FIRE: The Basics of Retiring Early

Brandon Wang by Jonathan Chng on Unsplash

The FIRE movement has gained immense momentum in recent years and has an almost cult-like fandom in the personal finance community. Inevitably, as I started my first few steps into personal finance, I stumbled upon the concept of FIRE: Financial Independence Retire Early. The FIRE movement is a dedication to extreme savings and investing in having the opportunity to retire much earlier than traditional savings or retirement plans.

Retiring in your 30’s or 40’s might sound like a dream to most people. It might also seem impossible without a high-paying job or getting extremely lucky, but actually, the FIRE community is filled with people of modest salaries.

The emphasis is placed on intensely high savings rates(sometimes up to 80%!) coupled with living frugally and reducing expenses to a minimum. Read: you’re sprinting to retirement, and your shirt is on fire.

In fact, FIRE embodies the same idea that Vicki Robin wrote about in the best selling book on personal finance, “Your Money or Your Life.”

“Money is something you trade your life energy for. You sell your time for money. It doesn’t matter that Ned over there sells his time for a hundred dollars and you sell yours for twenty dollars an hour. Ned’s money is irrelevant to you. The only real asset you have is your time. The hours of your life.”

To take back the time in our lives, followers of the FIRE movement have gravitated towards this drastic, high-saving, low-expense lifestyle to retire well before the traditional age of 65.

This simple idea has sparked the flame in many to completely shift their outlook on financial independence and move retirement plans even decades earlier. In reality, the steps to achieve FIRE are relatively simple. It’s sticking to these steps that is the most difficult part.

Steps to FIRE

  • Step 1: Decide what kind of living expenses you’ll be happy with in retirement.
  • Step 2: Consistently save and invest a majority of income while reducing expenses substantially.
  • Step 3: Once you’ve saved up or invested about 25–35 times your expected yearly expenses, you now have the opportunity to quit your job or retire to an alternate form of work. It’s at this point many reach FIRE.

Note: FIRE advocates commonly equate financial independence with the 4% Rule in the Trinity study: an influential paper that determined it is sufficient to live off of 4% of your total investments for the entirety of retirement.

What Happens After FIRE?

After attaining FIRE, many will quit their job to pursue other passions or industries that might have been too financially restrictive for them otherwise. Others stop working altogether and embrace the opportunity to spend more time with family or simply enjoy their hobbies.

Like staying on a diet, the plan to FIRE seems simple in theory but maybe exceedingly difficult to maintain.

There are also many different variations on FIRE, which creates more of a range of lifestyles rather than an exclusively frugal mindset. Some of these include Fat FIRE, Lean FIRE, & Barista FIRE.


  • Many FIRE enthusiasts champion an exceptionally frugal lifestyle. Fat FIRE differs by instead of maintaining a frugal lifestyle in retirement; they prepare to postpone retirement a few years or keep a higher savings rate to live much more lavishly in retirement.
  • This might mean preparing to live off $150,000+ a year instead of the much more common $25,000 — $50,000/year range that average FIRE enthusiasts plan to retire on. Of course, to achieve Fat FIRE, you will need much more saved up to reach financial independence.
  • The advantages of Fat FIRE are able to spend much more in retirement and the peace of mind that comes with a larger budget. The problem is simply the larger number needed to save up for before retirement, which might make it impossible for some to achieve Fat FIRE without a higher paying job.

Below are some numbers to compare with using the 4% Rule.

Lean FIRE:

  • Lean FIRE advocates are the ones that do not mind making significant sacrifices to achieve financial freedom earlier in life. The average yearly expenses for Lean FIRE is much lower compared to Fat FIRE and oftentimes only covers the essentials of a place to live, food to eat, and transportation. There have been many examples of individuals who have achieved Lean FIRE at phenomenally young ages by keeping their annual expenses in ranges as low as $20,000.
  • This path is most suited for minimalists or FIRE enthusiasts that don’t mind living in a low cost of living area or deciding not to have kids in the future. These may be deal-breakers for most, but Lean FIRE comes with the hefty advantage of financial freedom at a much earlier stage in life due to the lower retirement number required.

