# FIRE movement

The FIRE (Financial Independence, Retire Early) movement is a lifestyle/investment plan with the goal of gaining financial independence and retiring early through savings. The model became particularly popular among millennials in the 2010s, gaining traction through online communities via information shared in blogs, podcasts, and online discussion forums.
Those seeking to attain FIRE intentionally maximize their savings rate by growing the gap between their living expenses and their income, and investing the difference. JL Collins, an author who has been called the "godfather of financial independence," has said:
"Spend less than you earn—invest the surplus—avoid debt. Do simply this and you'll wind up rich."
The objective is to accumulate assets until the passive income from these assets provide enough money to cover living expenses. Some proponents of the FIRE movement suggest the 4% rule as a rough withdrawal guideline, thus setting a goal of at least 25 times one's estimated annual living expenses. Others, such as economist Karsten Jeske, suggest planning for a more conservative withdrawal rate such as 3.25% or 3.5% (accumulating around 28 to 30 times one's estimated annual living expenses) when planning to retire very early.
FIRE has been criticized for its low accessibility, in that aggressive savings and large investment portfolios require a large sum of money to begin with.

## Background
### Examples

FIRE is achieved through aggressive saving, far more than the standard 10–15% typically recommended by financial planners. Assuming expenses are equal to income minus savings, and neglecting investment returns, observe that:
* At a savings rate of 10%, it takes (1-0.1)/0.1 = 9 years of work to save for 1 year of living expenses.
* At a savings rate of 25%, it takes (1-0.25)/0.25 = 3 years of work to save for 1 year of living expenses.
* At a savings rate of 50%, it takes (1-0.5)/0.5 = 1 year of work to save for 1 year of living expenses.
* At a savings rate of 75%, it takes (1-0.75)/0.75 = 1/3 year = 4 months of work to save for 1 year of living expenses.
From this example, it can be concluded that the time to retirement decreases significantly as savings rate is increased. For this reason, those pursuing FIRE attempt to save 50% or more of their income. At a 75% savings rate, it would take less than 10 years of work to accumulate 25 times the average annual living expenses suggested by 'the 4% safe withdrawal' rule.
However, Justin McCurry, an author for The Lancet, The Guardian, and The Observer, who runs a website focusing on FIRE and its general idea, says in a CNN article:
   “It is a long-term mindset,” McCurry said. “It is going to take a decade or two to reach FIRE.”

### Pathways

There are several ways to pursue FIRE. Some of the best-known methods include:
LeanFIRE: LeanFIRE is about achieving financial independence earlier by living exceedingly frugally. With very low expenses, a smaller investment portfolio is needed to achieve financial independence.
FatFIRE: FatFIRE is a strategy for achieving financial freedom and early retirement with a larger budget than traditional retirement planning. Unlike other FIRE methods that may focus on minimalism and reducing expenses, FatFIRE intends for a more luxurious lifestyle in retirement. This approach requires saving and investing a significant portion of income to build substantial savings, meant so that individuals could potentially retire earlier than conventional retirement age while maintaining a higher standard of living.
CoastFIRE: CoastFIRE has at least two stages. The first is to save and build an investment portfolio, and continue until the portfolio is believed to grow sufficiently through the power of compound interest alone. In the second stage, the investing can either be slowed or stopped, and the individual has some freedom but isn't fully financially independent.
BaristaFIRE: BaristaFIRE is made for people to partially retire before they are fully financially independent. It involves switching to a less-demanding (usually part-time) job that provides some income, and perhaps benefits such as health insurance from the job. This approach is meant to cover living expenses with income and modest withdrawals from an investment portfolio. The investment portfolio is meant to grow with this approach.

### Social media presence

The emergence of social media has brought more attention to workers discussing their dissatisfaction. "Social media has made lives appear more glorious and expensive, but also allows others to broadly share about their financial freedom." said Zachary A. Bachner, CFP(r) of Summit Financial.

## History

The main ideas behind the FIRE movement originate from the 1992 best-selling book Your Money or Your Life written by Vicki Robin and Joe Dominguez, as well as the 2010 book Early Retirement Extreme by Jacob Lund Fisker. These works provide the basic template of combining a lifestyle of simple living with income from investments to achieve financial independence. In particular, the latter book describes the relationship between savings rate and time to retirement, which allows individuals to quickly project their retirement date given an assumed level of income and expenses.
The Mr. Money Mustache blog, which was started in 2011 by Peter Adeney, is an influential voice that generated interest in the idea of achieving early retirement through frugality and helped popularize the FIRE movement. Other books, blogs, and podcasts continue to refine and promote the FIRE concept. A notable contributor to this movement includes Financial Freedom author Grant Sabatier, who works closely with Vicki Robin and popularized the idea of side hustling as a path to accelerate financial independence. In 2018, the FIRE movement received significant coverage by traditional mainstream media outlets. According to a survey conducted by the Harris Poll later that year, 11% of wealthier Americans aged 45 and older have heard of the FIRE movement by name, while another 26% are aware of the concept.

## Criticism

The FIRE movement advocates frugality as a means to saving more for a person's future; this is therefore an inaccessible scheme for lower-income earners who perhaps have to employ frugality as a means of simply meeting day-to-day living costs. Critics cite the challenges of attaining high savings rates on a modest income and FIRE enthusiasts that already had high-paying jobs, such as Peter Adeney of Mr. Money Mustache. Conversely, Justin McCurry, as quoted in a CNN article about him, said:
   “Financial independence is well within reach of an average college graduate,” he said. “If you’re only making double the minimum wage, it is a lot harder. But for the vast majority of college grads it is in within reach, even for people who earn less than $100,000.”
Critics have also suggested that early retirees may not be setting aside enough funds for safe withdrawals during retirement. Tanja Hester and economist Karsten Jeske have advocated for considering a conservative safe withdrawal rate of 3.5% or less, rather than the 4% rate mentioned in many retirement articles. This adjustment requires accumulating approximately 30 or more times one's annual expenses, rather than the conventional 25 times.