What Is the FIRE Movement and How Can You Retire Early Without Being a Multi-Millionaire?

For a growing number of workers, the FIRE movement has redefined retirement planning. Adherents of FIRE—an acronym for “financial independence, retire early”—aggressively save and invest their way to a early retirement. “The goal of this movement is for you to save and invest as much as possible, usually somewhere between 50% to 75% of your income, so you can retire earlier than the traditional retirement age,” says financial educator Katia Chesnok. “People who join this movement strive to retire before 65 years old, usually in their 30s or 40s.”

First introduced by the 1992 book Your Money or Your Life, the lifestyle has gained popularity through articles, blogs, vlogs, podcasts and books released to showcase how to swap full-time employment for a flexible, financially sustained life. There are a number of millennials detailing how to achieve FIRE, but, with most of the tips geared toward high-earning professionals, can a FIRE lifestyle be achieved by working and middle class professionals?

The answer is yes.

Personal finance expert Dominique Broadway advises those who aren’t in high-earning roles to, as with any aspiring FIRE members, get clear on how much money is needed to sustain their lifestyle. “You have to think about how much you need to make to live comfortably,” she says. “First, identify what lifestyle you want when you retire. How much do you need to have every year, every month to be comfortable?”

A key metric for those within the FIRE movement is their FIRE number, or the number needed to retire early. After determining monthly expenses through budgeting, Chesnok advises people to multiply the amount of their monthly expenses by 12, so you can get the figure for your annual expenses. Then, multiply your annual expenses by 25, which is based on the 25x rule, which notes you need to save 25x your annual expenses to retire.

“To calculate your FIRE score, you also need your annual safe withdrawal rate,” she adds. “The most common example is that if your withdrawal rate is 4%, you need to multiply your budget by 25 to get your total, which is what you need to save to reach the FIRE goal.”

The 4% rule is discussed in one of Amon and Christina Browning’s YouTube videos. The co-creators of Our Rich Journey have produced more than 100 videos chronicling how they achieved FIRE by the ages of 39 and 41. Both former civil servants, the married couple bartered services; invested in real estate, which allowed them to live rent- and mortgage-free; and saved up to 70% of their incoming funds to save $2.5 million to retire. All in eight years.

“People think you have to have a six-figure salary income coming in at least every single year in order to reach FIRE and that wasn’t the case for us,” Christina Browning shared in CNBC’s Make It.

While the ultimate goal is early retirement, the methods to achieving FIRE will vary and, for those who aren’t high-earning professionals, they too can diversify their strategies. Mindset is half the battle. Hence, Broadway advises that once you’re committed to FIRE and recognize it’s possible for your life, you can then begin to plan and strategize.

Start where you are

After zeroing in on how much money you’ll need to retire early and the amount of time needed to achieve this milestone, determine what your multiple streams of revenue will be. “You really have to get creative and think about how you can make more money, or look for ways to not just make more money now, but other ways that you can create additional revenue streams going forward,” Broadway shares. If you have access to use your credit for a rental property, that can provide added income. Airbnbing your home or apartment, or providing a service via Uber, Turo, or Instacart can move you toward your financial goals, too. In your current full-time position, Chesnok suggests, take inventory on your contributions within your role to build a case for a raise.

Invest

There are several ways to approach investing. A common way for beginners to start investing is through a 401k or a Roth IRA. “Start investing in your 401k, and sometimes you’ll get a 50% to 100% match [from your employer] for the first 3% to 6% of your income that you contribute to the account,” says Chesnok. “If your company doesn’t offer a 401k, learn about Roth IRAs. Open and fund your Roth IRA, with as low as $50, and learn as you go.”

What makes the latter so appealing for those in the FIRE movement is that you’re allowed to pull out your contributions to your Roth IRA at any time, tax- and penalty-free. In a popular YouTube video, Amon Browning says, “If you have a 401k or a traditional IRA, you can roll that money over into a Roth IRA and start to withdraw that money early without any penalties.” Yes, you’ll have to learn a few steps, but it is possible.

Most importantly, adapt a can-do mindset

Saving. Investing. Living within, even below, your means. Increasing your revenue streams. The many steps taken to achieve FIRE can seem overwhelming, but once you’ve committed to healthy financial habits, you’ll stick to your goal of financial independence and have the option to retire early. Both Broadway and Chesnok agree that your mindset is more than half the battle, so making the commitment and believing that you can do this will keep you going. “Achieving FIRE not only depends on our budget, but also on our mindset of living within our means and of diversifying our sources of income as much as we can,” Chesnok says. So whether you’re earning a little, a lot, or somewhere in between, FIRE is possible—and well worth the commitment.

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