Going For FIRE: How to Achieve Financial Independence and Retire Early

Jacqui Coombe


You might have heard of the term FIRE, which stands for Financial Independence, Retire Early. FIRE is a movement of super-savers who aim for extreme frugality, smart investment, and early retirement. This early retirement can be during your 40s or even earlier. In recent years, it’s gained widespread attention, and some have adopted the FIRE strategy in aiming for retirement decades before the traditional timeframe.

So what else does FIRE involve and what are the steps you could take towards adopting a FIRE approach to your life? Read the following guide to find out everything you need to know.

FIRE explained

FIRE is an extreme alternative to the traditional approach to retirement. As a general rule, FIRE’s radical approach to savings requires adherents to save as much as 70% of their incomes. Once you have enough accumulated funds, you’ll again live frugally, withdrawing just 3% to 4% each year. Take into account this percentage should be adjusted for inflation.

It’s worth noting that FIRE retirement doesn’t necessarily mean you’re living on a tropical island with nothing to do. The aim is you have the freedom to stop working full-time if you want to. You can stop working or perhaps work part-time or on a casual basis.

So how much is enough in accumulated funds for a FIRE retirement? In general, this should be at least 25 times your yearly expenses. So someone living on $50,000 a year should have $1.25 million invested.

FIRE Explained For Achieving FIRE

Achieving FIRE requires considerable commitment and discipline. Some of the key strategies include:

1. Saving and investing

Those following the FIRE approach invest at least 50% and ideally 70% of their income in their retirement nest egg. If they start as early as possible while they’re still in the workforce, this gives their investments even more time to compound and grow.

2. More income

In addition, your strategy should involve raising your income, such as through a rental property or working on the weekends in a side hustle. More income means you can put aside extra money for investing. Getting a raise or finding a job that pays you six figures could be another way to go about it.

3. Budgetary discipline

FIRE adherents need to be diligent about tracking and monitoring their expenses while they’re still working. This enables them to save more and keep outlays as low as possible.

Figure out what your wants are as opposed to your needs and eliminate all spending that falls under the wants bucket. Even saving a few dollars each day can make a big difference over time, especially when you take into account the effect of compounding growth on invested money.

4. Detailed retirement planning

Extreme frugality and investing alone might not see you achieving FIRE on schedule. Success will likely require detailed planning, with clear projections for withdrawals, expenses, and investment gains before and during your retirement years.

On top of that, FIRE includes planning for emergencies. Managing risks, such as by taking out life insurance and other types of coverage, can protect you and your dependents in case the unthinkable happens. Once you have your plan, you will need to stick to it. In addition, you should maintain a generous emergency fund.

Variations On FIRE

There are a few different variations of FIRE that allow for more flexibility depending on your lifestyle and priorities.

Fat FIRE - Fat FIRE is suitable for those on higher incomes who are aiming for FIRE without sacrificing their lifestyles. If you’re earning much more than the average person, you can put aside more money and still retire FIRE-style in your 40s. You might be saving far less than 70%. However, your higher income means you’ll still be able to build a generous retirement nest egg.

Lean FIRE - Lean FIRE is for those who can live an extremely minimalist lifestyle with a very high percentage of their income going into savings. They may live on $25,000 or less each year to accelerate their time to retirement.

Barista FIRE - Barista FIRE offers a middle ground between Fat and Lean FIRE. Adherents may work part-time and live off their savings in part while maintaining something less stringent than the minimalist lifestyle of Lean FIRE.

Is FIRE right for you?

FIRE won’t be right for everyone given it’s an extreme way to save for retirement. Furthermore, many people enjoy working in their jobs and may have no desire to retire in their 30s or 40s.

However, FIRE can work well if you’re already on a six-figure salary and don’t need to compromise your current lifestyle to retire by your 40s. Another positive about the FIRE movement is that it encourages people to think about retirement planning. It can inspire other approaches to work and life beyond the traditional one. These other approaches may better reflect personal priorities and values.


In its purest form, FIRE and its lifestyle sacrifices aren’t for everybody. However, anyone can draw inspiration from FIRE to become smarter about saving, investing, and spending. Moreover, FIRE highlights the fact that not everyone has to follow the traditional route of working until they’re 65 before retiring.

Achieving FIRE will require considerable discipline and a detailed retirement plan and budget. You will likely need to raise your income and start saving and investing aggressively.

Doing the maths is essential for working out how realistic the FIRE approach is in your situation. In the final analysis, investing more of your income and having your retirement savings grow faster can only be beneficial even if you don’t plan to retire early.

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Jacqui Coombe has been a prolific reader since childhood, and now channels her love of the written word into writing content on a range of topics from business, marketing and finance to travel and lifestyle.

Santa Monica, CA

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