0 hidden charges. 0 forex

Fire Movement: Financial Independence & Early Retirement Plan

Reviewed by
Created on
July 8, 2022


What’s Inside

FIRE has, well, spread like wildfire lately. We’re talking about the movement which stands for ‘Financially Independent to Retire Early’. More than a movement, it’s a life goal that many millennials and Gen Z are working towards. If you read on, you’ll find out why it’s such a fascinating subject.

FIRE is an early retirement plan that’s geared towards allowing you to make the most of not just your sunset years but also your middle years - think 40s.

One of life’s most important lessons that most of us learn early on is that the concept of a free lunch is non-existent. With the FIRE movement, though, you are provided with the means to stretch yourself early on such that you can enjoy a longer period of retirement wherein you don’t have to work. Or, in some cases, do jobs that don’t pay very well but are fun to do. 

Here we will cover all that this early retirement plan entails and the movement that it brought about. 

The FIRE Movement

The acronym FIRE stands for ‘Financially Independent to Retire Early’. Under the FIRE movement, a number of people have begun working towards a single goal. This goal sees them saving enough money to retire several decades (while they’re in their 30s, 40s, or even 50s) before the usual retirement age. 

This movement brings with it the promise of flexibility and freedom, provided you act with discipline and are determined at an early age. If you wish to become part of this movement, you would be expected to save aggressively and direct a major portion of your income towards investments. 

The FIRE movement gained credence once the 1992 book titled Your Money or Your Life by Vicki Robin and Joe Dominguez became a best-seller and inspired thousands. 

Understanding the Mechanisms of the FIRE Movement

The FIRE movement emphasises on creating adequate savings such that passive earnings generated via investments over an indefinite time frame can offset your annual expenses. Presently, millennials serve as the largest number of FIRE supporters. This is evident from the fact that 58 percent of them hope to retire before 65 years of age. In order to amass this amount of wealth before the traditional age of requirement, you must be prepared to lead a non-conventional lifestyle. 

Here are a few characteristic traits that are linked with the FIRE movement.

  • Ample Savings Sought – Most FIRE movement supporters save 50 per cent or more of the money they earn each month.
  • Frugal Lifestyle – The more one is able to save, the faster they are able to acquire financial independence. A minimalistic lifestyle is often sought by those pursuing FIRE as it allows them to increase their savings rate.
  • Straightforward Investments – A number of FIRE enthusiasts gravitate towards low-cost index funds for their investments. A handful may even purchase rental properties to acquire a passive income. 

Determining Savings Under FIRE 

As per the FIRE movement, the amount of money needed to acquire financial independence equates to 25 times your annual spending. This figure is referred to as your “FIRE number”. To understand this better, consider you currently spend ₹5 lakhs each year. By this logic, your fire number would amount to ₹1.25 crores.

Use the early retirement calculator table to assess where exactly your FIRE number would fall, keeping in mind your average annual spending.

Keeping in mind the table mentioned above, the fewer your expenses, the smaller the figure needed to achieve FIRE. Owing to this very fact, a large number of FIRE proponents value minimalism and frugal lifestyles. 

Exploring the Rungs of the FIRE Movement

As you traverse through a FIRE lifestyle, you will need to pass varied “levels” of FIRE in a bid to acquire financial independence. These levels have been discussed below. 

Regular FIRE

Should you reach this level, you have enough money to offset your current lifestyle expenses as well as your living expenses. If you decide to leave the workforce, your current spending habits won’t change. 

Going by the previous example, if you spend ₹5 lakhs a year right now and wish to maintain the same standard of living once you retire, your regular FIRE number would be ₹1.25 crores.

Coast FIRE

This level is indicative of your having saved adequate funds to be able to coast towards a traditional retirement. Simply put, this means that you could stop saving entirely and still be able to enjoy a traditional retirement.

To understand this better, consider you are aged 40 and have an investment portfolio worth ₹20 lakhs. Suppose this has an average 8 percent return; you can acquire nearly ₹1.36 crores by the time you are 65 years old, owing to the power of compounding. 

Barista FIRE

This level entitles you to retire earlier than planned; however, you would still need to work part-time in order to add to your income and avail of health insurance. 

Let us consider you need ₹4 lakhs a year once you retire. Say, for instance, you already have ₹40,000 invested; this figure would provide you with a safe rate of withdrawal amounting to ₹1.6 lakhs each year (40,000 x 4% = ₹16,000). In such a scenario, you could be employed part-time to earn the remaining ₹2.4 lakhs.


This level highlights your willingness to live a frugal lifestyle that continues into retirement. Those who reach this level are willing to minimise costs and continue to spend the bare minimum, provided it entitles them to retire at a young age. 

To understand this better, consider an individual who moves to a low-cost-of-living area (think rural India) and who begins to grow his own food and ensures that his spending falls below ₹1 lakh each year. His lean FIRE number would then amount to ₹25 lakhs. 


This rung is diametrically opposed to the previous level. It is ideal for individuals who wish to retire early without incorporating a minimalist lifestyle. Here, individuals have the freedom to spend freely while having sufficient money saved to do as they please.

