Financial Independence Retire Early: The FIRE Movement

Through aggressive saving and investing strategies the retirement age doesn’t have to be 65 anymore. Following the FIRE movement could have you financially independent by the time you turn 40.

Written by Ashlyn Brooks / July 18, 2022

Quick Bites

  • Financial Independence Retire Early: The FIRE Movement is a strategy to retire well before the standard age of 65.
  • The movement promotes an aggressive savings strategy of 50% to 70% of your annual income.
  • The FIRE Movement can be adapted to suit your own vision for retirement.

F.I.R.E is an acronym for the movement: Financial Independence, Retire Early and was adopted from the best-selling book Your Money or Your Life. The goal behind this movement is to not have to wait until you’re 65 years old to kick your feet up. How you achieve this is through aggressive budgeting, saving, and investing strategies.

The idea is to save anywhere between 50% to 70% of your income to afford the option to retire by the time you reach 40 years of age. Saving this much of your income might seem unfathomable. But we’ll dive into who this FIRE movement is for, and give you tips and insight to see if early retirement could be in your future.

Inside this article

  1. How does the FIRE movement work?
  2. How much should I save?
  3. FIRE movement levels
  4. Tips & tricks to FIRE
  5. Who’s the FIRE movement for?
  6. FAQ

How does the FIRE movement work?

FIRE works by dedicating your early working years to saving and investing up to 70% of your income. John Stoj, a financial advisor at Verbatim Financial, says these three questions helped him understand the premise behind FIRE:

  • How much money do I need to stop working?

  • How can I save as much as possible?

  • How fast can I get there?

The ultimate goal of the FIRE movement is to pad your savings and investment accounts early in hopes that you will be able to quit your job and live off of withdrawals from your portfolio well before your 65th birthday.

How much should I save if I intend to join the FIRE movement?

If you intend to follow the FIRE movement, how much you save depends on your unique situation. Everyone has a different vision of what their life will look like in retirement. If you enjoy travel and the finer things in life, your FIRE journey will look different from someone who is content living within more modest means.

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Ideally, how much you should save to consider yourself a FIRE participant should be 50% to 70% of your annual salary. You’ll stick to this savings goal until you have stashed away 30 times your yearly expenses and only then should you retire from your job. Another metric to aim for is to have your yearly expenses fall between 3% to 5% of your portfolio balance.[1]

Did you know there are levels to the FIRE movement?

What is great about the FIRE movement is that it is versatile. Not everyone’s financial situation is the same and not everyone’s retirement planning will follow the same path. With FIRE not being a one size fits all plan, you might find one of these levels of FIRE more manageable for your lifestyle.

Coast FIRE

Coast FIRE is essentially what the FIRE movement embodies, however, you still delay retirement until your 60s. In a nutshell, Coast FIRE consists of cramming 40+ years of retirement contributions into a 20-year window. People who follow Coast FIRE’s principles contribute as much as possible to their retirement accounts until they reach their 40s.

After that, they stop their retirement contributions and let the money “coast” and compound while they finish their career. This is a great variation of FIRE to follow if you don’t want to worry about your retirement funds near the end of your career and allows you to make other choices with your money after you achieve FIRE success.[2]


This level of FIRE is catered toward the minimalist or the individual wanting to save in manner to retire as early as possible. To follow Lean FIRE, during your working years you will live on the bare minimum and save and invest the rest. This means that your retirement lifestyle will be minimalistic as well. However, due to having a simpler lifestyle, you’ll need a smaller income for retirement and achieve financial independence faster.[2]


Fat FIRE is for the anti-minimalist. This level of FIRE is geared toward the individual who is less frugal and enjoys spending more than saving. People following Fat FIRE won’t make as much financial sacrifice during their working years and will likely want to carry over their spending habits and lifestyle into retirement. Due to these reasons, it will normally take longer to achieve FIRE success. Typically this level of FIRE is reserved for individuals with a higher annual salary.[2]

Barista FIRE

You guessed it. This level of FIRE is focused on retiring from your main career early. However, Barista FIRE is unique in that its overall objective isn’t to retire completely. The goal here is to achieve enough financial independence to shift the focus of your work. People who follow Barista FIRE will typically use their newly found free time to pursue a career they have always had a passion for but might not pay as well as their old job. This gives you the opportunity to work for pleasure rather than working to afford your life.[2]

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Tips & tricks to FIRE

Annette Harris, founder of Harris Financial Coaching, says she achieved financial independence early by working with her spouse to make sound financial decisions and by paying down their debts.

“Paying off our debts early and before any interest was charged allowed us to triple our mortgage payments which led us to pay our mortgage off in eight and a half years,” Harris says. “This freed up a significant amount of money to help us achieve FIRE success.”

Additional tips for success when adopting the FIRE method for your life are:

  • Making a plan based on your financial situation

  • Finding ways to reduce your spending

  • Make it a priority to stay out of debt

  • Find side hustles to increase your income

  • Invest the money you save into high-yield avenues

Who’s the FIRE movement for?

FIRE has a pretty daunting task of saving 50% to 70% of your income. Because of this many people find that the FIRE movement is an exclusive club for high earners and out of reach for the average worker. However, FIRE has many accessible elements regardless of how much you earn. If you break it down to its simplest form, FIRE is simply about finding ways to spend your money wisely and adopting a healthy saving strategy.

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The FIRE movement is really for everyone. Most people can benefit from the principles that FIRE embodies, including saving money and adopting frugal spending habits. Those are all invaluable lessons to learn regardless of whether or not you are planning to retire early.


What is the 4% Rule in FIRE?

A milestone for financial independence is a portfolio large enough to sustain spending habits with inflation-adjusted withdrawals equal to 4% of the portfolio's initial value—also known as the 4% rule.

Where did the FIRE movement start?

The roots of the FIRE movement can be traced back to Vicki Robin and Joe Dominguez, who wrote the book Your Money or Your Life in 1992. Robin and Dominguez advocated that your retirement years should be spent enjoying hobbies, and time with family and friends instead of working into your 60s to continue earning money.

Article Sources
  1. “The inventor of the 4% rule just changed it.” MarketWatch. Nov. 3, 2020.
  2. “Financial Independence Retire Early: Everything You Should Know About the FIRE Movement.” Oct. 16, 2021.

About the Author

Ashlyn Brooks

Ashlyn Brooks

Ashlyn is a personal finance writer with experience in budgeting, saving, loans, mortgages, credit cards, accounting, and financial services to name a few.

Full bio

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