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What is the FIRE Movement and Should You Follow It?

Discover why and how some people adopt FIRE strategies to gain financial independence and retire early.

Energetic male and female kayakers in 40s paddling past camera; FIRE movement.
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The Federal Reserve’s most recent Economic Well-Being survey found that the number of non-retirees who have not saved anything for their retirement grew from 25% in 2021 to 28% in 2022. As for the Americans who are setting aside money for their golden years, the percentage of those who feel like their retirement savings is on track dropped from 40% in 2021 to only 31% in 2022.

As you contemplate these statistics and plan for your own retirement, you may encounter the FIRE movement. Here’s what it’s all about so you can decide if you want to follow it or just adopt some of its strategies to improve your current and future financial position.

What is FIRE?

In 1992, Joe Dominguez and Vicki Ruben published their book, Your Money or Your Life. It’s subtitle, Transforming Your Relationship with Money and Achieving Financial Independence, sums up their idea. Many believe this popular personal finance book was the original impetus for the growing movement called FIRE, which stands for Financial Independence, Retire Early.

Fire Movement 2 Inline Image
FIRE stands for Financial Independence, Retire Early.

Key FIRE Strategies

Followers of the FIRE movement commit to aggressively setting aside as much as 50 to 75% of their income to achieve financial independence and retire early (much sooner than traditional retirement savings strategies allow and even as early as their 30s or 40s). They use five key strategies to make this work:

1. Significantly reducing expenses:

As advocated in Dominguez and Ruben’s book, those in the movement consciously think about and track every penny they spend. A well-planned and strictly followed budget is their favorite tool for keeping their expenses as low as possible in favor of achieving their FIRE goals.

2. Creatively increasing income:

At the same time, FIRE followers continuously seek ways to increase their income. For some, that means doing everything in their power to climb the corporate ladder to the highest salary rungs. For others, it means starting their own small business and growing it as quickly as possible to put more money in their pocket. And some supplement their income by taking on second jobs or joining the gig economy on the side.

3. Knowing the FIRE number:

They also follow the “Rule of 25” to determine how much money they need to retire early with financial independence, i.e., their FIRE number. It’s just a matter of multiplying their annual expenses by 25 to get that number. For example, with monthly expenses of $5,000, your FIRE number is $1.5 million ($5,000 x 12 months = $60,000 in annual expenses x 25 = $1.5 million). With $10,000 in monthly expenses, your FIRE number is $3 million ($10,000 x 12 months = $120,000 in annual expenses x 25 = $3 million).

4. Aggressively investing savings:

With their FIRE number calculated, they take an aggressive approach to investing their savings to try to earn the highest returns possible to hit their number well prior to the traditional retirement age. This is typically done by investing in a combination of brokerage accounts and tax-advantaged ones like 401(k)s and IRAs.

5. Using discipline when drawing down savings in retirement:

Finally, they plan to withdraw no more than 3 to 4% of their nest egg each year of retirement.

Popular Variations of FIRE

Over the years, new variations of FIRE have sprung up, including these popular ones:


Like the name suggests, its followers go to further extremes by cutting their expenses to only the most basic necessities and focusing on a very minimalist lifestyle. This leaves even more of their income to save and invest for their retirement, in which they plan to continue their frugality to remain financially independent.


The opposite of Lean FIRE, this variation is used by people who want to set aside enough money to enjoy extras like traveling or luxury vehicles during their retirement years. This typically requires at least a six-figure salary to achieve.

Barista FIRE

Those who follow this strategy work to save enough in order to leave the traditional nine-to-five grind before the typical retirement age and either work part-time or pursue more meaningful endeavors like working for a nonprofit. A significant advantage to this version is that continuing to work can mean employer-based health insurance.

Coast FIRE

In this case, people set a target amount to save by a set age with the plan that after that, they will “coast” to their ultimate nest egg goal through compounding gains on their investments.

Can FIRE work for you?

Anyone can adopt the traditional FIRE concept or one of its variations, but some situations can make it harder to achieve. Having a family or earning a very modest income can make it difficult to set aside as much as 50% of your income. Likewise, if you lack an emergency fund or have a significant amount of high-interest debt, sticking to your budget may be challenging. Another roadblock to achieving FIRE can be the need to cover your own medical insurance before you’re eligible for Medicare at age 65.

It’s also important to understand your own personality. FIRE takes continuous discipline and vigilance. If you struggle with either, FIRE may not be right for you. However, the general FIRE strategies of continuously trying to decrease outgoing money and increase incoming cash and saving and investing the difference can help anyone get a step closer to financial independence and retiring comfortably at the age of their choice.


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CUNA 2023 diamond award trophy icon

CUNA 2023 Diamond Award Winner

Financial Education

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