FIRE (Financial Independence, Retire Early)
Definition
FIRE is a movement focused on achieving financial independence and early retirement through aggressive saving, frugal living, and strategic investing.
Explanation
The FIRE movement typically targets a savings rate of 50-70% of income, aiming to accumulate 25-30 times annual expenses. Once that target is reached, the 4% withdrawal rule can cover living expenses indefinitely. Variations include Lean FIRE (frugal retirement), Fat FIRE (higher spending), and Barista FIRE (part-time work for benefits).
FIRE requires discipline but offers freedom from mandatory work, allowing people to pursue meaningful activities on their own terms.
Example
A person with $30,000 annual expenses needs $750,000 invested (25× expenses) to retire under the FIRE approach using the 4% rule.