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What Is the F.I.R.E. Movement?

Guess what? There’s no law that says you have to work until you’re 65 (trust us, we checked). And there are a growing number of Americans who dream about leaving the workforce early and getting a head start on retirement!

But there’s a new wave of younger workers who are trying to take early retirement to another level. They’re on a mission to blaze a new path toward retirement as part of the F.I.R.E. movement.

They believe it’s possible to retire sometime in their 30s or 40s. You read that right! But how? Is it actually realistic to retire at age 45? Or even 35? Let’s take a closer look at the F.I.R.E. movement to find out whether it’s right for you.

So, What Is the Financial Independence, Retire Early (F.I.R.E.) Movement?

In a nutshell, the goal of the F.I.R.E. movement is to save and invest aggressively—somewhere between 50–75% of your income—so you can retire sometime in your 30s or 40s.

That’s right: You need to save at least half of your income just to have a chance to make this happen.


How much will you need for retirement? Find out with this free tool!

How do people do it? In order to sock away that much money for investing, folks who are on F.I.R.E. are always looking to do two things: keep their expenses extremely low and find ways to raise their income.

The general idea is that the higher your income and the lower your expenses, the faster you can reach financial independence. Think gazelle intensity—except the gazelle is literally on fire.

For those in the F.I.R.E. movement, “financial independence” doesn’t just mean sitting on some tropical beach or playing golf all the time. It means reaching the point where you don’t have to work a full-time job if you don’t want to. You can scale back to a part-time job or simply stop working altogether. The choice is yours . . . imagine that!

What We Can Learn From the F.I.R.E. Movement

We have mixed feelings about the F.I.R.E. movement, but the one thing we can get behind 100% is the focus and intensity these people have toward reaching their retirement dreams. And no matter where you are on your financial journey, there are some key lessons we can all take away from the F.I.R.E. movement:

1. Start dreaming and planning for retirement.

The best thing about the F.I.R.E. movement is that it’s getting younger workers to start thinking about retirement—especially since only 59% of Americans aged 35-54 (and only 43% aged 18-34) have any type of retirement account!1 Define what you want your retirement to look like and make a plan to get there. When you write down your retirement dreams and give them a timeline, those dreams become attainable goals!

2. Find ways to keep your expenses low.

These F.I.R.E. followers take the time to look at where their money is going. They define wants and needs, keep track of their monthly expenses, and cut out any spending that doesn’t make sense for them. They get on a budget and stick to it.

Saving a few dollars here and there really adds up over time. If you have the discipline to slash unnecessary expenses out of your budget, that extra money you can invest will help you make serious progress toward your retirement goals in the long run. After all, that Mediterranean cruise you and your wife have been dreaming about isn’t going to pay for itself!

3. Look for ways to boost your income.

Your income is your most powerful wealth-building tool. And if you want to retire early—or really early—you have to get creative about finding ways to make extra cash. There’s no way around it. And there are so many ways to increase your income—maybe you’re on a career path that’ll lead to that six-figure salary. Or maybe you’ve got a side hustle that you’re turning into a small business on nights and weekends. It could mean delivering pizzas for a while or saving up to buy a rental property.

Whatever that looks like for you, additional income will play a huge role in helping you take a step back from the workforce and enjoy an early retirement.

4. Make saving and investing a priority.

If you want to retire (early or otherwise), you have to save and invest. There are no ifs, ands or buts about it. That’s why folks in the F.I.R.E. movement are radical about throwing huge chunks of their income toward their retirement.

But the good news is you don’t have to save half your income to reach your retirement goals! You should start by investing 15% of your income into tax-advantaged retirement savings accounts, like 401(k)s and Roth IRAs.

The key is to get into a regular habit of saving and investing every single month. When you do that, time and compound growth work for you instead of against you.

After you knock out some of your other money goals, like paying off your mortgage early (which you can do if you’re investing 15% instead of 50% of your income), you can start investing more. We’ll talk about that later.

Why the F.I.R.E. Movement May Not Be for Everyone

The first big barrier to following the F.I.R.E. movement is having a large income (and we mean large). No matter how much you cut down your lifestyle, it’s going to take a big income—probably somewhere in the six-figure range—to have the ability to save enough to retire before your 40th birthday.

