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What Is the FIRE Movement?

The FIRE Movement is a popular strategy for retiring early. Learn how it works and its pros and cons here.

Who doesn’t want to retire early? While it’s a goal many of us have, it takes hard work and dedication to achieve. This is where the FIRE (financial independence, retire early) movement, which has emerged in recent years, comes in. In short, it’s a lifestyle and financial philosophy geared toward early retirement by way of saving and practicing a high level of discipline.

As we’ll explain further in this article, practitioners of the FIRE movement understand that delaying gratification by saving aggressively and minimizing expenses gives them the best chance to hit retirement as soon as they hit their 30s or 40s. While doing so before 40 may seem unlikely, it’s not impossible — and FIRE provides a tangible blueprint to help you get there. In this article, we’ll explain the key principles of the movement, address its pros and cons, and talk about the various saving strategies that can help one achieve early retirement.

Understanding FIRE

FIRE first popped up in Vicki Robin and Joseph R. Dominguez’s 1992 book, Your Money or Your Life, which discusses ways for individuals to take control of their finances responsibly. However, it has become popular more recently, appearing in various types of media, including blogs, videos, and podcasts.

The FIRE strategy incorporates aggressive saving and optimization of cash flow. Specifically, it involves disciplined budgeting and minimization of unnecessary expenses, as well as finding ways to make money and get over the hump of financial dependence. Achieving FIRE, per Amy Colton, CDFA, and wealth advisor at Forefront Wealth Partners, “requires a high level of financial discipline.” She continues, “This includes consistently tracking expenses, avoiding lifestyle inflation even as income increases, staying informed about financial markets and investment strategies, and having the patience to let investments grow over time.”

As its name suggests, there are two main components in the FIRE movement, becoming financially independent and retiring early:

Financial Independence

We all often have a unique idea of what it looks like for us. But in the context of FIRE, it’s heavily intertwined with leaving one’s job and entering an early retirement.

So, what does it mean to gain independence? Lisa Sakai, a co-founder and financial advisor at One Vision Retirement, interprets it as the ability “to do what you want when you want without having to worry about money.” She continues, “people [often] think they want to retire early but over half the time, they just want to have the ability to change what they are doing or how they are doing it. Having money saved and available to make those changes less stressful and challenging is the key many times.”

Therefore, while often closely tied to retirement, independence is more about the freedom to do what one wants. In many cases, however, retiring early is one piece of the puzzle of achieving independence financially and personally.

How do you become financially independent? Experts, including financial advisors and writers, often invoke the 4% rule when discussing ways to become financially free. JL Collins, author of The Simple Path to Wealth (2016), mentions that this method can be effective; however, he says, “It is important…to note that being [financially independent] is not a matter of reaching a certain set number. It is the combination of what you need and what you have invested.” He continues, “If you only need $20,000 a year, you only need $500,000 invested. If you need a million a year to live on, you’re going to need to have 25 million to invest.”

Retiring Early

Retiring before turning 65 years old is a big part of many people’s blueprint for financial independence. Many, however, set targets well before this, sometimes even as soon as their 30s and 40s. To accomplish this feat, you’ll generally have to put away 25 to 30 times your yearly expenses.

It’s important to note that retiring early, while a big part of the FIRE movement isn’t necessary to achieve financial independence. According to Colton, this is something people often miss the mark on regarding the movement. She says, “One common misconception is that the FIRE movement is solely about retiring early. In reality, it’s more about attaining the freedom to make choices that aren’t dictated by financial constraints.”

Core Principles of FIRE

Several characteristics and principles ultimately make up the FIRE strategy. The idea is that a person will practice them and put themselves on the path to retiring early and becoming substantially independent with their finances.

Below is a breakdown of each:

  • Aggressive saving. This involves setting aside a “significant portion” of your income, “often 50% or more,” per Colton.
  • Frugal living. FIRE practitioners often live below their means (e.g., buying inexpensive or used products, delaying vacations, living in a cheaper home, etc.) to build up savings quickly.
  • Creating passive income. FIRE devotees invest to generate enough passive income to support them. Any investments, long or short term qualify. Colton, however, mentions that it’s smart to emphasize investing “with a focus on compound growth.”
  • Geographic arbitrage. One way to save money is to move to places with lower living costs.
  • Health and fitness. Not only will staying healthy increase your chances of enjoying many years of retirement, but you save money when you don’t pay medical bills. Keeping fit and living a healthy lifestyle are no guarantees, but they make success more likely.

Pros and Cons of FIRE

FIRE is a powerful strategy that can eventually bring significant benefits, including the ability to live your life how you see fit. Seeing it through, however, requires a great deal of discipline and patience. It often means giving up immediate enjoyment and waiting to have fun in the future. Below are some pros and cons of the practice and the ultimate results it yields:


  • Financial independence. Gaining independence is the most prominent advantage of the FIRE movement. Through meticulous saving habits and generating income sources, you’ll have more control over your life in both the day-to-day and the long-term.
  • Flexibility. Retiring early allows you to enjoy life when you’re still able and healthy. You also retain the freedom to get a job and do what you enjoy, rather than what you must to get by.
  • Less is more. Living a simpler life as you build your finances and realizing you don’t need as much can be fulfilling and empowering.
  • Technically anyone can do it. While having a decent base of finance knowledge and a good income is nice, FIRE is something that most people can achieve. Colton emphasizes that people often think it’s “only for high earners, but in truth, anyone can adopt the principles of FIRE by adjusting their lifestyle and spending habits.”


  • Frugality is easier said than done. It’s not easy to save most of your money. On your quest for FIRE, you may have to make sacrifices, such as living in a cheaper house, driving an old car, or buying cheaper food. You’ll have to be okay with a certain level of discomfort, which could affect your overall quality of life.
  • Investing comes with risk. Investing is one of the biggest parts of becoming FIRE. This always comes with the risk of losses or market downturns.
  • Early retirement isn’t for everyone. Retiring early can come with some disadvantages, including high healthcare costs, boredom, and inflation risks.

Frequently Asked Questions

What is the biggest misconception about FIRE?

JL Collins submits that the “biggest misconception” surrounding the FIRE movement “is that it is only for certain groups of people.” As mentioned, while being a high earner and being enthusiastic about finance is powerful in accelerating the process, anyone can take steps to learn about saving and investing to become financially independent.

Is FIRE realistic for young people?

FIRE is realistic for anyone willing to put in the effort and discipline to stay on track. According to Amy Colton, CDFA, “the younger one starts, the more they can leverage the power of compound interest.” Additionally, she points out that its “sustainability depends on one’s ability to adapt to life’s changes and remain disciplined in saving and spending habits” and that “FIRE doesn’t mean living a life of deprivation but rather making intentional choices about spending and valuing long-term goals over short-term pleasures.”

How can a financial advisor help me achieve FIRE?

A financial advisor can be an incredibly useful resource on your journey to accomplishing FIRE status. They’ll be able to help you figure out budgeting strategies, put together an investment portfolio, and create an effective retirement roadmap. Financial professionals have immense knowledge of the industry and are often helpful in planning for reaching financial independence, as well as what to do after you acquire it.