What is FI/RE?

The FIRE movement (Financial Independence, Retire Early) has gained significant momentum in recent years, with many individuals striving to retire early by aggressively saving, investing, and living frugally. However, FIRE is not just about quitting work—it’s about achieving financial independence, where you have enough assets to live comfortably without relying on a traditional paycheck.

Of course, nothing comes without sacrifice, and FIRE is no exception. Achieving financial independence requires more than just cutting expenses—it demands time, discipline, and commitment. So, if you're considering joining the movement, what should you know? Let’s dive in.

What Is FIRE?

At its core, FIRE is about achieving financial independence as quickly as possible so you can retire earlier than the traditional retirement age. The strategy involves:

Aggressive Saving: Many FIRE followers save 50% or more of their income—some even aim for 70-80%.
Simple Investing: The FIRE community typically builds wealth through a simple but effective approach—investing in primarily passive index funds or real estate with a simple buy-and-hold strategy.
Frugality: A minimalist lifestyle is common among FIRE followers, who focus on cutting unnecessary expenses and living well below their means.

To me, it’s the complete opposite of the "YOLO" mentality, where people prioritize spending now without worrying about the future. FIRE is about delayed gratification—making intentional financial choices today to gain freedom later.

How the Game Plan for FIRE Works

To successfully reach FIRE, it focuses on two main areas: building wealth and reducing costs. Here’s how it's usually broken down:

1. Calculate Your FIRE Number

The first step is determining how much money you need to retire early—this is called your FIRE number. A common rule of thumb is the 25x rule, which suggests saving 25 times your annual expenses.

For example, if you need $40,000 per year to live comfortably, you would need $1 million ($40,000 × 25) to retire.

This concept is borrowed loosely from the 4% Rule, which assumes you can withdraw 4% of your portfolio annually (adjusted for inflation) while maintaining financial stability.

2. Aggressive Saving & Investing

To reach that FIRE number quickly, you’ll need to save a significant portion of your income—often 50% or more. These savings are typically invested in:

Index funds (a passive, low-cost strategy many FIRE followers prefer)
Stocks (for long-term growth)
Real estate (for additional income streams)
Other growth-oriented assets

The key is to build wealth while keeping your living expenses low.

3. Reduce Your Expenses

FIRE isn’t just about making more money—it’s about spending less. To reach financial independence faster it requires:

Cutting unnecessary expenses and focus on needs over wants.
Reducing housing, transportation, and lifestyle costs.
Finding ways to live below your means to increase savings.

The Challenges of FIRE

While FIRE is an attractive goal, it’s not without its drawbacks. Here are some key issues to consider:

1. The 4% Rule May Be Too Optimistic

Like mentioned, the FIRE number is an idea borrowed form the 4% Rule. However, the 4% Rule was developed based on historical data, assuming:

A 60/40 portfolio (stocks/bonds)
A 30-year retirement period

However, if you retire at 50 and live until 95, that’s a 45-year retirement—15 years beyond the rule’s original parameters. While the rule isn’t invalid, it may not be as reliable for ultra-long retirements. Some FIRE followers adjust their withdrawal rate to 3.5% or even 3% for added security, which means either needing more wealth parked on the side or a smaller draw from the portfolio.

2. Paying Years Now for More Years Later

The trade-off with FIRE is extreme discipline now for financial freedom later. This means:

Sacrificing luxuries and dramatically cutting expenses in your working years.
Living a frugal lifestyle for an extended period before reaching FIRE.

Some people embrace this challenge, while others find it too restrictive. FIRE is a lifestyle commitment, and not everyone is comfortable with the sacrifices it requires.

3. Cost of Living: Now and in Retirement

Minimizing expenses is key in the early FIRE years, but it doesn’t stop once you retire. The less you withdraw from your portfolio, the longer your savings last. This means:

Ongoing cost-cutting may be necessary to extend your portfolio’s life.
Your standard of living in retirement may need to remain lower than before FIRE.

Some FIRE retirees return to work because they underestimated long-term costs. It is a new lifestyle overall.

4. What Happens After FIRE?

One of the biggest challenges emerging from the FIRE movement is what comes next. Many people reach early retirement only to ask: Now what?

Some realize they don’t actually enjoy not working and want to return to the workforce. Others miss the structure and purpose that a career provides. Many want to work, but on their own terms—whether that means fewer hours, a passion project, or freelancing.

The problem? Many FIRE followers spend years optimizing their finances but little time planning what they’ll actually do post-FIRE. Some only realize this years later, leading to unexpected lifestyle adjustments. Because of this, some people in the FIRE community have altered their approach.

A New Approach: Coast FIRE

Recognizing the challenges of extreme FIRE, a new trend has emerged—Coast FIRE. This approach offers a middle ground, allowing individuals to achieve financial security without the intense sacrifices of traditional FIRE.

Coast FIRE: A Balanced Approach to Financial Independence

One variation of the FIRE movement is Coast FIRE, which offers a more flexible path to financial independence. Unlike traditional FIRE, which requires aggressively saving until you can retire early, Coasl FIRE is about reaching a point where your investments will grow on their own—eventually covering your living expenses by the time you reach traditional retirement age. This approach allows you to save aggressively in the early years and then ease up, without needing to contribute as much in the future.

How Coast FIRE Works

Save aggressively early on – In the beginning, you focus on maximizing savings and investments to build a solid foundation.
Let compound interest do the heavy lifting – Once allocated to a certain amount, your portfolio is on track to grow independently, meaning you no longer need to contribute as much (or at all).
Maintain a moderate lifestyle – You may not retire as early as traditional FIRE followers, but you can downshift to part-time work or a less stressful job, knowing your financial future is secure. This income is exactly what's needed to pay for your lifestyle expenses.

The Pros of Coast FIRE

More Flexibility – Coast FIRE allows you to reduce the intensity of saving after reaching a certain point, meaning you don’t have to live on an extreme budget for decades.
Lower Stress – You can enjoy life today while knowing that your investments will continue growing to fund your future.
Better Work-Life Alignment – Coast FIRE lets you choose work that aligns with your interests—whether it’s a passion project, part-time work, or simply a less demanding role.

The Cons of Coast FIRE

Still Requires a Big Commitment – While not as extreme as traditional FIRE, Coast FIRE still requires high savings in the early years to reach the point where investments can sustain themselves.
Reliance on Market Growth – Since Coast FIRE depends on compounding returns, your retirement is partially out of your control—market downturns or lower-than-expected returns could impact your long-term plans.
Work Must Generate Income – Unlike traditional FIRE, you must continue earning income to cover your ongoing expenses while your portfolio grows in the background. Even if you love your job, income remains a necessity until you fully retire.

The Bottom Line

The FIRE movement is about taking control of your financial future, but it requires serious commitment and sacrifice—balancing today’s lifestyle with tomorrow’s security. While full FIRE demands extreme savings and early retirement, Coast FIRE offers a more flexible alternative, allowing you to align your financial plan with your personal goals and career choices.

Most importantly, the FIRE community is a strong and supportive network with individuals on their own unique paths to financial freedom. Time to fire up those efforts!

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