Barista FIRE:

  • Barista FIRE(sometimes also called Coast FIRE) is an interesting take on FIRE. The first few years of Barista FIRE are pretty similar to any other type of FIRE method, but instead of stopping when your savings can cover your expenses, you stop once no further income needs to be saved for retirement.
  • Instead of retiring, you’ll move to a part-time job or pursue some other sort of supplemental income to cover living expenses. Then you’ll let interest and compound returns grow your savings to your end goal or retirement number.
  • Of course, this variation also has its cons, the largest drawback being the most obvious as well. You won’t have full freedom and will need some sort of income to cover living expenses while your savings coast to that final number needed for full retirement.

This type of FIRE can be attained much quicker and more easily. For example, if you plan to live off $40,000 each year in retirement, you would need to save at least $1 million to retire. For some, this might not be easily attainable in a traditional FIRE timeline.

Instead, in Barista FIRE, you might have the same goal to live off $40,000 in retirement and want to switch to a part-time job as a barista for 20 years. Assuming a 7% rate of return, you’ll only need to save $260,000 before reaching Barista FIRE. In those 20 years of working part-time, the initial $260,000 will have grown to more than $1 million.

Despite the many different variations of FIRE, this lifestyle is not for everybody. It’s easy to get lost in the goal of retiring early. If that is your only goal, then you may be chasing after the wrong thing.

For some people, it might make them much happier if they can spend the moment on creating experiences. Keeping up with the high savings rate and frugal lifestyle, many FIRE enthusiasts champion may be excruciating to you. Don’t forget to live in the moment, and saying no, just to retire a few years earlier is not worth the regret of missing the best years of your life.

FIRE is a way to attain full freedom outside the traditional retirement plan. The most important part shouldn’t be simply about being able to retire and quit your job; it’s the FI in FIRE.

My Value in Financial Independence

FIRE is a great option that I believe everyone should at least consider. The single best financial anyone can make is to start creating a retirement plan early. Thinking about your future life can be a simple way to realize what you want in life and work towards a goal.

I stumbled upon the FIRE community early on in my journey into personal finance, and it may be the best financial education I have ever received. I learned the lesson to start saving and investing early, but it was also the first time I was ever influenced to think about my future.

Creating this lofty goal of retiring early made me determined to continue working hard to make my goal into reality. Having this goal not only motivated me but also made me question why exactly I wanted to retire early. To be honest, I ended up realizing I didn’t want to retire early.

I wanted the necessary financial independence to completely own my life. My entire life, I’ve been a very logical individual. Being raised in a mid-class immigrant family, I was continuously taught the path to success involved doing well in school and working at a large company until retirement.

With that in mind, I did the logical thing and worked hard in school. I got into a strong college and studied engineering. After graduation, I entered the workforce after securing a position at a Fortune 500 company. I’d decided this was the path for me with the highest likelihood of success.

It hasn’t been until recently that I’ve realized what I want to do and what makes me happy is being able to express myself through creative outlets. I don’t want to work until the traditional retirement age. I want to have the choice to be able to try out photography, make interesting videos, and also continue writing and sharing my opinions on Medium.

Unfortunately, I am painfully aware of my lack of expertise, which makes it unlikely I’ll be able to pursue any of these interests as much more than a hobby. I also don’t have the guts or determination to quit my job and risk switching careers without any guarantee of success.

This is why I want to achieve FIRE. Or maybe just FI.

I want the opportunity to spend my time and my life creating work that doesn’t necessarily pay the bills but genuinely makes me eager to wake up each morning to start my day. To achieve this, I’m willing to sacrifice a few wants and wishes now for my future happiness. I’ll grind today in my nine to five so that tomorrow when I wake up, I can start working for myself 24/7.

This article is for informational purposes; only not all information will be accurate. This should not be considered Financial or Legal Advice. Consult a financial professional before making any significant financial decisions.

Comments / 0

Published by

Foodie / Personal Finance Enthusiast / Post-grad Life

San Francisco, CA

More from Brandon Wang

Comments / 0