F.I.R.E stands for Financial Independence, Retire Early. It is a lifestyle and financial movement that encourages saving and investing aggressively to achieve financial independence much earlier than traditional retirement age.
How It Works
Followers of F.I.R.E aim to save a very high percentage of their income—often 50% to 70%—by cutting expenses and increasing earnings. The savings are invested in income-producing assets, such as stocks, ETFs, or real estate, until they generate enough passive income to cover living expenses.
Key Principles
- High savings rate: Aggressively saving and investing a large portion of income.
- Frugality: Reducing expenses to increase savings capacity.
- Passive income: Building investments that generate returns without active work.
Variations of F.I.R.E
- LeanFIRE: Living a minimalist lifestyle with very low expenses.
- FatFIRE: Saving enough to retire early while maintaining a more comfortable lifestyle.
- BaristaFIRE: Achieving financial independence but continuing to work part-time for benefits or extra income.
Final Thoughts
F.I.R.E is not just about early retirement, but about gaining financial freedom and control over your time. While it requires discipline and sacrifices, it can provide long-term independence and flexibility in life choices.