What Is the FIRE Movement? (And Is It Realistic for You?)

Does the typical age-65 retirement feel way too late for your liking?

Well, if you haven't looked into the "FIRE" movement yet, you'll want to get familiar.

What Is the FIRE Movement?

Some people love their jobs, some people don't. There's no "right way" to feel about what you do for a living.

But we think it's safe to assume that no matter how one feels about their job, given both the choice and financial flexibility to pull it off, most people would prefer to spend most of their time pursuing their interests over pushing pencils.

The reason most people don't do it is money. Retirement costs money. Lots of it, in fact—so much so that people generally can't retire early without sufficient earnings during their career years and some careful planning. 

In fact, even though early retirement is … well, early … it's also, in a way, delayed gratification. Because people who want to retire early sometimes have to make sacrifices for years, even decades, to call it quits on their own terms.

Many people who go that route are said to be "joining the FIRE movement." That's a reference to  Financial Independence, Retire Early (FIRE), which 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 studs and investing aggressively. A person saving "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 in a moment), they either ease into retirement or fully retire. You see, there's more than one "type" of FIRE:

• Barista FIRE is about an early partial retirement, not a full one. This strategy involves quitting your full-time job at retirement 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. (Why "barista"? It evokes the popular choice of working as a barista because the job offers part-time hours, and many people find it enjoyable. Also, a couple of major coffee chains offer healthcare to even part-time employees.)
• 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.
• 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. 

6 Steps to Take Toward an Early Retirement

So, what does it take to achieve an early retirement? Honestly, there's nothing particularly novel about the steps involved—they're straightforward and easy to understand.

The trick is in the execution.

A FIRE retirement is simply not financially feasible for some people. And even among those who have the resources to make it work, some might struggle to muster the discipline necessary to pull it off.

But if you're interested in learning, here are the steps you'll need to take:

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).

But you can also get to your FIRE number by thinking about what your withdrawals will look like in retirement. FIRE retirees typically expect 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.

However, you can use other ​retirement withdrawal strategies​ to get to your number, too. And if you're not sure how, you can always consult with a professional financial advisor, who can run you through the process.

Young and the Invested Tip: Some people believe the 4% rule is outdated, including the rule's creator! Here's what you need to know about the evolution of this well-traveled retirement guidance.

2. Adjust Your Budget

You might 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 here's the typical order:

1. Start by hacking away at (or entirely zeroing out) your discretionary expenditures. 
2. See how you can negotiate down or otherwise reduce more-necessary spending. 
   • People often 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.
3. 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.

But you could also …

3. Find Additional Sources of Income

If the only path to a FIRE retirement given your current financial resources is outright austerity, you might want/need 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.

At this point, 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. 

That'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!

However, if you've gone through these steps, the numbers make sense, and you're comfortable living a more spartan life than you are right now, you might very well be able to achieve a FIRE retirement.

If that's the case, you'll need to start thinking about your investments. But first, that leads us to one more aspect of the budgeting plan. Specifically, you will also need to account for how you'll ...

4. Ratchet Up Your Retirement Savings

Unless you're already a hyperaggressive saver, you'll also have to put much more money away in your retirement account(s).

As I mentioned before, many FIRE followers try to save 50% or more of their income. The savings percentage you'll 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.

Young and the Invested Tip: Retirees sometimes let down their guard once they've reached the career finish line. Don't let that happen. These common mistakes for soon-to-be and fresh retirees can derail your post-work plan.

5. 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.

What does your retirement account's allocation look like? 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.

6. 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.

Young and the Invested Tip: Not sure how to choose a financial advisor? We've got you covered.

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