Financial Independence, Retire Early (FIRE): How to save more money for early retirement

Some people were born to work, and they’d be lost without the daily drive to achieve. Others enviously eye retirement and the freedom that comes from uncoupling from the constant stresses of work. People assume that only high earners or those with unique financial advantages can pursue the Financial Independence, Retire Early movement (FIRE), but that’s a common misconception.

Retiring before your mid-to-late 60s is possible, but a crucial aspect of being able to retire comfortably is having enough money to live comfortably, rather than just barely surviving. The FIRE movement isn’t just for wealthy cryptocurrency investors and tech entrepreneurs. With the right set of circumstances and rigid dedication to planning and execution, it could be possible to enact an early retirement plan and leave the workplace much sooner than your Golden Years.

Let’s take a closer look at the principles of the FIRE financial movement and see whether it might be possible for you to join the ranks of early retirees.

What is the FIRE movement?

Financial Independence, Retire Early combines the need to save aggressively—often aiming for a high savings rate of at least 50% of your income, and sometimes as much as 75%—with a range of investment options designed to provide passive income streams. The goal is to sock away enough cash and craft a diversified investment portfolio that allows you to become financially independent and have money still flowing in so that you can quit your job. Achieving FIRE requires saving a significant portion of your income, demanding discipline and a strong commitment to living below your means.

There are a handful of different FIRE pathways depending on your financial goals and income needs, which we’ll delve into a bit later. The movement’s roots date back several decades, but it became in vogue shortly after the financial crisis of 2008.

FIRE history

Financial Independence, Retire Early originated in the 1992 book “Your Money or Your Life.” Authors Joe Dominguez and Vicki Robin proposed a simplistic lifestyle combined with aggressive savings and financial investments that provide passive income in order to gain financial freedom. Multiple financial bloggers in the late 2000s and early 2010s helped popularize the FIRE movement.

FIRE growth

Statistics on the growth and popularity of FIRE are a bit murky, but one clear thing is the average U.S. retirement age of 62. FIRE is likely growing in popularity among millennials and Gen Zers who are disillusioned by the thought of toiling in a cubicle for decades. The hashtag “#FIRE” is a popular term across many different social media platforms.

Why FIRE

At its core, FIRE is about financial independence and the many freedoms that come with not working. Both notions are appealing to Gen Z, many of whom came of age or graduated from college during the COVID-19 pandemic and struggled to find high-paying jobs or afford homes.

When FIRE works best

FIRE can be for anyone, but since it requires rigid adherence to saving and budgeting, financial literacy, and constant scrimping, it’s best for people who can consistently make the sacrifices necessary to pull it off. FIRE followers are known for their disciplined approach, often maintaining a high savings rate and prioritizing financial goals. You’ll also need a high net worth, a low standard of living and expenses, and a great deal of motivation.

What financial independence really means

Financial independence means having enough money to permanently alleviate financial pressures and burdens. You have amassed enough wealth that income is self-sustaining, you aren’t tied to an employer or business, and you can maintain your desired lifestyle indefinitely.

Achieving financial independence also gives you the freedom to focus on your retirement goals, ensuring your long-term plans and aspirations for retirement are within reach.

The difference between financial independence and retirement

Retirement can look very different from financial independence. The Federal Reserve’s 2022 Survey of Consumer Finances found that average retirement accounts varied greatly by age – and none equalled any real measure of financial independence. The survey categorized Americans’ retirement account balances across different ages, highlighting how savings trends shift as people move through various age brackets:

• 35-and-under: $49,130
• 35-44: $141,520
• 45-54: $313,220
• 55-64: $537,560
• 65-74: $609,230
• 75-and-over: $462,410

The average retirement age in the U.S. is typically in the early to mid-60s. The traditional retirement age is often considered to be 65, but FIRE followers aim to retire much earlier than this benchmark by using aggressive savings strategies.

Those numbers are just averages for retirement accounts. Countless savers could have additional money in managed investment portfolios or hard assets such as real estate holdings that significantly boost their net worth and provide a measure of financial independence.

4% and 25x annual spending rules

Both rules are guidelines for retirement income.

4% rule

Using this rule, you’ll withdraw only 4% of your net worth in your first year of total retirement nest egg (if you amassed $1 million, that’s $40,000). You’ll make minor adjustments for cost-of-living increases in subsequent years, and by sticking to that base withdrawal amount, the idea is that you will be able to make your money last until you die. The 4% rule is designed to help most retirees sustain their lifestyle over a typical retirement period of about 30 years.

25x rule

The 25x spending rule means you’ve saved 25 times the amount you expect to spend in your retirement years. To calculate your annual expenses, multiply your monthly expenses by 12. For example, if your monthly expenses are $3,000, your annual expenses would be $36,000, and you would need $900,000 saved (25 x $36,000). You’ll need to figure out your current spending, deduct any benefits from Social Security benefits and other sources of passive income, and apply the 25x rule to the balance.

How to reach financial independence: Calculating your FIRE number

Knowing your FIRE number can help you save more money and potentially reach financial independence. The 25x rule outlined above is one of the best ways to calculate your FIRE number. It is important to have a planned approach to reaching your FIRE number, ensuring your strategy is deliberate and well thought out.

