What is the FIRE Movement?
FIRE stands for Financial Independence, Retire Early. It's not about winning the lottery or getting rich quick - it's a methodical approach to saving and investing that allows you to escape the 9-to-5 decades earlier than traditional retirement.
The core principle is simple: save aggressively (50-70% of your income), invest wisely, and let compound growth build a portfolio large enough to sustain your lifestyle indefinitely. Once your investment income covers your expenses, you're financially independent.
FIRE Isn't About Deprivation
Contrary to popular belief, FIRE isn't about extreme frugality or never enjoying life. It's about intentional spending - cutting ruthlessly on things you don't value so you can invest in freedom and the things you do value.
Calculate Your FIRE Number
Your FIRE number is the amount you need invested to retire. The formula is straightforward:
FIRE Number = Annual Expenses × 25
This is based on the 4% rule - if you can live on 4% of your portfolio annually, your investments should last 30+ years (and likely forever with modest growth).
Quick FIRE Calculator
Types of FIRE: Choose Your Path
Not all FIRE is created equal. Your target depends on your desired lifestyle after leaving traditional employment.
Lean FIRE
Minimalist lifestyle. $20-40K annual spending. Often involves geo-arbitrage (living in low-cost areas). Maximum freedom, minimum luxuries.
Traditional FIRE
Comfortable middle-class lifestyle. $40-100K annual spending. Balance of freedom and comfort. Most common FIRE target.
Fat FIRE
Luxurious lifestyle. $100K+ annual spending. Travel, fine dining, premium experiences. Requires higher income or longer timeline.
Other FIRE Variations
- Coast FIRE: Save enough early that compound growth will fund traditional retirement. Then work just enough to cover current expenses (no more saving required).
- Barista FIRE: Reach partial FIRE and supplement with easy, low-stress part-time work. Often for health insurance in the US.
- Flamingo FIRE: Save half your FIRE number, take a break, let it grow for 10 years, then reassess.
The 4% Rule Explained
The 4% rule comes from the Trinity Study, which analyzed historical market returns and found that withdrawing 4% of your portfolio annually (adjusted for inflation) had a 95%+ success rate over 30 years.
4% Rule Examples
$1M portfolio: $40,000/year ($3,333/month)
$1.5M portfolio: $60,000/year ($5,000/month)
$2M portfolio: $80,000/year ($6,667/month)
Is 4% Still Safe?
Some argue that 4% is too aggressive given today's lower expected returns. Many FIRE practitioners use a more conservative 3.5% or even 3% rate. Others point out that:
- The Trinity Study assumed no flexibility - real retirees can adjust spending
- Most FIRE retirees can earn some income if needed (consulting, part-time work)
- Many will receive Social Security or pensions eventually
- 30-year timeframes are conservative for early retirees
Building Your FIRE Portfolio
The FIRE community generally favors simple, low-cost index fund portfolios. Here are the most common approaches:
Classic Three-Fund Portfolio
The Bogleheads favorite - simple, diversified, low-cost.
Aggressive Growth Portfolio
For those with 15+ years to FIRE and high risk tolerance.
Bond Allocation Near FIRE
As you approach your FIRE date, consider increasing bonds to 20-40%. This reduces sequence-of-returns risk - the danger that a market crash early in retirement devastates your portfolio.
Maximizing Your Savings Rate
Your savings rate is the most powerful lever in your FIRE journey. Here's the math:
| Savings Rate | Years to FIRE |
|---|---|
| 10% | 51 years |
| 25% | 32 years |
| 50% | 17 years |
| 65% | 10.5 years |
| 75% | 7 years |
How to Increase Your Savings Rate
- Housing: The biggest expense for most people. House hack, get roommates, or live in a lower cost area.
- Transportation: Buy used cars, bike when possible, or go car-free if you can.
- Food: Cook at home, meal prep, reduce restaurant spending.
- Increase income: Side hustles, skill development, job hopping, negotiating raises.
- Automate savings: Pay yourself first. What you don't see, you don't spend.
Your FIRE Timeline
Here's a typical FIRE journey broken down by phase:
Foundation Phase
Build emergency fund (3-6 months expenses). Pay off high-interest debt. Track all spending. Calculate your FIRE number. Open investment accounts.
Accumulation Phase
Max out tax-advantaged accounts (401k, IRA). Invest in low-cost index funds. Continuously optimize expenses. Grow income through career advancement.
Growth Phase
Watch compound growth accelerate. Cross major milestones ($100K, $500K). Consider real estate or other investments. Start planning post-FIRE life.
Final Stretch
Adjust asset allocation for retirement. Build 1-2 year cash buffer. Test your retirement budget. Create withdrawal strategy. Plan healthcare coverage.
Financial Independence!
Work becomes optional. Live off investments. Pursue passions, travel, spend time with family, or continue working on your own terms.
Tracking Your FIRE Progress
Tracking your progress is essential for staying motivated and on course. Key metrics to monitor:
- Net worth: Total assets minus liabilities. Update monthly.
- FIRE percentage: Current portfolio ÷ FIRE number × 100
- Savings rate: (Income - Expenses) ÷ Income × 100
- Investment growth: Track performance vs. benchmarks
- Projected FIRE date: Recalculate quarterly based on actual progress
Track Everything in One Place
Use AllInvestView to monitor your entire portfolio across all brokers. See your net worth, dividend income, asset allocation, and progress toward your FIRE goal - all in one dashboard.
Frequently Asked Questions
Track Your FIRE Journey
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