Can FIRE help you achieve financial freedom early? Here's all you need to know about the movement

The FIRE (Financial Independence, Retire Early) movement aims to help people save and invest aggressively to retire early and escape the 9-5 hustle. The movement has become popular among the youth, especially those seeking freedom from working 9 hours a day until retirement.

The FIRE movement began as a niche philosophy, but it has now gained a mainstream following with thousands of working individuals worldwide adopting its principles to reclaim financial autonomy.

The concept of FIRE isn’t new. Many authors and finance experts have analysed it in their works, teaching readers how to take control of their time and life.

The book Your Money or Your Life by Vicki Robin and Joe Dominguez published in 1992, laid much of the groundwork for the movement and familiarised people with its concepts.

Today, with so many side hustles and investment opportunities for individuals, early retirement has become more achievable than ever.

What is FIRE?

FIRE is about maximising savings, minimising expenses, and investing wisely to have enough money that will sustain you throughout your life. The goal is to retire way earlier, even decades before the traditional retirement age. Most people who follow FIRE aim to retire in their 30s or 40s.

Pete Adeney, the author of Mr. Money Mustache, who helped popularise the FIRE movement and himself retired at 30, says that FIRE is about creating a happier and more satisfying life. He believes there are no downsides to FIRE and emphasises that it doesn’t matter how much money one makes, it’s about how to spend mindfully to achieve your retirement goals. FIRE means “Complete freedom to be the best, most powerful, energetic, happiest and most generous version of You that you can possibly be,” Pete says on his blog.

Principles of FIRE

How to follow FIRE

Your FIRE number is the amount you need to retire comfortably. Follow the Rule of 25, which suggests multiplying your annual expenses by 25, and remember to make adjustments for inflation and lifestyle changes. This is the most important step, as you need to have a clear goal in sight to achieve early retirement.

This rule suggests that you must plan to withdraw 4% of your savings annually, and by following this rule, your savings should last for several decades, and even your entire lifetime if you do it right.

For example, if your annual expenses are ₹10 lakh, your FIRE number would be ₹2.5 crore. At a 4% withdrawal rate, it will allow you to take out ₹10 lakh every year while the balance amount will continue to grow.

The 4% rule is based on the assumption that your withdrawals will be adjusted for inflation to maintain your purchasing power.

However, you may need to adjust your calculations based on your own needs, goals, expected returns on your investments, and inflation over the years.

People who follow FIRE save 50-70% of their income by cutting down unnecessary spending, optimising costs and increasing income sources through side hustles.

Invest with a long-term perspective and learn how to hold. For this, you should ideally consult financial planners to identify the best assets to invest in as per your needs.

Debt acts as a FIRE killer. Pay off your high-interest loans first and focus on eliminating your debt as soon as you can. Resist upgrading your lifestyle when your income increases and invest that money instead to plan for the future.

Ways to achieve FIRE

Every follower chooses their path of FIRE based on their retirement goals. There are many types of FIRE, and individuals plan their retirement journey based on their own needs. Here are some types of FIRE and their features described briefly:

• Ultra-economical lifestyle.
• Minimal post-retirement spending (₹20-30K/month in India).
• Best for those comfortable with simplicity.

• Larger FIRE number for a comfortable lifestyle.
• Allows for travel, hobbies and luxuries.
• Requires higher savings (₹5 crore+).

• Semi-retirement with part-time work.
• Covers some expenses while capital grows.
• Ideal for those who enjoy working but want flexibility.

Limitations to FIRE

FIRE is not for everyone, as it demands discipline, sacrifice, and long-term commitment. The ones who achieve FIRE may live their life to the fullest. But in both finance and life, nothing is ever guaranteed.

Retiring early in your 30s or 40s means that your savings must last for 40-50 years. This can become quite difficult due to inflation, as it diminishes your purchasing power over time.

Moreover, market volatility and changes in social dynamics can also make it tough to plan for half of your life at such an early stage.

There is no single way to achieve FIRE, and no universal number and plan that works for everyone. If you want to follow FIRE, you must analyse your expenses, income sources, and plans. You must also remember that FIRE is not just about the money.

The co-author of Your Money or Your Life, Vicki Robin, says that for her, financial independence isn’t the ultimate goal, but it’s a ticket to the greatest show on earth. She emphasises that money isn’t the destination but a means to ask questions like the American poet Mary Oliver does: “What are you going to do with your one wild and precious life?”

Robin teaches readers that FIRE is a tool to achieve something bigger. Your focus should be on improving the world around you, and not just accumulating wealth, as the real journey begins once you have achieved it.