If you think $50,000 per year will suffice throughout retirement, then multiply that number by 25. You’ll need to have at least $1.25 million in retirement savings to retire early. You’ll have to take into account age, housing, insurance, health care, inflation, and other major expenses. Your particular situation, such as your lifestyle, family needs, and location, will affect your calculations.

That $1.25 million may work for someone who is 50, but it might not be enough money for someone who is just 35 – younger people may have to save more money. Keep in mind that future results are uncertain, and investment outcomes are only estimates, so careful planning is essential.

Different types of FIRE approaches

As noted earlier, there are multiple FIRE pathways. Some people pursue full early retirement, aiming to leave the workforce permanently, while others choose variations like Coast FIRE or Barista FIRE that allow for more flexibility and part-time work. Your personal FIRE strategy largely depends on your spending habits, financial expectations, and how your retirement plans align with your long-term goals.

LeanFIRE vs. FatFIRE

Frugality is the heart of LeanFIRE. You’ll prioritize super-aggressive savings, minimal spending, and an extremely conservative lifestyle. Achieving LeanFIRE often requires intense budgeting to maximize savings and minimize expenses. With FatFIRE, you’ll enjoy a more posh standard of living by amassing greater wealth. A LeanFIRE strategy may require just $25,000 annually. Conversely, you’ll calculate your fat fire number using 33x. If you expect to spend $75,000 annually, you’ll need a minimum of approximately $2.5 million to reach financial independence and retire early.

BaristaFIRE

This hybrid FIRE strategy, known as BaristaFIRE, relies on supplementing your income after you reach financial independence and retire early. Instead of amassing enough wealth upfront to fully step away from working, you’ll rely on a side hustle or part-time job to augment your income. It’s a form of semi-retirement.

CoastFIRE

This FIRE movement prioritizes maximizing your savings and investment dollars to obtain an amount that allows you to coast into retirement. You have enough money to see financial independence in your future, but you’ll keep working so your savings and investments continue to grow and mature. It’s important to stay invested during this period to benefit from long-term growth and the power of compounding.

Saving and investing prudently are core tenets of each FIRE scenario. Choosing leanFIRE vs fatFIRE or another FIRE strategy requires careful planning and aligning a pathway that best matches your lifestyle, aspirations and principles.

How to save more money to reach FIRE

Achieving financial independence is one of the best ways to set your feet on the path to early retirement. Making financial decisions—such as adjusting your savings rate and optimizing your spending habits—is essential to optimizing your path to FIRE. Following these FIRE investment tips can help you realize your goals of stepping away from the workplace before the gray hair sets in. Remember, financial decisions about spending and saving are crucial for success.

Increase your income

Unless you have a huge inheritance, you’ll have to boost your personal net worth to reach FIRE. There are multiple ways you can build a financial safety net:

• Find high-paying side hustles. The gig economy is flourishing. Ride-hailing (Uber, Lyft) and food delivery (Instacart, DoorDash) may not be ideal, but they could be a good way to supplement your income. For those with polished technical skills, gig employment in web/graphic design or content creation could lead to substantial additional monthly income.
• Build an emergency fund or savings fund. Setting aside money regularly helps you cover unexpected expenses and increases your financial security, which is essential for early retirement planning.
• Negotiate raises and promotions. Are you maximizing your earnings at your workplace? It may seem daunting, but it’s on your shoulders to ensure you are getting the highest possible compensation from your employer. That may require requesting a raise or promotion that aligns with your contributions to the workplace.
• Build passive income streams. Building multiple passive income streams is one of the best ways to retire early. Passive income – stock dividends, interest from certificates of deposit and income from rental properties – puts money into your bank account and grows your net worth.

Rates Updated on September 12, 2025

Cut your spending

LeanFIRE isn’t for everyone, but you don’t have to be a miser to enact your early retirement plan. You most likely will have to change your spending habits, though, unless fatFIRE is your endgame.

• Practice frugal living. Frugality maximizes your earnings by minimizing expenditures. Examples include downsizing your home for a smaller mortgage, going with one vehicle instead of two for married couples, and buying used or secondhand items. Eliminating impulse shopping, buying on sale, purchasing generic items, and finding free entertainment options are additional examples of frugal living that could lead to thousands in savings. Frugal living is all about managing your discretionary spending. When budgeting, it’s also important to prepare for unexpected expenses, so you’re not caught off guard by unforeseen financial challenges.
• Use a 50/30/20 budget. This budgeting method creates three main buckets for your income: 50% for needs; 30% for wants; and 20% for savings or to pay down debt. If you are truly adhering to a FIRE strategy, though, you’ll want to adjust those numbers in favor of much higher savings.

Automate and optimize savings

Putting your savings on autopilot is an easy way to avoid overspending. Setting up automatic savings deposits from checking or brokerage accounts can help you achieve your savings goals much sooner, especially if you have poor spending habits (money out of sight is money out of mind). Set up transfers to high-yield savings or money market accounts to maximize your savings potential. Consider setting up automatic transfers specifically to build an emergency fund with three to six months’ worth of expenses, ensuring you are prepared for unexpected events and supporting your long-term financial stability.

