Personal Finance

What is the Financial Independence, Retire Early (FIRE) Movement?

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In this article


  • The FIRE movement is a set of financial practices that combine intense budgeting, saving and investing to support retirement before the standard ages of 65 to 70.
  • If you're working toward an early FIRE retirement, you'll start with two important concepts, your FIRE number and the 4% rule.
  • Successfully utilizing the FIRE strategy usually requires strict budgeting and saving, so it may not be right for every retiree.

Financial Independence, Retire Early (FIRE) is a lifestyle movement that offers an alternative to traditional retirement: leave your work life behind in your 50s, your 40s or even your 30s. But what does it take to retire decades earlier than most of your peers? You'll need to spend less, save more and be more thoughtful when it comes to investing.

What is the FIRE movement?

The FIRE movement is a wide-ranging set of financial practices designed to support retirement before the standard retirement age of 65 to 70. FIRE strategies typically combine aggressive savings and moderate- to high-yield investments. The FIRE method suggests that once you save and invest a certain amount of money — approximately 25 times your annual expenses — you'll be ready to leave the workplace behind.

For all but the ultra-rich, achieving high-level financial independence typically requires you to curb your spending habits, both pre- and post-retirement. However, this kind of extreme financial commitment might not be possible for every retiree. Is the FIRE movement right for you? The answer depends on many factors, including your savings, investments, income and desired lifestyle.

How does the FIRE movement work?

If you're working toward an early FIRE retirement, you'll start with two important concepts, your FIRE number and the 4% rule.

Your FIRE number — generally equal to 25 times your annual expenses — is an estimate of how much money you'll need to reach a comfortable early retirement. The 4% rule refers to the idea that, once this money is saved, you should aim to withdraw 4% of your savings per year during retirement. At this rate, most retirees can keep up with their current quality of life while stretching their retirement over a 30-year period.

For example, a person spending $60,000 per year would multiply that amount by 25 to find their FIRE number of $1.5 million. This is the amount of savings and investments they will then work toward in order to retire comfortably.

Followers of the FIRE movement use many different strategies to reach their savings goals. However, saving so much money almost always requires commitment and compromise. Some individuals aim to put aside 50% or even 75% of their income into savings and investments each year. Committing that much of your income to savings usually requires significant sacrifices in your budget and may require you to live sparsely for many years in the meantime.

It's also important to remember that your retirement needs may evolve as you age and undergo career and family changes. Significant shifts in your income or household expenses may require you to review any existing retirement strategies.

What are the different variations of the FIRE movement?

The standard principles of the FIRE movement can be modified to fit your unique financial circumstances and retirement needs. Prominent variations include the following:

  • Lean FIRE. Practitioners of Lean FIRE plan to pare down their costs during retirement, with the goal of spending less than they did while they were working. If you follow the Lean FIRE methodology, you'll couple a modest retirement budget with an aggressive savings plan. Like standard FIRE, the aim is to set aside up to 25 times your annual expenses.
  • Fat FIRE. The Fat FIRE strategy is geared toward those who want a more generous budget in retirement. To fund this lifestyle, you'll need to earn and save as much as possible. This means saving a minimum of 25 times your annual expenses and surpassing this goal when possible. Fat FIRE allows you to pursue your current lifestyle without having to cut back, but you'll likely need a bold savings strategy and a high salary to meet your ambitious savings goals.
  • Barista FIRE. This FIRE variation incorporates part-time work into your post-retirement plans. You'll still need to build a generous savings fund. However, you'll cover some of your day-to-day costs during retirement with low-stakes, part-time work. Barista FIRE's income from part-time work allows retirees to set lower savings goals and prioritize work-life balance, rather than full early retirement.

What are the pros and cons of the FIRE movement?

Before you pursue extreme early retirement, you'll first need to understand how FIRE can impact your life.


  • Reduced stress. Many employees consider their job to be a major source of stress. Even if you love your job, retiring early can relieve work-related anxiety and improve your overall mental health.
  • Increased free time. Without your work obligations, your schedule is wide open. When you retire early, you're free to spend more time with your family and pursue hobbies and passions you might otherwise have to postpone such as learning a new language, volunteering and traveling.
  • Greater financial security. Between saving aggressively and investing a significant portion of your income, you'll give yourself a larger safety net later in life. Even if your savings don't grow as planned, FIRE's rigid budgeting and savings requirements can still help you build a strong financial foundation.


  • Restrictive saving and budgeting. For most retirees, the FIRE movement requires sacrifice and financial discipline. If you're middle- or low-income, retiring early may require severe budgetary restrictions. When you're living paycheck to paycheck, it can be nearly impossible to meet FIRE's strict savings requirements.
  • Greater investment risk. You can't always rely on steady investment growth. No matter how low-risk your investments are, they're still vulnerable to stock market fluctuations, inflation, recessions and other changing economic conditions.
  • Health insurance coverage gaps. If you retire before 65, you won't initially be eligible for Medicare benefits. Instead, you'll need to secure healthcare coverage through a private insurer or your state's public healthcare exchange. Both options can be pricey.

The FIRE movement may not be right for every would-be retiree. Those considering FIRE should be prepared to make significant financial cutbacks and understand that, as with any investing process, success is not guaranteed. However, for some committed individuals, the FIRE movement may be a way to make early retirement a reality.

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