FIRE Movement: Ways to Retire Early

10 minutes
Man raising his hands in the air and enjoys having reached his goal by participating in the FIRE Movement, either through LeanFIRE, BaristaFIRE or FatFIRE.

What would your life look like if money weren’t worth worrying about? If you are not required to work to afford your lifestyle? It is the complete freedom of choice to do whatever you want whenever you want it. For many people, this sounds like something they will never achieve. But let’s dive a bit deeper into that topic.
Imagine for a moment that you have reached that goal. What would be the top 5 things you’d like to do with your newly acquired freedom? Maybe you’d travel the world or buy that cool car you always wanted. Or perhaps you would be enjoying some free time and not doing anything for once. Or buy a new home in a completely different location. Many things could cross your mind when asked such a question.
One way to get to such a level of freedom is by joining what’s called the FIRE Movement – Financial Independence, retire early. There are many variations of FIRE, such as LeanFIRE, BaristaFIRE and FatFIRE. Discover Way’s to retire early below.

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What is FIRE? An Introduction

The FIRE Movement started in 1992 when Vicki Robin and Joe Dominguez used that term in their book “Your Money or Your Life.” There is an updated version of that book available:

Brand new for 2018: A fully revised edition of one of the most influential books ever written on personal finance with more than a million copies sold

“The best book on money. Period.” (Grant Sabatier, founder of Millennial Money, on CNBC Make It)

“This is a wonderful book. It can really change your life.” (Oprah) 

For more than 25 years, Your Money or Your Life has been considered the go-to book for taking back your life by changing your relationship with money. Hundreds of thousands of people have followed this nine-step program, learning to live more deliberately and meaningfully with Vicki Robin’s guidance.

This fully revised and updated edition with a foreword by “the Frugal Guru” (The New Yorker) Mr. Money Mustache is the ultimate makeover of this best-selling classic, ensuring that its time-tested wisdom applies to people of all ages and covers modern topics like investing in index funds, managing revenue streams like side hustles and freelancing, tracking your finances online, and having difficult conversations about money.

Whether you’re just beginning your financial life or heading towards retirement, this book will tell you how to:

  • Get out of debt and develop savings
  • Save money through mindfulness and good habits, rather than strict budgeting
  • Declutter your life and live well for less
  • Invest your savings and begin creating wealth
  • Save the planet while saving money
  • And so much more!

“The seminal guide to the new morality of personal money management.” (The Los Angeles Times)

You guessed it already, but the FIRE Movement is not about being rich. There goes your expensive house, car, and travel plans 😀. Instead, FIRE is about identifying your needs and what is enough for you. It is about having financial stability to free yourself from the 9-5 job you might not enjoy. All the money you spend should have a specific purpose, instead of spending it just at the moment on things you don’t need. Many participating in the movement aim to “retire” between 30 and 50.

What does “retire” mean in that context?

It’s the part about FIRE that I dislike the most. Don’t get me wrong, FIRE is a great concept! But the wording “retire” carries a meaning that some misunderstand. FIRE does not have to mean that you quit your job. For me, what is meant by “retire” is your choice of doing what you want with your time. For many, this can still be working on a job. A job that you enjoy doing and that adds value to your life. Think about living your life on your terms.

How does the FIRE Movement work?

The first step is coming up with your FIRE Plan. The basis for that plan is the income you need to support your lifestyle. I don’t necessarily mean your current lifestyle. Think about what you want your lifestyle to look like. There could be some changes you’d like to see. You may want to live in a different place. That can significantly impact the income required to support that lifestyle. The second essential component is when you want to achieve that goal. This, of course, determines how much time you have left.
If you need $75,000 a year to sustain your lifestyle, your plan will look much different than if you need $50,000.

Save money and cut costs

The illusion of a hand moving the sun into a jar of money to symbolize the FIRE Movement

Members of the FIRE Movement usually have two main strategies to save as much money as possible: Cost-cutting and income saving.
Cutting costs means buying used items, canceling subscriptions, and evaluating in detail what you buy and why. Instead of paying for repairs, learning to DIY is another way of saving money over time. For income saving, you’d aim for saving 50-80% of your income.

