Does retirement feel much too far away? Then you might be interested in joining the Financial Independence, Retire Early (FIRE) movement.
Some people love their jobs; others don’t. But it’s probably fair to assume that, if given the choice and financial flexibility, most people would prefer to spend their free time pursuing their interests rather than clocking in 40 hours a week.
But retirement costs money—lots of it. Which means people generally can’t retire early without sufficient earnings during their career years and some careful planning. In fact, even though early retirement is, as the name suggests, “early,” it’s a form of delayed gratification for those who have to sacrifice what they want for years, even decades, to call it quits earlier than they otherwise could afford.
Today, we’ll talk about what the FIRE movement is, how it works, and how to determine whether it’s a realistic goal for you.
The information and analysis contained within this article appears for your consideration, but it does not constitute individualized financial advice. Always act at your own discretion.
Table of Contents
What Is the FIRE Movement?
The FIRE movement prioritizes intense saving and investing to reach a goal of retiring earlier—sometimes significantly earlier—than is traditionally expected.
This isn’t about setting aside a few extra dollars each month. This is about stripping your budget down to the basics and investing aggressively.
As a broad for-instance: A person investing “normally” for retirement might set aside 10% or 15% of their income each month. Someone practicing FIRE might set aside 50%.
Once a worker reaches their FIRE number (more on this later), they either ease into retirement or fully retire.
Steps to Achieving an Early Retirement
There’s truly nothing novel about the steps involved in achieving an early retirement. They’re straightforward and easy to understand.
The difficult part is in the execution. It’s simply not financially feasible for some; and even among those with the resources to make it work, some might struggle to muster the discipline necessary to pull it off.
1. Find Your FIRE Number
Your FIRE number is simply the total savings you need by the time you retire.
Many FIRE members go by the “Rule of 25,” which suggests you save 25 times your annual expenses. For instance, a person who spends $70,000 per year would have a FIRE number of $1.75 million ($70,000 x 25 = $1.75 million).
Many FIRE retirees typically plan to implement the 4% rule for retirement withdrawals (or a variant of it). The 4% rule dictates that you withdraw up to 4% of your savings in your first year of retirement; then in each subsequent year, you withdraw the previous dollar amount, adjusted upward/downward for inflation/deflation.
It’s worth noting that some people believe the 4% rule is outdated—and that includes the rule’s creator, who has since made some adjustments to the withdrawal level.
Consider consulting a professional to determine what FIRE number makes sense for you.
Related: How Much to Save for Retirement by Age Group [Get on Track]
2. Adjust Your Budget
It’s possible you already run a tight financial ship, but many people who decide they want to be a part of the FIRE movement usually have to take scissors—if not an ax—to their budgets.
There’s a long list of expenses many people can cut from their budgets, but generally speaking, people typically start by cutting down (or zeroing out entirely) their discretionary expenditures.
After that, they see how they can negotiate down or otherwise reduce their more necessary spending—for instance, people look for lower-cost internet/phone providers, find ways to cut back on energy usage in their home, and try to be more cost-conscious when it comes to grocery shopping.
Once you’ve slashed costs to the point where you could reach your FIRE number, look at your budget and ask yourself, “Can I live with this?” If you’ve cut to the point where you’re, say, making risky insurance and health care decisions, you might want to reconsider. Or you simply might admit to yourself that you need more creature comforts than what the budget provides for.
Also, a reminder that the adjustment to your budget will need to incorporate your efforts to …
3. Ratchet Up Your Retirement Savings
Unless you’re already a hyperaggressive saver, you’re also going to need to make some considerable strides to put more money away in your retirement account(s). And this could make the aforementioned step much more difficult.
As I mentioned before, many FIRE followers try to save 50% or more of their income. The figure you need to hit your FIRE number might be lower, but there’s a good chance that it’s more than what you currently sock away.
Here’s an example of how drastic the change might need to be, and how it could affect your take-home income.
Tom, age 30 and single, makes $80,000 a year after taxes. He currently contributes an aggressive 10% of his income ($8,000) to a 401(k). His employer matches a maximum of 3%, for total annual savings of $11,000. He currently budgets around annual take-home income of $72,000 ($80,000 – $8,000 in savings contributions). Remember: The $3,000 employer contribution is free.