Where to put your money: Investment strategies for FIRE

Investment strategies can be highly personal, but there are some FIRE investment tips to follow that may shorten the journey to financial independence. Seeking professional investment advice can help you make informed choices tailored to your goals. Making the right investment decision is crucial when selecting strategies for your FIRE plan. Additionally, adjusting your investment mix can significantly impact your progress and increase your chances of achieving early retirement.

Invest in low-cost index funds and ETFs

Exchange-traded and low-cost index funds allow you to retain more of your earnings because you won’t be paying a Certified Financial Planner (CFA) or Registered Investment Advisor (RIA) a percentage (usually around .8 to 1.2% of total assets under management) for their services.

Use tax-advantaged retirement accounts

An employer-sponsored 401(k) allows your money to grow tax-deferred, while a Roth IRA allows you to make tax-free deductions once you retire (contributions are made with post-tax dollars). Health savings accounts reduce your taxable income, growth is tax-free, and you won’t have to worry about paying taxes on withdrawals for qualified medical expenses.

Consider real estate investments

Real estate is an important component of portfolio diversification. Investing in real estate can lead to many potential benefits, including multiple passive income streams and asset appreciation. Over time, you may be able to liquidate multiple assets and transition into higher-value properties. It’s essential to conduct thorough due diligence on target assets and understand the numerous risks associated with investing in real property.

Asset allocation for long-term FIRE success

A successful FIRE investment strategy must be focused on aggressive growth versus capital preservation; however, aggressive investing assumes a much higher degree of risk. Before choosing your allocation, carefully assess your risk tolerance, as it will determine how much risk you are comfortable taking on in your portfolio. Here’s a rule of thumb: stocks for growth; bonds for stability; alternative assets for diversification.

Your investment strategy should also consider your time horizon—the longer your time horizon, as with early retirement, the more important it is to manage risk and adjust withdrawal strategies accordingly. You’ll also want to periodically rebalance your investment portfolio based on market trends, returns, and financial expectations, while keeping in mind the impact of return risk. Return risk, especially the sequence of returns risk, can significantly affect your portfolio’s longevity if you experience negative returns early in retirement. Planning for the possibility of negative returns is crucial to avoid depleting your savings too quickly. That can be a lot to ask of retail investors – you may need to have a Registered Financial Advisor on your team to fully maximize your investment potential and reach your FIRE goals.

Planning for health insurance and other early retirement costs

Health insurance is one of the largest expenses you’ll face in retirement. Monthly insurance premiums may be more than your home’s mortgage. In addition to health insurance, planning for your ongoing living expenses is crucial to ensure your savings will last throughout early retirement.

Medicare is the main form of health insurance for retirees, but it won’t be available until you reach age 65 unless you have a qualifying disability. Options for health insurance include COBRA if you leave the workplace (up to 18 months) and the Health Insurance Marketplace from Healthcare.gov.

Your retirement plan should also take into account the possibility of paying for long-term acute or managed care and costly medical emergencies. With ACA healthcare plans, large expenses such as dental implants or dentures may not be covered, either. When planning for early retirement, consider other factors such as taxes, increasing life expectancies, and your personal needs. It may not be enough to reach a FIRE number – you may want to go well beyond your 25x (or 33x calculation for fatFIRE) financial target to account for the possibility of large, unplanned medical expenses.

Is FIRE right for you?

Shedding the shackles of the workplace and retiring early may sound appealing, but the FIRE movement isn’t for everyone. It will only work if you are extremely disciplined and have the ability to generate enough income to reach your FIRE financial target. Whether FIRE is suitable depends on the needs and circumstances of a particular investor, as each individual’s goals, savings habits, and financial situation can greatly influence their path.

Before deciding to join the FIRE movement, ask yourself the following questions:

1. Do you want freedom from the workplace, or do you truly enjoy working? Some people would be lost without the structure and drive that comes with going to work every day and striving to perform their best. That’s especially true for entrepreneurs.
2. Can you sacrifice lifestyle comforts to retire early? For those not making several hundred thousand annually, FIRE means tremendous sacrifice. You’ll regularly have to skip luxuries, expensive vacations, new clothes, dining out, and many other smaller frivolities.
3. What are your core values and goals? Retiring early may not be as appealing as reaching financial independence. Knowing your true “why” can go a long way to reaching FIRE or at least amassing enough wealth to live comfortably when you retire.

Creating your personal FIRE blueprint

FIRE is much more than money management and not working – it’s an empowering lifestyle choice. Your focus will be on earning more money, spending less, and saving/investing.

Since no two financial situations are alike, you’ll have to create a personal FIRE plan. Your FIRE strategy must take into account your income, living and other expenses, current savings, and ability to invest to create multiple passive income streams. You may want to consider engaging the services of a CFA or RIA to better assess your financial situation and create a pathway to Financial Independence, Retire Early.

You can start your FIRE journey today by tracking your net worth and current expenses. It’s the first step in building the foundation you’ll need to eventually achieve financial independence and bring your early retirement plan to fruition.