The FIRE Movement, Explained

Am I really writing about the FIRE movement? Seven years into running what is, ostensibly, a FIRE movement blog? Why yes, I am!

We’ve published over 400 articles for Bitches Get Riches. It’s possible that one day we’ll stop because we’ve run out of things to say. But today ain’t that day.

Today, I’m explaining a concept so important to us—so central and foundational to every aspect of our lives—that we forgot to write about it. For years.

What can I say? It’s peak me! When a friend comes to visit, I often meet them at the threshold, drag them inside, thrust food into their hands, and press them to name their favorite title card from the original Batman: the Animated Series before I remember to actually, y’know, greet them. A tiny minority of people find this blunderbuss communication style charming. I’m grateful to them! I collect them! And if you’re still reading our blog after such a glaring long-term omission, congratulations: you’re a part of my collection.

If this is your first time hearing about the FIRE movement, sit down. Get comfortable. I might have the privilege of changing your life—and I want us both to enjoy it.

What is the FIRE movement?

Our society has a default template for life. It goes like this:

When you’re a child, you go to school to learn the skills you need to get a job. Once you become an adult, you get that job—or maybe two or three, depending on how powerful the greedy have become.

So you work. And you work, and you work.

Once you start working, you don’t usually stop. Not for any meaningful amount of time, anyway. You’ll get a lifetime of evenings and holidays to catch your breath. If you’re lucky, you might spend a week or two each year on a vacation, where you’ll try to enjoy yourself through the dread of its impermanence. But always, work looms.

Work is the central part of most people’s lives. Whenever someone wants to get to know you, they’ll probably start by asking about your job. It eats your days and subsumes your identity.

You do all of this on a weak promise that one day, you might finally get to stop. But only for the few years right before you die! It’s called retirement. If you’re unlucky, you may never have enough money to retire. Or you will, but your body will be too broken by its years of labor to enjoy the fruits of your lifelong labor. You may die before you ever get the chance to stop working.

The FIRE movement is a collection of people who think this system is completely unacceptable bullshit.

Financially independent, retired early

The FIRE movement—also styled FI/RE—is an acronym. It stands for “financially independent, retired early.” (I’m not going to get into the FIRE movement’s origins and history. If you’re interested in that topic, our dear friend and the Aslan to our Pevensie children J.D. Roth has a great article on it.)

A FIRE seeker is someone who’s taken steps to deviate from the default template for life I described above. They want to push their income as high as they reasonably can, while pushing their expenses as low as they reasonably can. And yes, the Reasonableness Line is a no man’s land as hotly contested as any muddy, flea-infested World War I trench.

Financial independence generally means having no debts, low financial commitments, and enough material wealth to support their needs in perpetuity.

Early retirement means getting to the point where you don’t need income from a job anymore. Depending on how lucky you are, and how maniacally focused you are on meeting your financial goals, early retirement can come decades earlier than the default of 65. Because some people truly love what they do, they may never retire even if they have the means. We really like Tanja Hester’s alternative phrase “work optional” for this reason.

Is this even attainable?

Yes, it is.

But it’s not attainable for everyone. We live in an unfair world where much depends on luck, health, relationships, and the circumstances of birth. But I refuse to believe that the FIRE movement is the exclusive domain of the already healthy, wealthy, connected, and privileged either.

I retired at 35.

When I tell people this, a lot of them look me up and down, wondering what secret explains this discordant fact. “Did she have rich parents? Marry a rich man? Work in some kinda ultra-lucrative career? Win the lotto?”

The answers are no, no, no, and I fucking wish.

I’m an artist who married another artist, and we both have disabilities that have seriously harmed our finances. I entered the workforce at the worst possible moment, graduating with a huge pile of student loans to a fucked up economy with a 10% unemployment rate. In my high cost of living area, I was barely scraping by on $12,000 per year earned doing odd jobs. I walked home from work plenty of nights because I couldn’t afford the $1.25 bus fare. Despite some considerable advantages—like a good education—I consider myself a pretty average person.

Today’s post isn’t really about my story, but if you want to see a full breakdown of how much money I made and saved at each point in my life, you can read that here.

The real point is I started my journey toward FIRE when I was in a deep, dark hole. And that’s common. People are more willing to make extreme choices when they’re trapped in a system that feels hopeless and unconquerable. Many people pursuing FIRE have truly sad stories about childhood instability, joblessness, homelessness, sickness, and hunger. It makes perfect sense to seek independence from a system that’s traumatized them with its volatility and cruelty.

But wait—how?!