Saving 80% of income is not achievable for many people, depending on where you live. It is an extreme example that shows how deeply rooted lifestyle changes can be when participating in the movement. But don’t call it off just yet! There are many ways to save money for such an ambitious goal. You can find helpful tips in our guide “10 Money Tips I wish I knew in my 20s” and “5 Easy Money Moves To Save More”. Instead of cutting costs, you can also earn more money. Maybe you have some empty space you could rent out. Check our guide “Earn Passive Income By Renting Out Your Empty Space With Neighbor” for more information.

Catherine Mary from FrugalNook has an excellent article, “23 Simple Tips to Living Frugally on One Income,” filled with valuable tips to save more. In her article, she dives into different strategies to master your money management on just one income. Her tips can help you reach your financial goals much quicker than you might think.

You will need more than saving money to get closer to your FIRE Movement goal. Instead, you will have to invest your money and let it grow. Many FIRE participants choose index funds or ETFs, because they are a hands-off form of passive investment. It’s very easy to do and has a reasonable risk. We recommend learning the basics for beginner investors before putting much money at stake. We have a beneficial article, “5 Must Read Books for Beginner Investors”, that will get you started.

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How much money do I need to save?

Let’s say you determined that your lifestyle requires an income of $75,000 per year. A good rule to follow is called the rule of 25. You save 25 times your annual expenses. In our example, that means $75,000 x 25 equals $1,875,000. That might seem like an astronomical amount of money.

There are some limitations or flaws with the rule of 25, however. This rule supports 30 years of “retirement.” It works in conjunction with another rule: the rule of 4%. This rule is about how much money you can use per year. In our above example, you can withdraw $1,875,000 x 0.04 equals $75,000. Some experts say calculating with a lower number, say 3.3%, is good advice. It gives you a safety cushion for your early retirement.

Do I need to change my lifestyle?

Depending on your current situation, there might be some adjustments to make. It all depends on how much you want it and when. Most FIRE participants are making many sacrifices to reach their financial independence number. The bottom line is that you should cut the costs in areas you feel comfortable doing so. Evaluate what you need and where you spend money. If you don’t want to miss out on travel, check out “How to Travel on a Budget – The Ultimate Guide“.
And let’s face it. When following your FIRE plan, there are times when you feel like you are missing out. Vacations, party time, social time, and luxury items will become rarer. Create yourself a safety net and remind yourself why you are doing it.

Variations of FIRE

Over the years, many variations of the original FIRE plan have come up. They all share the same basic principle of saving enough to fulfill a dream of financial independence. Their main difference is in what the end goal is:

  • leaving your stressful 9-5 job for a part-time job, called BaristaFIRE
  • Having enough money to live a simple life, called LeanFIRE
  • Having enough money to do whatever the hell you want, called FatFIRE

Details of BaristaFIRE

Changing into a part-time job is much easier than quitting and being fully financially independent. Take our example of a lifestyle in need of $75,000 per year. If you save up to cover $37,500 * 25 equals $937,500, that seems much easier to achieve in comparison. You might also benefit from health insurance coverage by supplementing your income with a part-time job. Another option for couples is only to have one person work at any time. You can change who is working from time to time.
Even if your plan aims higher, reaching the BaristaFIRE goal can be an essential psychological achievement for you!

Details about LeanFIRE

The LeanFIRE variation is based on the lowest amount of money to retire without the need to work. LeanFIRE is a scaled-down version of FIRE where you live minimally on $40,000 annually. Not much would change financially in your retirement, as you’d continue a very frugal lifestyle. Your years of saving would act as your training ground. Since the amount of savings doesn’t provide a significant safety cushion, you might have to supplement your income occasionally.
Like BaristaFIRE, reaching the LeanFIRE goal can be a psychological achievement.