But that shouldn’t discourage you from building wealth—anyone can do it! According to The National Study of Millionaires, one-third of millionaires never had a six-figure household income in a single year.

No matter what kind of career or salary you have right now, don’t fall for the myth that you need a high-paying job to build the wealth you need to enjoy a worry-free retirement. Anyone can become a millionaire—it just takes a little time.

If you want to learn more about the proven path that has helped thousands of Americans become millionaires, then Dave’s new book, Baby Steps Millionaires, is for you. Grab your copy today to find out more about this special group of millionaires, and how you can become one too!

Don’t Mess With Credit Cards—You’re Going to Get Burned

Income aside, there are some other issues with the F.I.R.E. movement we want to tackle head on.

Many F.I.R.E. advocates actually promote the idea of using credit cards for the points and rewards. Say what?

Don’t mess around with credit cards. Seriously. You may be thinking, But I pay my credit card bill on time every month! That might work for a little while, but you’re not beating the system. All it takes is one missed payment or one major emergency that forces you to bite off more than you can chew for credit card debt to spiral out of control.

In total, Americans have tallied $986 billion in credit card debt.2 As of late 2022, the average interest on credit card accounts has risen to 20.4%.3 Why would someone open a credit card with that kind of interest? Because they thought they could pay off their balance every month . . . until they couldn’t.

Listen: If you’re like most Americans, almost a third of your budget is going toward paying back debt.4 That makes it really hard to save and invest, and it’s not a recipe for financial success.

When you play with fire . . . well, you know what happens.

Don’t Do F.I.R.E. Just to Escape a Job You Hate

You might be drawn to the F.I.R.E. movement if you hate your job. After all, only 34% of American workers say they’re actively engaged at work.5 It’s no wonder that a growing number of young workers are dreaming about leaving the workplace altogether.

But there’s a deeper problem that lies beneath the surface, and F.I.R.E. isn’t going to solve it. If you hate your job, you don’t need F.I.R.E. What you really need is a new career path. America’s Career Coach Ken Coleman calls it “finding your sweet spot.” That’s the place where your greatest talents and passions intersect. Even folks who follow F.I.R.E. can get behind that!

If your sole desire is to retire early so you can escape going into work on Monday, you’re going to be very disappointed. Life is too short to waste a few years, or even decades, working a job you hate.

The Roadmap to Early Retirement

Whether your goal is to retire at age 65 or 35, you need a plan. You have to know how much money you’ll need to have saved in order to retire when you want—and how much you’ll need to save each month to get there.

This step-by-step plan will help put you on the path toward early retirement:

Step 1: Get out of debt and finish your emergency fund.

Debt is holding back millions of younger workers from investing for retirement. In fact, American millennials in their 30s have been piling on debt at a historic rate since the pandemic began, and all that debt is hurting their ability to save and invest for the future.6

That’s why you have to get focused. Chop up those credit cards and kick Sallie Mae out of your life for good—and give it everything you’ve got.

Once you’re debt-free and before you start investing for retirement, it’s time to build up an emergency fund. When you have enough money in a savings account to cover 3–6 months of expenses, you won’t have to worry about a broken air conditioner or a flat tire derailing your investing plan.

Step 2: Invest 15% into tax-advantaged retirement accounts.

Here comes the fun part! Now you’re ready to start saving for retirement. Begin by saving 15% of your gross income every month in retirement plans like a 401(k) and a Roth IRA—and be sure to invest your retirement money in mutual funds with a great track record.

Step 3: Pay off your mortgage early.

While you’re investing, get intense about paying off your home early. This is a huge goal that’s going to give you momentum toward early retirement! Think about it: How much more money would you be able to save for retirement if you didn’t have a house payment? What could you do if you were completely debt-free with a paid-for house?

Step 4: Invest beyond 15%—max out your retirement accounts.

With a paid-for house and no debt to speak of, you can really start to make some headway on your early retirement goals. This is where investing 50% of your income for retirement could actually be possible. First, go back to your 401(k) and IRA and max out your contributions.

But remember: In most cases, you won’t be able to withdraw money from your 401(k) or IRA without facing an early withdrawal penalty until you hit age 59 1/2. For example, with a traditional 401(k), you’ll not only have to pay income taxes on the money you take out, but Uncle Sam will also be taking another 10% on top of that. Not a good plan!