So how? How does someone retire decades ahead of schedule if they aren’t discovered to be the long-lost daughter of Tsar Nicholas II and swept into the bosom of Dowager-Empress-in-Parisian-exile levels of wealth?!

There are three basic principals of the FIRE movement:

• Earn as much as you can.
• Spend as little as you can.
• Invest the difference.

That’s really it. Depending on how far you’re willing to go, each of these points offers incredible extremes.

To maximize income, some people take on multiple jobs, or work in industries they loathe. Personally, I didn’t. I changed jobs frequently to maximize my income, and specced into specialties that made me an attractive employee. But I started as an artist, ended as an artist, and fled from dysfunctional work cultures whenever I found them.

To live as frugally as possible, some people have eaten food out of dumpsters, or lived out of absurdly tiny spaces. Personally, I didn’t. I focused my efforts on the biggest line items on my budget: housing, transportation, and income. I lived with one trillion roommates a few years longer than it felt fun, went without a car for a few years, and filled some—not all!—of my free time with paid freelancing work. Since I was busting ass where it mattered, I never beat myself up for small luxuries. I deferred more pleasures than I denied, and only regret a spare handful.

As for investing? It’s kind of an act of faith. You’ve got to plan, invest, allocate, diversify… but after that, you just hold onto your butt and pray that the god of compound interest smiles upon you. Turns out, I picked a rotten time to retire. Poor market performance has wiped out much my gains. But I have decades to recover and grow. My skills and experience are the ultimate fallback plan. If the worst should happen, I can always go back to work.

Point is, there isn’t a system. How far you take it depends entirely on your needs, abilities, and priorities. You’ve got to start with understanding how much you truly need to feel safe and happy.

How much do I need to retire early?

A common starting point in the FIRE movement is something called the 4% rule.

I’ll explain how it works, but I’m gonna keep all the math real simple. Because I’m real simple.

When you retire, you stop drawing an income, and start living off your invested savings. The 4% rule is a guideline for how much you need to have saved to start doing that, while neither running out of money nor over-saving and running out of time to spend it. If you can live comfortably on 4% of your savings, you’ll be able to live off your retirement savings for 30 years. Adjust that number upwards each year based on inflation, but otherwise try to keep your withdrawal rate steady.

Let’s say you need $40,000 a year to live comfortably. To retire, the 4% rule says you’d need $1,000,000 saved. Taking into account an average historical rate of return on investment of 8%, if you saved $200 every month toward your retirement, it would take you about 45 years to have enough money saved to retire.

Practitioners of the FIRE movement try to manipulate those numbers in their favor.

Could I need less in early retirement?

Oh, do you not want to work for 45 years straight? Me neither.

Let’s go through some scenarios to try to make that timeline shorter.

What if you lived more frugally? You look at your budget, and decide to cut some things so you only need $36,000 per year. Now you only have to save $900,000. Cool, right? But it would still take you 43 years to save up, a difference of only 2 years saved. That’s due to the magical power of compound interest. Time is the most valuable ingredient of your investments. Forcing your future self to tighten their belt is the least effective approach to FIRE.

What if you contributed more towards your retirement? Let’s say you prioritize your savings. Instead of putting $200 into your retirement every month, you put in $500. Now you can hit that one million mark in only 33 years, saving 13 years. This is why maximizing your earning potential is a huge component of success in the FIRE movement. If you aren’t paid adequately, your only path to retirement is a long, long time in the market.

The #1 thing you can do to jumpstart the process of reaching FIRE is to become debt-free. People in the FIRE movement react to debt the same way vampires react to garlic. And once you look at the numbers, it’s very clear why. We take on debt in times of great vulnerability, and it’s designed to siphon all our potential for wealth to those who are already wealthy.

What happens if I do everything, all at once?

Let’s say you make well below median income for an American—say $35,000. Because you don’t earn much, you have a little credit card debt with $200 monthly minimum payments. You work hard and scrimp to pay it off early. Your next debt is an average amount of student loans with a $400 monthly minimum.

Around this time, you change jobs for an average 15% pay increase. You take the extra $300 you’re now earning every month, add the $200 you used to pay toward credit cards, and combine it with the $400 you’re spending on your student loans. You’re now putting $900 toward your student loan debt every month. Your 10-year student loans are paid off in just 4 years, saving you thousands.

Because you’re smart and you know job loyalty is mostly for chumps, you’ve changed jobs again for another 15% pay hike, giving you another $400 every month. You combine that with the money you used to spend on loans, and now have an incredible $1,300 back in your monthly budget. All that extra money goes into buying an average home with an average mortgage, currently around $2,000 per month.

