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Built Up or Burnt Out? Lessons From the FIRE Movement

Nov 05, 2021 5 min read Eric Rosenberg

Key takeaways

  • FIRE focuses on early retirement—and the frugality you need to get there.
  • Anyone can take lessons from the FIRE concept.
  • It’s wise to plan out your future needs even if you don’t plan to retire early.


Looking to retire young or merely shore up your financial future? Consider playing with FIRE.

Short for “financial independence, retire early,” FIRE is a loosely affiliated community of people with a singular goal: retiring ASAP on passive, self-replenishing income streams.



The FIRE movement came to prominence in 1994, when financial advisor William Bengen developed the theory that you could retire early if you live by the traditional (though, some argue, outdated) “4% rule”1: Save 25 times your annual living expenses and withdraw 4% of your savings each year in retirement. For example, if your living costs are $40,000 a year, you’d need to save $1 million before retiring, assuming your investments earn 5% to 8% per year after inflation.

While many people are interested in the “retire early” part, FIRE isn’t without detractors. For example, some don’t want the ultra-frugal, super-disciplined lifestyle required for extremely early retirement, while others simply don’t have the finances to make it work. What’s more, the sooner you retire, the more years you’ll likely have to fund.

Here’s a look at FIRE, how you can apply it to your finances, and whether the movement makes sense for you.


Fanning the flame

FIRE’s supporters say that many people can cut their spending and, in turn, boost their savings and investments—by a lot. Indeed, some have even been able to retire as early as their 30s.

Consider FIRE blogger Pete Adeney, a.k.a. Mr. Money Mustache, who advocates saving half  your income for early retirement.2 Adeney, who retired from his software engineering job at age 30, has lived a meticulous but comfortable life holding to the tenets of FIRE.

True, opinions are split on how practical this lifestyle is for the average person—especially if you have kids (and their related costs). Even so, some FIRE practices are worth considering.


How FIRE can spark any retirement plan

While you may not have the ability (or will) to live on half your income, the FIRE movement’s concepts could help strengthen your retirement saving strategy.

For example, FIRE teaches followers to be conscious of spending and set clear targets around retirement savings. For example, if you earn $70,000 a year but have $0 saved, you could start saving 30% of your income. If you adjust for a 4% withdrawal rate, along with 8% average annual investment returns—not an easy long-term feat these days—it would take about 22 years to reach retirement. Instead, if you save 50% of your income, you could retire in 14 years.3 (If your investments earn less, of course, you’d have to save longer, save more or both.)

Another way to boost your savings is to create a “passive” income stream that essentially earns money while you sleep. Ideally, you’d invest in a business product, but other sources of passive income might include interest-bearing bonds, dividend-paying stocks or rental property for which you hire out cleaning and maintenance.4 (Passive income is taxable, but the rate may be lower than on other types of income.)

Because FIRE focuses on the cash flow you need to cover your expenses, you can use its ideas to target how much you’d need to invest to retire and maintain your current lifestyle.


Using FIRE if you’re forced into early retirement

Due to the COVID-19 pandemic and other economic factors, many Americans have been forced to retire sooner than planned. While this may lead to financial hardship, a few lessons from the FIRE movement could make early retirement easier to handle.

The math behind your potential FIRE plan can help you estimate the extra savings you’d need to meet your original retirement goals or adjust your lifestyle and spending. (A site called Engaging Data has a FIRE calculator that can help you understand your potential to retire early based on your current finances.5)

Many FIRE followers take extreme frugality measures to cut every dollar they spend. Some common habits:

  • Using a bicycle or public transportation instead of owning a car
  • Avoiding dining out at restaurants
  • Paying off all debt early to avoid interest costs
  • Saving and investing every possible dollar to retire even sooner


Pros and cons of FIRE

FIRE isn’t all good or all bad. Consider:


  • Its good to know where you stand. The first step of any FIRE plan is projecting your investment needs for retirement.
  • Most people can cut spending and invest more. Unless you’re already living on a shoestring, it’s never a bad idea to look for places to cut spending and invest those savings.
  • It can help you retire early. Even if you can’t call it a career at 30, you may be able to retire earlier than you’d planned.
  • Control your schedule. Early retirees can spend time with family, sleep in, go fishing, start a new business or use their newfound free time as they choose.


  • Many people cant cut their spending further. If you’re already on a tight budget, have debt or have limited income, FIRE simply isn’t for you.
  • Costs can go up in retirement. Health care, inflation and other factors may drive up your costs in what could be a long retirement—which could leave you short on savings.
  • Investments may underperform. If your investments perform worse than you expect, you could wind up outliving your funds.
  • Early retirement isnt for everyone. You may find early retirement simply isn’t as fulfilling as you’d hoped—and it will last a long time.


What you can do next

Review your spending and how much income you’d need from your investments to cover those costs in retirement. Reach out to a trusted financial professional for help understanding and planning for your retirement needs.

Please consult your tax and legal advisors for advice pertaining to your circumstances.


  1. 1 Trina Paul, “Retiring in your 30s: Is it possible and is it even a good idea?,” CNBC, Sept. 9, 2021 (cnbc.com/select/is-retiring-in-your-30s-a-good-idea/)
  2. 2 Harvey Jones, “Meet the people trying to save enough to retire by 40,” The Guardian, Aug. 18, 2019 (theguardian.com/money/2019/aug/18/meet-people-saving-retire-by-40-fire-movement)
  3. 3 Kelly Anne Smith, “The Forbes Guide To FIRE,” Forbes, June 29, 2020 (forbes.com/advisor/retirement/the-forbes-guide-to-fire/)
  4. 4 Melissa Houston, “Passive Income And Why You Need To Know About It,” Forbes, July 7, 2021 (forbes.com/sites/melissahouston/2021/07/07/passive-income-and-why-you-need-to-know-about-it/)
  5. 5 “When Can I Retire? Early Retirement Calculator/FIRE Calculator,” Engaging Data, accessed Oct. 7, 2021 (engaging-data.com/fire-calculator/)


Eric Rosenberg is a finance, travel and technology writer in Ventura, Calif. He has in-depth experience writing about banking, credit cards and investing.


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