What Is the FIRE Movement?

FIRE movement

Did you know that the average person will spend 90,000 hours at work during their lifetime? That means that roughly one-third of your life is spent at work.

While some people might identify with their career as their purpose in life, others might simply see it as a necessity to make ends meet. For people in this latter camp, the notion of spending so much of your life at work might seem quite dire.

The FIRE movement has arisen in response to the traditional path of working 40+ hours a week until you’re 65. These people want to have more control over how they spend their time while they’re still young.

What exactly is the FIRE movement, though? Is it right for you? Let’s explore what you should know.

What Is the FIRE Movement?

FIRE is an acronym for “Financial Independence, Retire Early.” People who consider themselves a part of this movement have the goal of aggressively saving and investing. By saving between 50-75% of their income, these individuals are planning to retire sometime in their 30s or 40s rather than waiting until they are 65.

This path stands starkly in contrast to the traditional retirement path. People who are focused on retiring early are primarily looking to achieve two outcomes.

Firstly, they are always working to raise their income. Secondly, they are always looking for ways to lower their expenses.

People who are dedicated to achieving financial independence and retiring early are trying to reach a point where they don’t have to work a full-time job out of necessity. Once they reach their goal, they might stop working altogether or they might scale back to a part-time job.

The Different Rungs of the FIRE Movement Ladder

As the FIRE movement has grown, a number of different distinct types of FIRE have emerged. Depending on your current income and career, as well as your intentions for early retirement, one of these paths might stick out to you as more applicable to your wants and needs.

FIRE (Regular or Traditional)

This is the standard FIRE concept that focuses on accumulating income-generating assets that allow you to cover your living expenses. Traditional FIRE involves cutting expenses, saving aggressively, investing intelligently, and simplifying your lifestyle.


LeanFIRE is a type of FIRE that focuses on having a much tighter budget. The goal is to have a significantly lower cost of living than the average person.

A big part of the LeanFIRE lifestyle is being frugal. Keeping costs down, managing expenses, and lifestyle simplification become major focuses.

People who ascribe to the LeanFIRE path plan on retiring and living on less than $40,000 each year.


For people who want to retire early but have much higher expenses, a higher yearly budget, and an interest in maintaining the creature comforts of wealth, FatFIRE has emerged.

People who follow this path are looking to live on $100,000 a year or more. This means that only high earners can really expect to go this route.

Frugality isn’t as much of a focus when it comes to FatFIRE, but rather embracing a more indulgent approach. These people aren’t interested in completely sacrificing their cushy lifestyle to eat rice and beans for the rest of their life.


This type of FIRE isn’t about quitting your job and never working again. The goal here is to save enough money and have it well invested so that you only have to make a small amount of income each year.

The name BaristaFIRE implies that you can supplement your lifestyle with a low-paying, low-stress, part-time job. Some people might choose this approach in order to get health coverage and stay engaged in a working role without the high stress of the corporate environment.


CoastFIRE is quite similar to BaristaFIRE, and there is some debate over how they exactly differ. Essentially, CoastFIRE is about starting investing at a young enough age that the power of compounding interest will help you cover your cost of living when you’re older.

Having this type of arrangement set up can mean that you work to cover your living expenses, but you aren’t stressing trying to climb the income or status ladder. By setting yourself up to benefit from compounding interest in the future, you are essentially coasting until you reach your goal retirement amount.

An Early Retirement Roadmap

If you are committed to retiring early, you’re going to need a plan. Crunching the numbers becomes essential, as you need to know exactly how much money you’ll need each year and how much money you’ll need to save.

Get Out of Debt and Make an Emergency Fund

Millions of younger people are held back from retirement investment by the burden of debt. For this reason, debt should be overcome first before you open a Vanguard Roth IRA or another investment account.

You’ll want to consider whether or not you will continue using credit cards as a part of your financial plan. On the one hand, there are a lot of good reasons to use credit cards that boost your financial health. However, if you aren’t using credit cards in a responsible manner, carrying debt and relying on credit cards to pay for expenses can end up leading to serious financial trouble.

Once your debt has been dealt with, it’s time to create an emergency fund. This fund should consist of 3-6 months worth of expenses in case of the unexpected.

Invest Into Tax-Advantaged Retirement Accounts

Once you’ve paid off your debts and created an emergency fund, it’s time to start saving for retirement. To begin with, you can save 15% of your gross income each month. You’ll store this money away in retirement plans such as a ROTH IRA or a 401(k), for example, a Fidelity 401(k).

Pay Off Your Mortgage and Save For Your Kids’ College

If you have kids, you might choose to put money away for their college fund. If you expect your kids will go to college, creating this fund can ensure that they aren’t faced with debt when they graduate.

Next, you’ll want to focus on paying off your home loan early. By eliminating your monthly mortgage payment, you’ll be able to ramp up your investments and savings.

(Looking for more advice about what to do after you pay off your mortgage? Check out this article.)

Maxing Out Your Retirement Accounts

Now it’s time to really start making headway on your FIRE goals. You’ll first want to max out your contributions to your IRA and 401(k).

It’s worth understanding that, in most cases, you’ll face an early withdrawal penalty if you withdraw money from these retirement accounts before the age of 59.5. For this reason, you’ll want to create a bridge account, which we’ll touch upon in the next section.

(If you’ve been searching around for the right retirement plan, you might be wondering if Empower Retirement is right for you. Check out our review here.)

Build a Bridge Account

If you are serious about retiring early, you’ll want to invest some money in a taxable investment account. With this type of account, there aren’t contribution limits and you can withdraw money whenever you’d like. However, you will have to pay taxes on any money that is earned by your account.

It might be worth sitting down with an investment professional to take a look at the numbers here. You can then determine how much money you should invest in your bridge account in order to meet your FIRE goals.

Financial Independence, Retire Early: Is It Right For You?

Work can be a real drag, and many people are enticed by the prospects of the FIRE movement and retiring early. However, hating your current job isn’t necessarily enough of a reason to pursue this path. Without goals or a purpose that you want to pursue once you reach your FIRE goal, you might find yourself floundering on the other side.

Another potential downside of the FIRE path is that you are so focused on lowering expenses, increasing income, and saving money that it can leave you feeling unsure of what to do with yourself when you finally make it to early retirement. While it’s good to plan for the future, it’s important to work towards a balanced life even when aggressively saving.

This is also a route that takes quite a bit of discipline. Depending on your income and expenses, achieving FIRE might mean living a very lean lifestyle. Some people might find that this is worth it, while others might not be interested in spending so many years making this type of sacrifice.

If you’re looking for more resources about investing and personal finance, check out our library of articles here!

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