My Account

What Is the FIRE Movement?

Tips for Retirement Planning

A women sitting beside a firepit.

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. But its principles have been around for as long as people have been investing. FIRE is hyper-focused on budgeting, following a framework of living frugally and investing as much money as you possibly can now.

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 for FIRE followers. It's more of a lifestyle that you adhere to for the rest of your life. For retirement, that translates to living on small withdrawals from your nest egg and living on the same frugal budget that you do today.

FIRE is a lifestyle that you practice even in retirement. You would live on small withdrawals from your investments and follow the same frugal budget.

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. If the FIRE movement seems enticing, 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. But if you're not ready to go that far, approach it the same way you would for typical retirement planning: Focus on where you can spend less now so you can save more for later. Consider looking 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. Americans typically have a savings rate of less than 10%.² There's a big difference between that rate and the 50-70% FIRE advocates. However, just because you're not on an accelerated track to retire early doesn't mean you can't increase your contributions. While 50% may sound like 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, but it can challenge your traditional thoughts about retirement. Even if you love your job and don't intend to retire until your 60s, it's still helpful to think about how you're investing your money and how you can make saving more work in the long run. At every stage, the two biggest takeaways may be to understand where your money is going and to always make investing a priority.

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.

Need to discuss your retirement goals?


Monthly personal savings rate in the U.S.,, October 2021.

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.

Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.