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FIRE Movement: Financial Independence, Retire Early

Dec 03, 2018 5 min read Stephanie Taylor Christensen

Key Takeaways

  • The FIRE movement stands for “financial independence, retire early."
  • It also addresses how you spend your time and money and where you invest your energy and attention.
  • Critics say that uncertainty, increased longevity, and health care costs require more financial stability than what you can achieve by early retirement.

To the casual observer, it might appear that Greg Pauly* is just beginning his professional life. He's 28, recently started a new job as a personal trainer in Phoenix, Arizona, and opened a business. Yet, Greg plans to retire in about 11 years.

Is he a trust fund baby? Looking for a life that doesn't involve work? Unrealistic about what it costs to live each month? Nope.

He's a devotee of the FIRE movement, which stands for “financial independence, retire early."

“I discovered FIRE in 2016 when I was working as a project manager for a large pharmaceutical company. I found the movement through reading about FIRE icon Mr. Money Mustache," says Pauly. “It resonated with me immediately because the freedom the lifestyle provides is extremely enticing, as is the creativity. I'll confess to being intrigued by unorthodox ideas, and the thought of 'beating the system' by only working for a fraction of the stereotypical 40-year career was very exciting."


The appeal of a lifestyle determined by choice versus commitment has attracted an enthusiastic community of hundreds of thousands of FIRE followers — and plenty of vocal critics, including financial expert Suze Orman. Here's a closer look at what the FIRE movement is really all about.

What is the FIRE movement?

The fundamental philosophy of FIRE is “to lead the happiest, most satisfying life you can possibly lead," according to Pete Adeney Opens in new window, otherwise known as Mr. Money Mustache, an early adopter and advocate of the FIRE movement. On his site, he explains that reaching “financial independence" does not necessarily mean the end of your working years. Likewise, “retire early" doesn't have to mean you stop working when you reach whatever number you've identified is “enough" to reach financial independence.

Ultimately, FIRE isn't really about wealth. It's about choosing what you do with your money, your time, and your energy.



Anyone can strive for FIRE.

FIRE is based more on controlling what you spend and save than on what you make. On his site, Adeney points out that people with higher incomes tend to have more bad habits to break when they decide to commit to FIRE, compared to someone who makes less money and is already accustomed to spending less.

When he first heard about FIRE, Pauly was saving about 20% of his $75,000 a year salary. Once he came to understand the fundamentals behind the movement, he slashed expenses and began saving aggressively. “I began saving 55% of my income, by maxing out my 401(k), HSAs, and Roth. I opened a taxable account with what was left over," says Pauly.

Retirement is more flexible.

Traditional retirement is based on the idea that you work for decades to eventually earn the freedom to spend your time and energy how you want. The “retire early" aspect of the FIRE movement means you choose what to do — regardless of the pay — rather than remaining in a job you don't like, because of the pay. With that definition of retirement, you may never stop working — and may not want to retire.

Most FIRE devotees calculate their “goal" number for financial independence based on their annual spending level multiplied by 25. Based on the FIRE model, a person who spends $30,000 a year, for example, could retire once they've saved $750,000. Pauly's goal number is to have $1 million saved by the time he's 39.

Choose where and how you spend money.

FIRE devotees are all for choosing what's worth spending money on, based on personal values. You don't have to become extremely frugal or a minimalist to adopt the FIRE movement. The choices of where you spend, and how you save and earn income, are yours.

To eliminate his expenses, Pauly secured rent-free living with a wealthy family, in exchange for ten hours a week watching their children — on top of his day job. “In FIRE fashion, I was able to leverage my soccer coaching skills, piano playing abilities (years of lessons as a kid), and tutoring proficiency (I tutored writing in college) to live in a private spot in a beautiful suburb, close enough to walk/bike to work," says Pauly.

Last year, Pauly had saved enough to leave his desk job, and focus entirely on his new business and personal training. He says he's still on track to retire before he turns 40.



Your future may be more expensive than you think.

Suze Orman told listeners of Paula Pant's Afford Anything podcast Opens in new window that she “hates" the FIRE movement and does not think anyone should consider retiring early until they have at least $5 to $10 million saved. Her reasons boil down to the fact that the future is so uncertain, health care is so expensive, and you just don't know what your life will look like decades from now. “Listen, when my mom got older, I was responsible for her. I spent on her in seven years, over two and a half million dollars," said Orman.

Employment may not be readily available forever.

Unemployment rates in January 2020 were the lowest they've been since 1969, according to the Bureau of Labor Statistics data Opens in new window. That's good news for FIRE devotees who may want to hold a number of odd jobs to earn income — but there's no telling what will happen to the job market in the next few decades. Will there still be demand for the skills and services that have made the “gig economy" a viable money-making option? Will people who intentionally left the traditional workforce be able to rejoin it, should they need to return to a more stable income source or a job with benefits? Orman said she thinks artificial intelligence could wipe out so many jobs that unemployment could shoot up to 25% in the next couple of decades.

Tax rates and social programs could change.

Many retirement planning strategies assume that Social Security Opens in new window and Medicare will help offset some expenses later in life. Yet, these programs could be very different once they've had to cover the 75 million Baby Boomers who are in some phase of their retirement. (The issue of health and its costs are part of the reason FIRE devotees tend to prioritize preventative health measures like stress management, a healthy diet, and active lifestyle).



What you can do next

Whether you love or loathe the FIRE concept, you may want to create well-defined and intentional goals for your money so that you're in control of your financial life (and not the other way around). Please consult your financial, tax and legal advisors for advice pertaining to your particular circumstances.



*Greg Pauly is not his real name.


Stephanie Taylor Christensen is a personal finance expert and freelance financial, business and health writer with more than two decades of experience. Her work regularly appears in USA Today, Cosmopolitan, Money and Forbes. Learn more at stephanietaylorchristensen.com


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