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Financial Independence, Retire Early (FIRE)

File Photo: Financial Independence, Retire Early (FIRE)
File Photo: Financial Independence, Retire Early (FIRE) File Photo: Financial Independence, Retire Early (FIRE)

What Exactly Is Financial Independence, Retire Early (FIRE)?

People who follow Financial Independence, Retire Early (FIRE) save and invest aggressively to retire earlier than typical budgets and retirement plans allow.

The 1992 bestseller “Your Money or Your Life” by Vicki Robin and Joe Dominguez popularized principles common to this movement. Although the origins of the concept and acronym FIRE are uncertain, it became a basic tenet of the book to analyze expenses based on the number of hours needed to pay for them.

The Purpose of Fire

The FIRE movement directly targets the 65-year-old retirement age and the business that promotes it. Followers of the FIRE movement want to retire early and live off tiny portfolio withdrawals for decades by allocating a majority of their income to savings.

Fire retirement has gained popularity with millennials in recent years. Extreme savers work for years and save up to 70% of their income. They may retire or quit their occupations when their savings reach 30 times their annual costs, or $1 million.

After retiring early, FIRE adherents take 3% to 4% of their funds annually to pay living expenses. Individuals must manage their spending and dedicate time to maintaining and reallocating investments based on their desired lifestyle and savings size.

Several FIRE retirement variations have emerged to determine the lifestyle of its followers.

  • Fat Fire is for those with a conventional lifestyle who wish to save more than the typical worker without sacrificing their standard of living. A high income and active savings and investment methods are often necessary for success.
  • The Lean FIRE lifestyle entails a tight commitment to minimalist living and high savings, resulting in a more limited lifestyle. Many Lean FIRE followers live on $25,000 or less.
  • For those who wish to be in between, try barista FIRE. They abandoned their 9-to-5 occupations yet maintained a semi-minimalist lifestyle with part-time employment and savings. The former allows for health care, while the latter bans retirement fund withdrawals.

For whom was FIRE created?

Most people assume FIRE is for six-figure earners. If you want to retire in your 30s or 40s, it probably is. Everyone may learn from the movement’s ideals to save for retirement and even retire early, if not as early as 40.

You may work at something you love instead of retiring if you attain financial independence, which is the first stage of FIRE. In the book, Robin explains that FIRE educates you to consume less and live better, not merely retire early.

Detailed Planning

Everyone should plan for retirement. According to the latest Board of Governors of the Federal Reserve System report from May 2021, one in four Americans had no retirement savings in 2020, and 36% thought their retirement plans were off track. Following a thorough strategy and adhering to it are key elements in the FIRE movement for saving for retirement and preserving an emergency fund.

Economic Control

FIRE retirement requires maximizing income and lowering costs. Retiring by 40 requires extreme measures, but everyone can benefit from making and sticking to a budget and doing everything they can to earn as much money as possible, whether that’s by getting a better job, adding a second one, starting side businesses, or renting out property.

Smart Investment

Financial security in retirement is challenging without a savings plan. FIRE followers invest more than most people want. However, setting aside a certain proportion of your salary each month for investment and starting early can help you increase your retirement savings to a level that will ensure your financial security in your later years.

What exactly does fire mean?

Financial Independence, Retire Early (FIRE) refers to financial independence strategies for early retirement.

How does fire work?

By saving up to 70% of their income while working full-time, FIRE followers aim to retire early. When their savings reach 30 times their annual costs, or $1 million, they may quit their occupations or retire.

What fire variations exist?

The FIRE movement has several versions. Fat fire is a more relaxed way to save more and sacrifice less. A simple lifestyle is needed for lean fire. To exit the nine-to-five rat cycle, Barista FIRE requires part-time work and financial cuts.


  • Financial Independence, Retire Early (FIRE) advocates excessive savings and investing.
  • FIRE advocates aspire to retire early and live off tiny withdrawals by saving up to 70% of their annual salary.
  • Many FIRE adherents take 3% to 4% of their funds annually to pay for their retirement needs.
  • Fire retirement requires careful preparation, financial discipline, and smart investment.


Correction, 11/13/2022:A previous version of this page incorrectly attributed “Financial Independence, Retire Early” (FIRE) to Vicki Robinson and Joe Dominguez’s 1992 book, Your Money or Your Life. The article was expanded to explain the term’s origins.

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