However, Tom must save $40,000 per year to reach his FIRE number on time. That means he must save an additional $29,000 annually.
First off, Tom has to do that within the confines of annual contribution limits. For instance, the 401(k) contribution limit for 2026 is $24,500. So, let’s say he maxes out his 401(k). Even with the employer contribution, he still needs $12,500 more. Well, the IRA contribution limit for 2026 is $7,500. That brings him down to $5,000.
If he had a health savings account (HSA) through work, that’s another $4,400 he could sock away in a tax-advantaged account. So he’d only have to find a home for the remaining $600. If not, he’s looking to stash $5,000. Either way, there aren’t many tax shelters left—he’d likely have to put that money into a taxable brokerage account (if he wanted it to grow at a pace similar to his retirement accounts), which means he’d face annual tax consequences on things like capital gains and dividend income.
Related: How to Invest for (And in) Retirement: Strategies + Investment Options
Do you want to get serious about saving and planning for retirement? Sign up for Retire With Riley, Young and the Invested’s free retirement planning newsletter.
3. Optimize Your Investments
When you calculated how far your savings would take you, what were you using as a baseline rate of return?
For instance: Were you planning to put all non-retirement-account savings in a high-yield savings account or certificates of deposit (CDs)? Well, as tax-inefficient as a traditional brokerage account might be, it’s also going to provide you with a lot more growth and, in theory, get you to your FIRE number even more quickly.
Within your retirement accounts, how are you planning to be invested? If you’re 30 and your portfolio is, say, 50% stocks and 50% bonds, you’re much more conservatively invested than many advisers would say you should be. Again, merely stepping up to the recommended level of portfolio aggression for someone your age might be enough to get you over the hump (or get to your FIRE number even more quickly).
In short: Optimizing your investments can make a big difference in whether you can achieve a FIRE retirement.
Related: How to Invest for (And in) Retirement: Strategies + Investment Options
4. Find Additional Sources of Income
Perhaps the most important takeaway from Tom’s example above is this:
Tom is going from $72,000 in take-home income to just $43,000 ($80,000 – $37,000 in savings contributions). So he’s not just cutting expenditures—he’s doing so from a much lower income ceiling.
If you face a similarly austere situation, you might need/want to find ways to increase your income.
Easier said than done, of course, but it’s not impossible either. The three traditional ways of going about it are:
–More aggressively seeking out a raise/promotion from your current employer.
–Change jobs to upgrade your pay.
–Start a side hustle to earn additional cash.
If you’re still not close to being able to make your FIRE number from here, it’s very likely that a FIRE retirement isn’t in the cards. It’s nothing to be ashamed of.
In fact, now that you’ve done the work of seeing what you can cut and how you can earn more, you might find that between some more doable budget cuts, somewhat higher retirement contributions and a small side gig, you could still set yourself up to retire earlier than the average American—even if it’s not as early as you originally imagined. That’s still progress!
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5. Talk to a Financial Advisor
If you have lofty monetary goals, you might want to talk to a professional financial advisor.
Quite a few people who opt for a FIRE journey are self-starting DIYers. So their first instinct might be to open up an Excel sheet, grab a calculator, and get to planning.
But remember: Financial advisors are generally trained in not just doing all the calculations necessary to determine when someone can retire when and how they want, but also in looking around corners to determine what hurdles might pop up along the way.
Financial advisors not only can help out creating a personalized plan from the start, but they can also help you along the way, plotting out investment strategies, tax planning, budgeting, and risk management. You might want assistance in, say, health care planning, Social Security timing, and the best ways to diversify your income. And when you’re near retirement, you’ll need a retirement account withdrawal strategy in place.
A financial advisor can help you with all of the above and more.
Related: How to Choose a Financial Advisor
FIRE Variations
There are several FIRE variations. These vary in difficulty to achieve.
Barista FIRE
Barista FIRE is about an early partial retirement, not a full one. This strategy involves quitting your full-time job at requirement but sustaining yourself through a combination of savings and part-time work while still living a fairly frugal lifestyle. Sometimes, however, they don’t need to withdraw retirement funds early.
