Retirement What is the FIRE Movement + How to Make It A Reality Read the Article Open Share Drawer Share this:Click to share on Twitter (Opens in new window)Click to share on Facebook (Opens in new window)Click to share on Tumblr (Opens in new window)Click to share on Pinterest (Opens in new window)Click to share on LinkedIn (Opens in new window) Written by Zina Kumok Modified May 9, 2022 Sources Advertising Disclosure The views expressed on this blog are those of the bloggers, and not necessarily those of Intuit. Third-party blogger may have received compensation for their time and services. Click here to read full disclosure on third-party bloggers. This blog does not provide legal, financial, accounting or tax advice. The content on this blog is "as is" and carries no warranties. Intuit does not warrant or guarantee the accuracy, reliability, and completeness of the content on this blog. After 20 days, comments are closed on posts. Intuit may, but has no obligation to, monitor comments. Comments that include profanity or abusive language will not be posted. Click here to read full Terms of Service. Save more, spend smarter, and make your money go further Sign up for Free In a world with stagnating wages and an increasing cost of living, many people are looking for a way out of the rat race. That’s why radical investment strategies and risky business ventures are so popular. Believe it or not, there actually is a reliable way to achieve financial independence – but it’s far from a “get-rich-quick” scheme. Financial Independence, Retire Early (FIRE) is an increasingly popular strategy to break free from the daily grind and build your ideal future. Here’s what you need to know about how it works. What is the FIRE Movement? The FIRE movement encourages consumers to save and invest aggressively while they’re young in order to retire decades earlier than normal. There is no specific FIRE timeline; that depends on your particular goals and financial situation. Many people who work toward FIRE try to retire in their 30s and 40s. The FIRE movement isn’t always about retiring early, however. Some people may reach their FIRE goal and keep working, because they enjoy what they do or because they’re not sure about the next steps to take. For them, FIRE provides the peace of mind that comes with not relying entirely on your job to make ends meet. Some people choose to work toward FIRE so they can take a sabbatical, switch careers or become digital nomads. Others want to reach FIRE so every extra penny they earn can become a legacy they leave behind. Types of FIRE There is no one way to reach FIRE. In fact, there are many schools of thought. Here are the most common types of FIRE and how they stack up: Fat FIRE People who don’t want to worry about budget limitations when they retire may opt for Fat FIRE, where your investments greatly exceed your annual cost of living. Fat FIRE may be appropriate for those who don’t believe in penny pinching and want to enjoy the luxuries that life has to offer. Barista FI Because health insurance is one of the biggest expenses for those without access to an employer plan, some FIRE devotees will retire from their regular job and work at a company that provides health insurance to part-time employees – like Starbucks. This is known as Barista FI. Coast FI Coast FI is a financial independence movement where the goal is to have enough invested that you can afford to stop making retirement contributions. Once you reach Coast FI, you can either keep making contributions in order to retire early or focus your resources on other goals like starting a business, contributing to a child’s college education, traveling abroad and more. Slow FI The Slow FI movement believes in reaching financial independence, but not at the crushing pace of traditional FIRE. Slow FI is a more conservative path, avoiding the huge sacrifices that come with traditional FIRE strategies. How to Retire Early Lower your expenses If you’re trying to retire early, one of the most important things to do is lower your expenses. This will free up more money to invest and save. Track your expenses with a budget and find a balance between saving for FIRE and continuing to enjoy your life. Increase your income While lowering your expenses is key to achieving FIRE, increasing your income is another crucial aspect. There’s a limit to how much you can save by being frugal, but there’s no limit to how much you can earn. Increasing your income can include asking for a raise, switching industries, starting a side hustle and more. Understand your numbers One of the main reasons that people fail to meet their FIRE goals is that they don’t properly identify how much they’re saving, how much they’re spending and how much they’ll need to retire early. Start by tracking your expenses to get an average of how much you typically spend a month. It’s important to be realistic – not optimistic – when you calculate your average expenses. To get a baseline estimate of how much you need to save, use one of the many FIRE calculators. You’ll have to input how much you spend annually, how much you save annually, when you hope to retire and how much you currently have saved. The calculator should show if you’re on track to meet your goals or way off course. Talk to a financial planner Deciding to retire early is one of the biggest financial decisions you can make. And before you take that leap, you should talk to a third party to ensure you’ve thought of everything. A financial planner can point out potential problems with your plan, like whether you can afford huge health insurance premiums or annual property tax increases. They can also recommend the best types of investment accounts to open and how to lower your tax liability. Create automatic savings Saving money is hard, but saving money to retire early is even harder. You can make it easier on yourself by automating your savings. If you have a 401(k), you can increase your contributions by talking to your HR or payroll department. The money will automatically come out of your paycheck. If you receive a raise, then your 401(k) contributions will also automatically increase. If you invest in an IRA, then you’ll have to set up automatic contributions through the investment company. Determine how much you can afford to save automatically every month. Find inspiration When working toward FIRE, it can be hard to find like-minded people around you. That’s why it helps to get inspiration from outside sources like FIRE blogs, podcasts and forums. Some popular resources include the Choose FI Podcast, the Mad Fientist blog and the 1500 Days to Freedom blog. Some of these communities even have local meetups, where you can spend time with real people who share your financial priorities and dreams for the future. Save more, spend smarter, and make your money go further Sign up for Free Written by Zina Kumok Zina Kumok is a freelance writer specializing in personal finance. A former reporter, she has covered murder trials, the Final Four and everything in between. She has been featured in Lifehacker, DailyWorth and Time. Read about how she paid off $28,000 worth of student loans in three years at Conscious Coins. More from Zina Kumok Visit the website of Zina Kumok. Sources Financial Independence, Retire Early (FIRE) is a popular strategy to build your ideal future. Here’s what you need to know. Browse Related Articles Retirement Chapter 3: How to Create a Retirement Budget Investments Plan Your Financial Future at Any Age Budgeting Chapter 1: What Is a Budget & How to Create One Retirement Chapter 1: How Much Do I Need to Retire? Retirement Chapter 11: How to Retire Early Budgeting Chapter 10: Set Up Your Mint Goals Retirement Chapter 7: Investing in a 401(k) vs. 403b Personal Finance What Is an Online Financial Advisor & What Can The… Budgeting Chapter 9: Managing Your Money with a Budget Budgeting Chapter 4: How to Create a Budget Comments are closed.