Details about FatFIRE

With the FatFIRE Movement variation, you can retire on your own terms. It is the form of retirement a lot of people dream of. It comes with financial freedom that allows you to live your dream. While BaristaFIRE and LeanFIRE require some adjustments and sacrifices in your lifestyle, FatFIRE does not. Of course, the money you will need to save for FatFIRE is much more significant. It should be big enough so that money isn’t something you’d need to worry about.

One of the biggest benefits of FatFIRE is that your lifestyle doesn’t need to be adjusted. Living a very frugal life is only for some. You get to choose what you want to do with your retirement and are not limited in your choices. Your more significant nest egg also comes with more security should influences outside your control, like economic downturns, come into play.

The longer path to reach the FatFIRE goal can also be a severe disadvantage. On your journey, you could hit mental and motivational roadblocks. It can make you overly focused on money and miss out on many essential aspects of life.

Final thoughts – FIRE Movement with LeanFIRE, BaristaFIRE and FatFIRE

The decision if FIRE is something for you is a very personal one. Whether it’s LeanFIRE, BaristaFIRE or FatFIRE, it requires a lot of resilience on your part during the initial phase. The issue many people face is that some sacrifices can make you feel isolated and left behind. You can implement some mental frameworks to help you out, though. Your mind can be a really powerful tool if you utilize it.

If you decide to participate in the FIRE Movement, talk to your friends and family about your plan. Could you include them in your ideal world? It will make the process a lot easier for you.

Check out our post, “Is my 401k good?” to improve your retirement planning.

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14 responses to “FIRE Movement: Ways to Retire Early”

  1. Ann Avatar

    I loved reading this post! It’s so encouraging to know that even those of us who are getting close to retirement age can still make it. The resources shared here are like hidden treasures, and I’m definitely saving this for future reference. It’s never too late to plan for a better retirement!

    1. Andy Reimann - StockFit Avatar

      Thank you Ann for your support! Very glad you like the post.
      I couldn’t agree more, it’s never too late to do something that can have an impact on your retirement!

  2. thelifeafterwork Avatar

    This is great information! I had heard of FIRE but I didn’t realize there were different categories. BaristaFire seems like a perfect goal for me. Thanks!

    1. Andy Reimann - StockFit Avatar

      Thank you for your support! Yes, there are multiple variations. I guess you could make any adjustments to your plan that work for you. The most important aspect is having a goal to work towards and to pursue happiness.

  3. Eva Petruzziello Avatar

    I like this thinking, planning is an excellent way to retire early.

    1. Andy Reimann - StockFit Avatar

      Hey Eva, thank you for your support!
      It absolutely is. And I also think, done the right way, it can be fun too!

  4. […] to explore early retirement and how you might achieve it. Check out this post from Stockfit, “Fire Movement: Ways to Retire Early“. There are some really interesting concepts to think about to guide you toward making early […]

  5. Christine Avatar

    Thank you! This is great information. I’d never seen all the categories described so clearly.

  6. Merritt Avatar

    Great article! I like that you provide all the information for each goal. Thank you!

  7. Susan Avatar

    This is much needed information for those of us who want to retire from our full time jobs ASAP! Will take this to heart.

  8. Angie's Roost Avatar
    Angie’s Roost

    I LOVE this article, thanks for publishing it. I had heard of FIRE before but I didn’t know much about it. I feel like I need to go read “Your Money or Your Life” now since my husband and I are on the path to living well for less.

    1. Andy Reimann - StockFit Avatar

      Thank you for your support 🙂
      This book can really be a life-changing experience and was already for so many. Truly inspiring idea and definitely a good read at the very least.

  9. Stephanie Avatar

    Excellent advice in the article for anyone. I wish I had read this 15 years ago, but as you point out it isn’t too late to incorporate these steps now.

  10. Valerie Rose Avatar
    Valerie Rose

    This was such a motivational post! I need to get on it!

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