Financial Independence, Retire Early (FIRE) is a financial movement defined by frugality and extreme savings and investment. By saving up to 70% of annual income,FIRE proponents aim to retire early and live off small withdrawals from accumulated funds. The goal is to save and invest very aggressively—somewhere between 50–75% of your income—so you can retire sometime in your 30s or 40s. For those in the F.I.R.E. movement, “financial independence” doesn’t just mean sitting on some tropical beach or playing golf all the time. It means reaching the point where you don’t have to work a full-time job if you don’t want to. You can scale back to a part-time job or simply stop working altogether. The choice is yours.
This is a fairly new concept for me. As I continually strive to become more financially independent, FIRE is not a bad concept to adapt. Saving up to 70% of annual income means a lot of cutting corners. When you think about the outcomes, the perceived hardship is definitely outweighed by the awesome ending. Being able to retire early and truly enjoy your life is a priceless reward. If you’re anything like me, I dream of being able to travel the world when I retire. Being able to see different people, culture, scenery, oceans, experiences in different countries is a dream.
Retiring early because you don’t like your job is a bad reason to do it, and is a recipe for being bored or aimless when you get there. Achieving FIRE is a big deal, and it takes a lot of focus and determination.
Okay so what are the FIRE rules:
1. The basic math behind FIRE is ridiculously simple: spend less than you earn and “save the difference” in low-fee investments like index funds.
2 Take control of your financial life. This is something that you have to be pretty determined to do. You will feel like giving up, splurging on items that you know you work hard to be rewarded. Remember that this is a choice. Determination and hard work pays off. I’ve noticed another recurring theme among those who follow F.I.R.E. They take the time to really look at where their money is going. They define wants and needs and cut out spending that doesn’t make sense for them. That means getting on a budget and sticking to it. Those savings here and there add up, and they can help you make serious progress toward your goals.
3. Do some self reflecting to determine if this is what you want. Before embarking on your FIRE journey, define what financial independence means to you. Understand your goals, values and what motivates you toward financial independence and early retirement. Retiring early because you hate your job isn’t a sustainable goal.
4. You will need a strategy to reach your goal. Calculate how much money you will need to reach your personal financial independence goals. Most FIRE followers estimate that “once your net worth is 25 times your annual expenses, you’ve achieved financial independence.
5. Remember with DEBT, FIRE is not attainable. Carrying debt circumvents all other wealth-building strategies. Pay 10% interest and even if you earn a 7% return on your investments you’re still out 3%. It is really important to pay down debt. Striving to retire early takes hard work. Living frugally to be able to achieve your end goal is not something are able to do or are comfortable with doing. If this is what you want, make sure you set goals and live modestly.
To truly understand the FIRE movement, you also need to realize that our traditional views of retirement are out of date and constantly changing. According to data from the Bureau of Labor Statistics, nearly 20% of people over 65 are still working and that number is expected to grow.
Yes, some of these people work because they can’t afford not to. But others work because they’re pursuing a second act in their career: they’re finally doing work their passionate about or starting that business they’ve always wanted to. But, importantly, they’re doing it on their own terms.
FIRE allows people to do life on their terms. It gives them the financial breathing room to start a business, work part-time doing something they enjoy, spend time with their family, or yes, sip margaritas on the beach.
When we say that someone is retired, what we are really saying is that they have the option to not work. Instead of retiring FROM something, many people within the FIRE community choose to retire TO something.
For many in the FIRE movement, financial independence isn’t actually about retirement — it’s about having the ability to choose work that you enjoy doing. Maybe you’ll give up your career in accounting to finally pursue a career in photography Maybe you’ll say goodbye to working in marketing to open a science camp for kids. Maybe you’ll leave a job in the oil industry to start a nonprofit in the green space.
Financial independence gives you the chance to choose the work that you do, without worrying about how much you make.