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

Retirement isn’t an age—it’s a financial number. And there’s no law that says you have to work until you’re 65. That’s a myth!

We’ve talked to many people who are well on their way to leaving the workforce early. 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 or not it’s right for you.

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

F.I.R.E. stands for “Financial Independence, Retire Early.” The goal 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.


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 less than half (41%) of Americans have tried to figure out their retirement savings needs.1 That’s like trying to aim for a target with a blindfold on. Define what you want your retirement to look like and make a plan to get there.

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 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. And that’s exactly what will help you make serious progress toward your goals.

3. Look for Ways to Boost Your Income

There’s no way around it. If you want to retire early—or really early—you have to get creative about finding ways to make extra cash.

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, 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.

Maybe saving 50% sounds like too much for you right now. (That’s a lot for most of us.) And that’s okay! But we all have to start somewhere. That’s why we recommend you start by investing 15% of your income into retirement savings after you’ve paid off all your consumer debt and saved up 3–6 months of expenses in a fully funded emergency fund.

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

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. In our study of millionaires, we discovered that one-third of millionaires never had a six-figure household income in a single year. We also found that the average millionaire worked, saved and invested for an average of 28 years before hitting the $1 million mark.2

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.

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

All income aside, there are some other issues with the F.I.R.E. movement that 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?

From student loans to credit cards, Americans are carrying an average debt balance of $26,621.3

Listen: It’s hard to save and invest when almost a third of your budget is going toward paying back debt. That’s not a recipe for financial success.

Don’t mess around with credit cards. Seriously. Not only is it easier to swipe that plastic without thinking, but there are studies to back it up. According to The Survey of American Finances by EveryDollar, “90% of people say they spend more using a credit card or debit card than with cash.”

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 and find yourself in serious trouble. There’s a reason why Americans have tallied $820 billion in credit card debt.4

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 31% of American workers say they’re 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. Ramsey Personality 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. will tell you 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 decades or even one year 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. That’s why you have to get focused. Chop up those credit cards and attack your debt with everything you’ve got.

After you become 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: Save for Your Kids’ College and Pay Off Your Mortgage Early

Have kids? If so, it’s time to start saving for their college fund. This is important because it’ll help give them a head start on covering college expenses (and put them on a path toward graduating debt-free).

While you’re doing that, 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: Investing Beyond 15%—Max Out Your Retirement Accounts

Now that you’ve got your little darling’s college fund in place and a paid-for house, you can really start to make some headway on your early retirement goals. First, go back to your 401(k) and IRA and max out your contributions. For 2022, you can put up to $20,500 into your 401(k) and $6,000 into an IRA.6 That’s $25,500 combined.

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 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.

Then make sure you’re on track to have that much saved in your bridge account for each year of your early retirement until you can access your retirement accounts—without penalty.

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

Here’s what we like about taxable investment 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 investments is that you pay taxes on any money your account earns. 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 Investing 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 Ramsey SmartVestor, we’ll connect you with up to five trusted investment pros in your area. The best part? It’s free! Find your financial pro today and they’ll help you start planning your dream retirement. Go check it out.


Ramsey Solutions

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.

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