The “barista” name evokes the popular choice of working as a barista because it offers part-time hours and is often considered more enjoyable than someone’s previous career. It’s also because some major coffee chains offer health care to employees with part-time hours.
But obviously, while the name points to coffeeshops, it applies to any kind of part-time work.
Related: Retired But Too Young for Medicare? Health Insurance for Early Retirees
Lean FIRE
Lean FIRE is for people who thrive on being highly minimalistic. These movement members are on a bare-bones budget and many manage to live on $25,000 or less per year. The hope is that surviving on the minimum now will pay off in the long run.
Related: How Much Social Security Will I Receive?
Fat FIRE
Fat FIRE is for the most ambitious members of the FIRE movement. These people want to retire early without lowering their standard of living. This necessitates a high salary and very aggressive savings and investment strategies to pull off.
Related: 10 Common Financial Mistakes That New Retirees Make
Pros + Cons of Early Retirement
There are several benefits of early retirement, but it isn’t for everyone. There are drawbacks to consider as well.
Advantages of an Early Retirement
Retirement allows for far more free time than you get during your working years. After all, the typical American work week is 40 hours—and for many, it’s more. Plus you’re also dropping the commute; the average one-way travel time to work in 2024 was more than 27 minutes, per the U.S. Census Bureau, which means the average round-trip travel is about 55 minutes per day. That’s four and a half hours per week you’re gaining back, too.
All told, people are getting 45 to 50 hours back by retiring.
Retiring early can also reduce stress and anxiety. If you plan to move during retirement, you can change locations earlier. This may allow you to start enjoying better weather, spending more time with family, or saving money if you downsize your home.
Related: Are You Saving Enough for Retirement?
Do you want to get serious about saving and planning for retirement? Sign up for Retire With Riley, Young and the Invested’s free retirement planning newsletter.
Disadvantages of an Early Retirement
FIRE can be extremely difficult to achieve. To reach it, you may have to forgo most social events, which could damage friendships and familial relationships. You might also need to give up hobbies that give you joy. Indeed, some people find long periods of frugality to be downright miserable.
It’s also possible that as you near retirement, something changes that drastically alters your math and pushes your timeline further back. You could find retirement boring and miss the routine of employment; and re-entering the workforce can be challenging after you retire.
And lastly, because no one knows what their lifespan will be, you might never be rewarded for all the sacrifices you make to retire early.
Related: 7 Expenses That May Be Missing From Your Retirement Budget
How Achievable Is the FIRE Movement?
The appeal of the FIRE movement is clear, but this goal is far more achievable for some than others.
The average retirement age for men in 2024 was 64.6 years old, according to the Center for Retirement Research at Boston College. That’s three years older than the average in 1994. The average retirement age for women was 62.6 years old, and that age has been steadily rising over time, too.
Your ability to retire early depends largely on your salary, capacity to live far below your means, and aggressiveness of your investments. If you’re serious about becoming part of the FIRE movement, you should discuss your goals with a financial advisor.
Related: 5 Things Retirees Can Do With Their Cars
Want to talk more about your financial goals or concerns? Our services include comprehensive financial planning, investment management, estate planning, taxes, and more! Schedule a call with Riley to discuss what you need, and what we can do for you.
How Long Will My Savings Last in Retirement?
When a person finally decides to retire, they don’t quit their job one day, then liquidate their entire nest egg and stash it into a bank account the next day. (Or at least, they probably shouldn’t.) They withdraw money over time, which allows them to cover their expenses while the remaining nest egg continues to grow in price and/or generate income.
That’s where these retirement withdrawal strategies come in.
Related: 10 Best Monthly Dividend Stocks for Frequent, Regular Income
The vast majority of American dividend stocks pay regular, reliable payouts—and they do so at a more frequent clip (quarterly) than dividend stocks in most other countries (typically every six months or year).
Still, if you’ve ever thought to yourself, “it’d sure be nice to collect these dividends more often,” you don’t have to look far. While they’re not terribly common, American exchanges boast dozens of monthly dividend stocks.
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