Financial Independence, Retire Early (FIRE) is a movement dedicated to extreme savings and investment to quit the rat race decades ahead of schedule.
Key Takeaway: An introduction to the Financial Independence, Retire Early movement and how to join.
The Core Equation
FIRE dictates that once you have saved 25 times your annual expenses, you are financially independent (based on the 4% safe withdrawal rule). For example, if you spend $40,000 a year, you need a $1 million portfolio.
Types of FIRE
- LeanFIRE: Extreme frugality to retire on a small portfolio.
- FatFIRE: Building a large portfolio to retire with a luxurious lifestyle.
- BaristaFIRE: Saving enough to semi-retire and work a low-stress, part-time job for benefits.
Frequently Asked Questions
How much should I save for retirement?
Aim to save at least 15% of your income annually.
What is the difference between a 401(k) and an IRA?
A 401(k) is employer-sponsored, while an IRA is an individual account you open yourself.
When can I retire?
It depends on your savings and lifestyle, but typically between ages 60 and 67.
Conclusion
Even if you don't plan to retire at 35, the principles of FIRE—spending less than you earn and investing aggressively—are the surest path to financial security.