For example, consider a couple that wishes to spend ₹15 lakhs a year, so they never need to compromise on life’s small luxuries. For them, their fat FIRE number would amount to ₹3.75 crores. 

Incorporating FIRE Into Your Life

You can reach FIRE in several ways, and there is no unique method that applies to everyone across the board. Instead, your FIRE is influenced and dependent upon the circumstances you find yourself in and the goals you aspire to achieve. However, certain tenets exist that FIRE movement members adhere to and abide by. These have been touched upon below. 

Identify What an Early Retirement Means to You

Retirement doesn’t necessarily indicate an idle life. A number of FIRE enthusiasts continue to work even after they’ve retired, as it is a source of pleasure and helps keep them physically and mentally engaged. Others, on the other hand, exit the workforce and either travel, have a family or follow their passions while they’re still young and healthy enough to enjoy themselves.

Ultimately the basic premise of the FIRE movement is to attain the freedom to create a life you love. By determining what this looks like and accounting for its expenses early on, you are on track to achieve it.

Saving is Key

One of the most important aspects of FIRE is saving a big percentage of your income. This is because the more you save, the faster you acquire financial independence. Most FIRE proponents seek to save at least 50 percent of what they earn. However, this also depends upon their timelines. Individuals hoping to retire by the time they are 30 years old will need to be more aggressive with their saving patterns in comparison to those who hope to retire by age 50. 

Trust your Investments’ Powers of Compounding

Compounding is heavily relied upon by those hoping to achieve FIRE. To understand this better, let us assume that you need ₹5 crores to achieve FIRE, and you currently save 1.5 lakhs a month. If this money is saved in a savings account wherein little to no interest is earned, it will take you over 27 years to achieve FIRE. 

That said, if you choose to invest the same amount and earn an 8 percent annual return on average, you will be able to attain FIRE in almost half the time. 

Advantages that FIRE Provides

Some of the merits associated with FIRE -

  • Helps Lower Stress Levels – By retiring early with FIRE, you can eliminate the stresses associated with a regular 9 to 5.
  • Enjoy Freedom & Flexibility – If you retire early with FIRE, you have more time to pursue all that makes you happy and can spend more time with your friends and family.
  • Promotes Good Investment Skills – As this lifestyle focuses on aggressive saving and investments, it promotes a lifelong habit of spending modestly and investing generously.

Shortfalls of FIRE

Some of the shortfalls associated with FIRE -

  • Adversely Impacts Mental Health – Should you follow through with FIRE and retire early, you may be left with too much free time. If you don’t use this time constructively, it can adversely impact your mental health.
  • Frugality Isn’t Always a Boon – If you skimp on several aspects of your life, you may adversely impact your happiness. Further, frugal spending habits in areas like food can lead to health issues in the future.
  • Life is Unpredictable – The future may bring with it unforeseen circumstances that you may not be able to account for with a FIRE budget.

Final Thoughts

The FIRE movement is a lifestyle choice that aims to achieve financial independence and retire early by saving and investing a large portion of one’s income. It is based on the idea that people can live more fulfilling lives if they have the freedom and flexibility to pursue their passions and interests without being tied to a conventional job. The FIRE movement is not for everyone, as it involves making trade-offs and sacrifices that may not suit everyone’s preferences and goals. However, for those who are interested in pursuing this path, it can be a rewarding and empowering way to achieve financial security and freedom. 

Check out these links to learn more about FIRE: https://www.youtube.com/shorts/aBGa07vs7ko

Infinite Plan on Fi Money For Your Retirement 

When considering your retirement plan, consider Fi's Infinite Plan. Upgrade your zero balance savings account by maintaining ₹50,000 and enjoy limitless benefits, such as:

  • Free physical Debit Card
  • 2% cashback on UPI & Debit Card spends (up to ₹500/month) 
  • Unlimited transactions at 0 Forex charges
  • Priority customer support
  • Access to Jump to grow your wealth by up to 9% p.a.

Frequently Asked Questions

1. Who created the FIRE movement?

Authors Vicki Robin and Joe Dominguez are credited with starting the FIRE movement. 

2. What does the acronym FIRE stand for? 

The acronym FIRE stands for financial independence to retire early. 

3. When did the FIRE movement start?

The FIRE movement began in the last decade of the 20th century following the popularity of the ideas penned in the 1992 book titled Your Money or Your Life by Vicki Robin and Joe Dominguez. 

4. What do you mean by financial independence?

Being financially independent generally means being debt-free and being able to sustain oneself without consistent employment. A financially independent person can go on sustaining themselves without being dependent on a job, or another individual, especially when it comes to retirement.

5. How do I become financially independent?

  1. Set clear financial goals
  2. Create a budget
  3. Build an emergency fund
  4. Pay off debt
  5. Save and invest consistently
  6. Consider multiple streams of income
  7. Build a long and short-term plan


Investment and securities are subject to market risks. Please read all the related documents carefully before investing. The contents of this article are for informational purposes only, and not to be taken as a recommendation to buy or sell securities, mutual funds, or any other financial products.
Share this article
Copied Link!
Personal Finance
Fire Movement: Financial Independence & Early Retirement Plan


View similar articles in
Personal Finance
Get the Fi app