At this rate of $3,300 per monthly mortgage payment, you can pay your 30-year mortgage off in just 12 years. This saves you over a quarter million dollars in compounding interest payments.

You now have a jaw-dropping $3,300 a month to spend and invest however you like. With that, it’s over for these hoes. You could have a million bucks saved in only 14 years—giving you back many years of your life you’d otherwise spend working.

A lot of things can slow that process—typically illness, unemployment, and having children.

But a lot of things can speed it up, too. Some are beyond your control, like good luck and favorable markets. But many positive factors are things you can actively pursue: finding better-paying jobs with higher than typical raises; leaving toxic industries that undervalue your contributions; entering into a marriage or other cost-saving partnership; moving to a lower cost of living area; and avoiding debt in the first place.

Tell me the truth: Is early retirement really possible?

If you’re reading this, I really want my answer to be yes.

It’s the answer I believe in my head based on experience, logic, and economic math. It’s also the answer I believe in my heart.

The FIRE movement encourages people to understand what they truly want in life, and pursue it voraciously. Even if you fail to shave double-digit years off your retirement date, so what? I think everyone’s life would be improved by a couple of long and serious critical thinking sessions about the role that work and money plays in their life. It’s an “aim for the moon, land among the stars” situation.

That said, lots of factors make success harder. The whole “if I can do it, anyone can” thing makes our eyes roll right out of our heads. Our country’s economy is still racially segregated and heavily biased towards white people. American social safety nets are cruelly designed to force fully disabled people to choose work or a life of abject poverty. Greed has driven up everyone’s cost of living, and parents in particular are struggling with bridging unbridgeable gaps. There are many forces arrayed against you.

So he truthful answer is: I don’t know—but I know you can try for it.

If it doesn’t work for you, a default life is still waiting for you. But I think you’ll like it, even if you’re not the wunderkind who retired on a fat stack before they were old enough to rent a car.

Is it worth it?

Oh hell yeah.

Look, I’ve made no secret that my first six months of early retirement sucked shit. Money is the source of a lot of problems, but it can’t buy you good luck or good health. I didn’t have much of either, that first year (you can read about it here if you want the gory details).

But now things have evened out, and I feel like a black and white extra from Pleasantville stepping into full color. I haven’t felt this alive and present since I was a grade school kid in the summertime, running rampant through the neighborhood with no commitments bigger than my library books.

Now that I’m retired, I get to do all the stuff normally reserved for grandmas: cook everything from scratch, fuss over my garden, join book clubs, volunteer, dominate the dining room table with a neverending series of sewing projects I may or may not finish. But I get to enjoy that time in high energy and good health.

I wake up when I feel like it, wear what I want, go where I please, and fill each day with whatever matters most to me. That’s an incredible feeling. It feels surpassingly natural and right. No one should have to wait until the end of their life to know how sweet it feels to live solely for yourself.

How do I start?

Hey, did I mention we’ve got over 400 articles?! Whatever you need help with, we’ve got ideas. Here’s a few to help you get started…

• The Financial Order of Operations: 10 Great Money Choices for Every Stage of Life is our beginner’s guide to becoming financially independent. This is the ordered checklist of financial steps we think works for most people, in most situations.
• Your Girl Is Officially Retiring at 35 Years Old has my own story, with many more concrete details about each of my savings and income milestones.
• How To Save for Retirement When You Make Less Than $30,000 a Year is a great primer for people in low-paying fields looking to explore the FIRE movement.
• Bitchtastic Book Review: Tanja Hester on Early Retirement, Privilege, and Her Book, Work Optional details one of our all-time favorite takes on FIRE principals, notable for its honesty and inclusivity about the injustices that make FIRE easier for some than others.
• The Real Story of How I Paid off My Mortgage Early in 4 Years has a slightly more sobering take on all the advantages required to pull off the headline-grabbing financial wins, with some actionable advice buried at the end.

If those aren’t enough to slake your thirst, we’ve got master posts on each of the three main pillars of the FIRE movement: make more, spend less, invest the difference. They’re full of deep-dive articles that get into all the fiddly specifics. Have at ‘em!

• { MASTERPOST } Everything You Need to Know about Getting a Job, Raise, or Promotion
• { MASTERPOST } Everything You Need to Know about Saving Money and Being Frugal
• { MASTERPOST } Everything You Need to Know about Investing for Beginners

How many of our readers are pursuing FIRE? Are you just starting out on your journey—or is this your first time hearing about it? Tell us about it in the comments below!