. The Pension Benefit Guaranty Corporation (PBGC) describes these as collectively bargained plans maintained by one or more unions and multiple companies, generally in the same industry (PBGC).

Contractors pay into the plan for hours you work. You build credit toward a pension based on the plan's rules, often tied to hours or years of credited service.

What to understand about yours

Every plan is different. Ask your plan office for the summary plan description and your latest benefit statement, and look for:

• How you earn credit. How many hours count as a year? What happens in a slow year?
• Vesting. How long until the benefit is yours, even if you leave the trade?
• Earliest retirement age and how much the pension is reduced if you take it early.
• Disability benefits if you can't keep working.
• Survivor options for your spouse or partner.
• Rules about working after you retire. Some plans limit work in the same trade or area while you draw a pension. Read this before planning a semi-retirement side business.

If a plan gets into trouble

PBGC insures multiemployer pensions, but the guarantee has limits. PBGC's maximum guarantee is $35.75 a month times your years of credited service, and it is not adjusted for inflation (PBGC). For many people, that's less than the full promised benefit. It's one reason many tradespeople also save on their own.

Annuity funds and 401(k)s

Some locals also have an annuity fund or a 401(k)-style plan alongside the pension. These are usually individual accounts: the balance depends on contributions and investment results, not a formula. Find out how the money is invested, what it costs, and when and how you can take it out.

If you work for yourself

Plenty of tradespeople run their own shop, sub out to general contractors or take side jobs. Being self-employed means no employer plan, but it opens up some powerful accounts.

Solo 401(k)

The IRS calls this a one-participant 401(k). It covers a business owner with no employees, or the owner and their spouse (IRS).

You contribute in two roles:

• As the employee, elective deferrals up to the yearly limit: $24,500 in 2026, plus catch-ups from age 50 (IRS).
• As the employer, an additional contribution based on your earnings; for self-employed people, special calculations apply (IRS).

The total of both, not counting catch-ups, is capped at $72,000 for 2026 (IRS).

One catch: if you hire employees who become eligible, the plan generally has to include them, and it's no longer a one-participant plan.

SEP-IRA

A SEP is simpler to set up and run. Only "employer" contributions go in. For 2026, contributions can't exceed the lesser of 25% of compensation or $72,000, and compensation over $360,000 isn't counted (IRS). For self-employed people, "compensation" is figured on net earnings using a special calculation, so the real percentage is lower than 25%. SEPs take only employer contributions, so there's no age-based catch-up (IRS SEP FAQs). If you have employees, a SEP generally has to cover eligible employees too.

Which is better depends on your income, whether you have employees, and how much paperwork you want. A tax professional can run the numbers for your situation.

Don't forget self-employment tax

When you work for yourself, you pay both halves of Social Security and Medicare tax. The IRS sets the self-employment tax rate at 15.3% (12.4% for Social Security and 2.9% for Medicare). It generally applies to 92.35% of your net earnings from self-employment, and the Social Security part is capped at a yearly wage base (IRS Topic 554). For 2026, that wage base is $184,500 (IRS). Higher earners can also owe a 0.9% Additional Medicare Tax above a threshold ($200,000 for single filers, $250,000 married filing jointly) (IRS Topic 554).

Self-employed people also generally pay estimated taxes during the year rather than having them withheld. Many tradespeople set aside a fixed share of every job payment in a separate account for taxes, so April isn't a shock.

Uneven income: smoothing the bumps

Construction has busy seasons and slow ones. Work can dry up when the economy slows. That makes a few habits especially valuable:

• A bigger cash cushion than a salaried worker might need: enough to cover slow months without debt.
• Saving a share of overtime and big jobs instead of raising your monthly spending to match a great month.
• Tracking spending over a whole year, not month to month, so your plan reflects reality. Our savings rate guide explains how.

Your body is part of the plan

A desk worker can often keep going into their late 60s if they choose. Many trades are hard on knees, backs, shoulders and lungs. A FIRE plan for a tradesperson should assume the body may set the timeline.

Ways people protect that asset:

• Take safety seriously. Hearing protection, eye protection, proper lifting and fall protection protect future earnings, not just today.
• Look into disability coverage. Check what your union, plan or employer provides, and whether private disability insurance makes sense if you're self-employed. A licensed agent or advisor can explain options.
• Plan a second act. Many tradespeople move into estimating, inspection, project management, teaching apprentices, sales or running a shop. Building those skills before you need them gives you choices.
• Consider Coast or Barista FIRE. Saving hard early, then shifting to lighter or part-time work, can be a natural fit for a physical career. See FIRE basics.

Getting to your money before 59½

Most retirement accounts charge a 10% additional tax on withdrawals before 59½, with exceptions. One that can help tradespeople: if you leave your job in or after the year you turn 55, withdrawals from that employer's qualified plan generally aren't subject to the 10% additional tax (IRS Topic 558). This doesn't apply to IRAs, including SEP-IRAs. Pension plans have their own early retirement rules.

Health insurance in the gap

If your coverage comes through a union health fund or an employer, find out what happens when you stop working. Some plans offer retiree coverage, some don't, and some require a certain number of hours to stay eligible. Health insurance before Medicare covers the main options.

Next step

Find out what "enough" looks like for you, including any pension you expect.

Try the Pension FIRE calculator →

Not in a union plan? Start with the FIRE number calculator. And if you're thinking about a side business, read Side hustles and passive income: a realistic guide.