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While many Americans find themselves wondering if a comfortable retirement will ever be within reach, a growing lifestyle movement is pushing back against this all-too-common struggle. It’s called the FIRE movement — an acronym for Financial Independence, Retire Early — and it’s gaining ground.

More people than ever before are reevaluating their priorities and wondering if there’s another way to live — one less fraught with money worries and free from the constant grind. FIRE is an alternative to the status quo, particularly popular among millennials looking to throw away the ‘keeping up with the Joneses’ rulebook to embrace a more frugal and financially secure path.

But what does joining the FIRE movement entail, and is joining FIRE right for everyone?

What is Financial Independence, Retire Early (FIRE)?

Financial Independence, Retire Early (FIRE) is a movement of people devoted to achieving financial independence from employment and dependency on others. It requires committing to a program of extreme savings and investment with the aim of retiring decades ahead of most people.

By adhering to a budget considerably tighter than typical households, FIRE followers save aggressively and invest persistently with one ultimate goal — to build sufficient wealth to produce a level of income that covers their expenses for life.

While most people are hoping to hit that number in their 60s or 70s, those in the FIRE movement are hitting the mark in their 50s, 40s, and sometimes even 30s, with decades of retirement ahead of them.

The idea stems from a 1992 best-selling book by Vicki Robin and Joe Dominquez, Your Money or Your Life. The authors encouraged readers to rethink their relationship with earning and spending, weighing each expense against the working hours required to pay for it. It asks people to think carefully about the amount of time they’re willing to exchange for the things they want and the sacrifice they’re willing to make to take that time back.

Ultimately, recognizing the tradeoff being made is what motivates participants to remain resolute in pursuit of the goal. Adhering to a lifestyle that diverges from the mainstream means the community aspect of the movement helps too. FIRE followers connect over shared values and goals through online forums, social media, in-person meetups, and conferences. They share tips and advice for saving money, making more money, investing, and creating passive income sources.

FIRE is about following sound, practical, and proven financial principles and taking conventional prudence to another level through hard work, discipline, and resourcefulness.

Achieving FIRE

The goal is simple: to retire much earlier than the traditional retirement age of 65 (or 67, when Americans are eligible for Social Security benefits). To do this, FIRE adherents save at least 50% and as much as 75% of each paycheck—a daunting task that calls for major lifestyle changes.

Achieving FIRE involves the following steps:

1. Find Your FIRE Number

The first step to pursuing FIRE is knowing how much it will take to get there. It requires hitting a target number identified through a simple calculation. Your FIRE number can be found by multiplying your expected annual expenses by 25.

This formula is based on the familiar “4% rule” — a popularly-held assertion based on past market performance that claims retirees can safely withdraw 4% annually from an investment portfolio of stocks and bonds without running out of money.

If you expect to spend $50,000 annually, your FIRE number would be $1.25 million. The idea is that this is the amount of money you will need to live on for the rest of your life. Reaching this amount is considered the point at which you’ve achieved financial independence and no longer need to work for a living.

If you’re looking at your FIRE number, thinking it appears to be unfeasible, you’re probably right — at your current level of spending. If you’re currently making $120k and spending $100k a year, saving $2.5 million is a tall order — mathematically impossible. Without some serious adjustments, you’d find it difficult to reach a comfortable retirement at any age, much less early.

To hit FIRE, you’d have to make some drastic changes, but with a shift in mindset and habits, many followers find it more feasible than expected.

2. Reduce Your Spending

With many middle-class families already stretched thin, reducing spending can seem unattainable. Those committed to the FIRE path often must slash their budget by making deep cuts. Not only will decreased spending allow for setting aside more money in the accumulation phase but adapting to a more moderate lifestyle lowers expected annual spending in the future, lowering the FIRE number.

Spending $100 per week on takeout is a convenient way to save time and treat yourself, but it amounts to $5,200 per year. Let’s say cooking at home with a carefully-planned meal plan and grocery budget, eating the leftovers you’d normally toss in favor of restaurant fare, saves you from splurging. This would shave a shocking sum from your retirement goal: $5,200 x 25 = $130,000. Looking at it this way makes opting for takeout less tempting.

You could do the same calculation with all frivolous spending. Do you really need another pair of designer shoes? The latest gadget? A full kitchen remodel? Two beach vacations a year? A new car every five years? In some cases, that answer may be yes. But many will forego what mainstream consumerism considers normal in favor of more freedom.

Some FIRE participants overhaul their entire lifestyle — dramatically downsizing their homes, moving to less-expensive neighborhoods, ditching late-model luxury car payments for clunkers, or even leaving the country for lower cost-of-living expat havens such as Mexico or Portugal.

From cutting out Starbucks and Target runs to kitchen sink haircuts, sack lunches, and second-hand clothing, some FIRE followers are willing to be as thrifty as possible to reach financial independence.

But what if frugality is still not enough?

3. Increase Your Income

If you’ve done the math and know that no amount of penny-pinching will get you to your target, you’re not alone. And if financial independence appeals to you but you’re not convinced denying your family everyday creature comforts is worth it, most people share this sentiment. This is why FIRE followers often seek ways to increase their income to supplement savings. You can find FIRE-focused books, podcasts, blogs, social media accounts, and more that focus on various ways to do this.

FIRE followers are negotiating raises, vying for promotions, changing careers, learning new skills, and earning in-demand certifications — all motivated by financial independence. There’s a vigor that comes with finding clarity in the numbers and inspiration in the stories of their peers.

They are also taking on second jobs, investing in real estate, starting side hustles, and running lucrative online businesses — all sparked by the desire to shorten their working years and tap into the possibilities of passive income.

After joining the FIRE movement, people are often surprised by how much more income they can generate to stash away, simply by making it a priority.

4. Invest Your Savings

Living frugally and boosting your income isn’t enough if you’re going to stash your nest egg in a shoebox or savings account. Sound investing is part of the FIRE equation too. As with traditional retirement planning, the goal is to reach a point where your investments generate enough income to cover your living expenses.

They max out their 401(k)s, ROTH IRAs, and traditional IRAs and hold additional investment accounts with funds they can access prior to the IRS retirement age. Understanding taxes, insurance, and other important financial matters will impact their progress and help determine their efforts’ outcome.

Is the FIRE Movement Right for You?

Anyone can benefit from following the principles of FIRE. Even if you are not able to reach financial independence, it can help you establish more financial security than you otherwise would. You can use the principles to improve your finances. Committing to spending more thoughtfully, avoiding lifestyle creep, embracing frugal habits, learning about investing, and finding ways to boost your income can pay off positively.

Whether you want to join the FIRE movement or not, getting on the path to greater financial security and retirement is a goal worth pursuing. The sooner you get serious about your finances, the better. The earlier you begin saving and investing for retirement, the more likely you will be to escape the financial woes that come with a lack of planning. By working with a financial advisor, you can develop a sensible plan to suit your specific situation and goals.


Kevin Stoddard is a LPL Financial Advisor with Stoddard Financial in Medfield, Massachusetts. Stoddard helps clients throughout New England to identify, plan, and execute strategies designed for securing their desired financial future. With their Financial Wellness @ Work program, they engage, educate, and empower employees by helping them to understand and appreciate the value of their benefits package. 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This material was prepared by Crystal Marketing Solutions, LLC, and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate and is intended merely for educational purposes, not as advice.