What Is the FIRE Movement?

Tips for Retirement Planning


The Financial Independence, Retire Early (FIRE) movement might seem like the latest fad in finance. But in reality, it’s based on the traditional tenets of saving and investing. Everyone can learn a little from FIRE, no matter where you are in the retirement planning process.

The FIRE movement started gaining traction in the 2010s. Still, its principles have been around as long as people have been investing, according to Tony Marquez, CFP®, a Financial Consultant: “FIRE follows the framework of living frugally and investing as much money as you possibly can,” he notes. “It’s just hyper-focused on budgeting, imagining the life you want to accomplish.”  


Tony Marquez, CFP
Financial Consultant

What Is the FIRE Movement?

FIRE stands for Financial Independence, Retire Early. But unlike traditional retirement strategies, it also has these key differentiators:

  • Fast-Tracked Timeline
    As the acronym suggests, people who follow the FIRE plan intend to retire much earlier than the average retirement age of 64 in the US.1 Strict followers of FIRE aim for retirement in their 30s or 40s.
  • Bigger Cut of Your Paycheck
    Since FIRE followers want to accelerate their timeline, they have to set aside large portions of their annual income for retirement. Depending on their salaries, they have to invest anywhere between 50% and 75% of their income to retire early.
  • Frugal Living
    Those who subscribe to the FIRE philosophy believe in a long-term low-cost way of living. They live frugally while they’re working to invest for retirement. But they typically intend to continue the same frugal lifestyle even after they begin retirement.

Even with such aggressive planning, retiring early doesn’t mean sitting back on a beach somewhere, Marquez notes. “The FIRE movement is built on investing as much as you can and then living on small withdrawals the rest of your life,” he says. “You’ve got to understand that the life you’re living today is going to be the rest of your life, with regard to budget.”

You’ve got to understand that the life you’re living today is going to be the rest of your life, with regard to budget.

Tony Marquez, Financial Consultant

FIRE Movement Variations

As the FIRE movement has grown in popularity, it’s evolved into several different strategies as well, including:

  • LeanFIRE
    The original FIRE strategy, LeanFIRE is meant to help workers retire as quickly as possible and live on minimum expenses in retirement. The typical goal is to have $600,000 in retirement accounts before leaving the workforce and then keep expenses around $25,000 a year or less.
  • FatFIRE
    Nearly the opposite of LeanFIRE, FatFIRE followers try to put away 30x (or more) their annual expenses. This increase means staying in the workforce a little longer, with the tradeoff of a less frugal retirement.
  • BaristaFIRE
    This strategy relies on getting a part-time job once you hit your FIRE retirement investment goal. BartistaFIRE gets its name because the goal of the part-time job is to work for a company like Starbucks that extends health care and other benefits to its part-time employees. This can minimize the financial burden of unexpected health care costs while still allowing you to work less.
  • CoastFIRE
    On the extreme end of FIRE, CoastFIRE followers intend to invest as much as they can in retirement accounts before 30. In that way, they plan to give their investments the benefit of time in the market. CoastFIRE can require extremely frugal living and a high income or working multiple jobs right out of school to invest the target amount each month.

The FIRE movement can sound complicated or intimidating. But at its core, it’s following the same basic guidelines as a traditional retirement plan—just on a faster timeline. It relies on keeping living expenses down and the potential earnings from investing as much as you can, as early as you can.

How the FIRE Movement Can Influence Your Retirement

If you’re not a high-earner or in your 20s or 30s, you may feel like your ship has sailed when it comes to joining the FIRE movement. However, that’s not entirely the case, Marquez explains. If the FIRE movement is enticing to you, you can borrow lessons from it to try to accelerate your retirement strategy.

Here are some ways that FIRE can inspire your retirement plan, no matter what your age or income is.

  • Trim Expenses
    The FIRE movement often requires extreme frugality. Most households could stand to cut a few expenses; according to Marquez, “It just goes back to typical retirement planning,” he says. “It all starts with focusing on what you need to survive.” Consider taking a look at your monthly budget to see where you might eliminate unnecessary expenses, such as unnecessary eating out or unused subscription services.
  • Increase Contributions
    Hand in hand with spending less comes setting aside more. “The American household over long periods usually averages no more than 10% in savings per month,” says Marquez. “There’s a big difference between the 10% traditionally versus the 50-70% FIRE expects. There’s a whole world in between.” Just because you’re not on an accelerated track to retire early doesn’t mean you can’t up your contributions. While 50% is a lot, consider what it would take to invest 20% a month instead of 10%.
  • Make Your Money Work for You
    FIRE might not be the best fit for everyone’s lifestyle, but it does challenge the way we traditionally think of retirement, Marquez reasons. Even if you love your job and have no intention to retire until you’re in your 60s, it’s still helpful to think about how you’re investing your money and how you can make it work for you in the long run. “The two biggest things I can say to a client at any stage is understand where your money is going and make investing a priority,” Marquez says.

FIRE or Not, Make Sure You Have a Plan

Whether you intend to leave the workforce in the next 10, 20 or 30 years, making a plan to invest for retirement is important. FIRE or not, there’s never a better time than now to revisit your retirement strategy with American Century. 


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This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

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