FIRE stands for Financial Independence, Retire Early. It is a lifestyle movement focused on extreme saving and investing to achieve the freedom to stop working for money decades before traditional retirement age.
The core math is simple: save 25–30 times your annual expenses, then withdraw 3.5–4% per year indefinitely. If you spend $40,000/year, you need roughly $1,000,000–$1,200,000 invested.
Lean FIRE: Retire on minimal expenses ($25,000–$40,000/year). Requires aggressive saving (50–70% of income) but achieves independence fastest. Fat FIRE: Retire on a comfortable lifestyle ($100,000+/year). Requires $2.5M+ but maintains luxury travel, dining, and experiences. Coast FIRE: Save enough early that compound growth reaches your target by traditional retirement age without further contributions. Coast at a lower-stress job.
Barista FIRE: Semi-retire with part-time work covering some expenses while investments cover the rest. Common for healthcare benefits.
The 4% rule originates from the Trinity Study (1998), which found that withdrawing 4% annually from a 50/50 stock/bond portfolio succeeded 95% of the time over 30 years. For longer retirements (40–50 years), many FIRE practitioners use 3.5% or even 3.25% to account for sequence-of-returns risk — the danger of poor market performance in early retirement years.
Criticisms of the 4% rule include: it was based on US historical data only, assumes no flexibility in spending, and does not account for extended low-interest environments.
The path to FIRE requires both sides of the equation: 1. Increase income: promotions, side hustles, skill development, entrepreneurship 2. Decrease expenses: housing optimization, meal planning, used cars, minimalism 3. Invest aggressively: low-cost index funds, tax-advantaged accounts, real estate 4. Avoid lifestyle inflation: raises should boost savings rate, not spending
Most FIRE achievers save 50–70% of their income. This sounds extreme but becomes easier with automation, habit formation, and alignment between spending and values.
Model your FIRE number with our Savings Calculator. Enter your target annual spending, expected return rate, and current savings to see how many years until financial independence. Experiment with different savings rates to find your personal timeline.