You may have heard an unfamiliar buzzword when you began looking into early retirement. FIRE, which stands for Financial Independence, Retire Early, is a term that originated with the 1992 best-selling book Your Money or Your Life by Vicki Robin and Joe Dominguez.

FIRE is a lifestyle movement that has become popular among many millennials, and other generations. It incorporates extreme savings and investment strategies that allows those who adopt the lifestyle to retire much earlier than typical retirement age. The movement has become more mainstream over the last few decades, and is often featured by big media publications. There are lots of critics, but just as many proponents to the lifestyle.

The primary goal is to aggressively save as much as 50-75% of your income so you can retire in your 30s or 40s. You read that right, that’s saving at least half of your income. It’s extreme, but it’s possible. There are people doing it, and if you’re wondering how, they do it by focusing on two things:

keeping expenses extremely low, and increasing their income.

As with any popular movement, different variations of the financial independent, retire early lifestyle has sprung up over the years. There are five primary versions of it now, though I’m sure there are many who are pursuing it, who have put their own spin on it.

Traditional Fire

The objective of this version is to accumulate as much income, or income producing assets, to cover all of your current living expenses. In this version you are aggressively saving, cutting your expenses, boosting your income, and simplifying your life in order to retire by the time you are in your 30s or 40s.


FatFIRE is for those people who want to retire early, but will have higher expenses and a significantly larger budget. The rule of thumb here is that your yearly budget will be around $100K and up. Typically, those people who take this route have higher incomes and more disposable income than those who take the traditional route.


If you’re thinking that LeanFIRE must be the opposite of FatFIRE, you’re not far off. It’s much like traditional FIRE, but on a much tighter budget. In this version you become a master at keeping expenses low, and finding ways to simplify your life. You’ll live more of a minimalist lifestyle (frugality is your friend) your goal being able to retire and live on $40K a year or less.


This is another popular variation of FIRE that has come about in the last few years. As the name suggests, in this version your goal is to retire and only need a small yearly income to supplement your retirement savings. Instead of working 40 or more hours a week, you would only need a part-time job (like a barista) in order to live the way you want. This is also a good way to test out early retirement and see if you’re ready, plus give yourself more time to pursue other passions.


This version is a little different than the other four. If you’re thinking this one refers to retiring and living on the beach, that’s not quite it. The idea here is to invest enough at an early age so that you won’t have to invest later. This works on the principle compounding, and you’ll have to do a bit of math to see if this is the right path for you.

If you use the rule of thumb that financial independence means having saved up 25 times the amount of your annual expenses, and your expenses are $40K a year, you’d need $1 million dollars to be financially independent. Following this approach, if you managed to save up $182,000 by the time you’re 30 years old, and invested it at an annual rate of 5% (after inflation), you’d have $1 million dollars by the time you were 65. Naturally, if you wanted to retire at an earlier age you’d have to invest more money up front, invest at a higher return, or both. You would still have to work in the meantime in order to cover your living expenses, but the upside would be that you wouldn’t have to necessarily save any of that income.

Is FIRE right for you? Maybe, maybe not, but only you can answer that question. There are pros and cons to taking the FIRE approach, and it certainly helps if you have a substantial income. But regardless of how you feel about it there are things you can learn from this approach. Create a plan for retirement and keep your expenses low. Reduce debt, find ways to boost your income, and make saving a top priority. These are all things you want to be doing anyway, no matter when you plan to retire.

What do you think? Have you tried any of these FIRE versions, or perhaps a variation of your own? Please share in the comments!

Have more questions or want to know more? Contact Candice by emailing