But there’s a solution to that problem that most people who want to retire early forget about: a bridge account.

Step 5: Build a bridge account—open a taxable investment account.

If you want to retire early, the bridge account will help you “bridge” the gap between when you want to retire and when you can take the money out of your retirement accounts.

As you plan your retirement dream, set a retirement age target and figure out how much money you’ll need to live on each year. Then multiply that number by how many years you expect to use your bridge account. That’s how much you should have in your bridge account so you can live comfortably until you’re able to access your retirement accounts without penalty.

For example, let’s say you want to retire early at age 55. That means you need to have enough money in your bridge account to last about 4 1/2 years. So if you expect to live off of $50,000 each year in retirement, your goal should be to have at least $225,000 in your bridge account by the time you turn 55 years old!

Once you’ve maxed out your 401(k) and IRA, open up a brokerage account (also known as a taxable investment account) to serve as your bridge account.

Here’s what we like about brokerage accounts:

  • You can take out money anytime you like.
  • There are no contribution limits.
  • You can open an account through a brokerage firm and invest in mutual funds.

The one big drawback to these accounts is that you pay taxes on any money your investments earn. It’s a good idea to sit down with your investment professional to work through the numbers and set a goal for how much you need in your bridge account to achieve your retirement goals.

Work With an Investment Pro

There are a lot of different moving parts that go into successfully retiring early, but it is possible! And the best way to turn your dream into a reality is by working with a trusted financial advisor or investment professional who can help you get there.

With the SmartVestor program, we’ll connect you with up to five trusted investment pros in your area. Find your financial pro today and they’ll help you start planning your dream retirement.

Find your SmartVestor Pro today!

Frequently Asked Questions

Who is the F.I.R.E. movement designed for?

The F.I.R.E. movement may be designed to help people who want to retire extremely early, but anyone—no matter their age or income—can learn from its principles. Do you need to make six figures from the time you turn 18 to invest enough to retire in your 30s? Yeah, most likely. But some of the F.I.R.E. principles—such as increasing income, saving and investing more, and cutting back on expenses—can help anyone retire earlier!

You’re never too young or too old to get started, but you should stop saving for retirement temporarily if you still have consumer debt or haven’t saved up an emergency fund. Pay off those debts smallest to largest first, then build your emergency fund of 3–6 months of expenses. Then you can take all the money that was going to those monthly payments and start investing for retirement!

How did the F.I.R.E. movement get started?

In 1992, Vicki Robin and Joe Dominguez published the book Your Money or Your Life. It popularized the ideas of saving and investing early to achieve financial independence earlier, and voilà! The F.I.R.E. movement was born.

The principles of the F.I.R.E. movement got another boost from a 2010 book called Early Retirement Extreme. It was written by Jacob Lund Fisker, who said he was able to retire early from his job as a nuclear astrophysicist by saving most of his paycheck every month and reducing his expenses to just $7,000 a year!

What are some variations of the F.I.R.E movement?

Over the years, followers of F.I.R.E. have flexed and molded its principles to better align with their retirement goals and life situations, so here are a few variations you may come across:

  • Fat F.I.R.E.: This version is for anyone who doesn’t want to change their standard of living (aka cut back on expenses) while saving more for retirement than the average worker. And if they don’t cut back on expenses, the only way to save and invest more is to earn more!
  • Lean F.I.R.E.: Exactly what it sounds like, this variation emphasizes living lean. The basic idea is to trim all the fat from your budget by cutting back your expenses to the extreme so that you can save and invest as much of your earnings as possible. Think minimalist living so you can retire earlier.
  • Barista F.I.R.E.: F.I.R.E. followers who want a mix of the “fat” and “lean” principles we mentioned above fit into this category. Their goal is to save enough to quit their 9-to-5 job so they can live on a combination of working part time (somewhere like Starbucks—hence barista—so they can supplement their income and get health insurance) and pulling a little from their savings each year without dipping into retirement.

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This article provides general guidelines about investing topics. Your situation may be unique. If you have questions, connect with a SmartVestor Pro. Ramsey Solutions is a paid, non-client promoter of participating Pros. 

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About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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