Does FIRE Early Retirement Movement Make Sense for You?

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A growing movement thinks that the traditional retirement age of 65 is too old, and argues that with some smart planning and serious frugality, you should be able to retire earlier than that.

The idea of this movement is to cut your expenses and maximize your savings to allow you to reach financial independence and a very early retirement. The movement calls itself FIRE—short for Financial Independence/Retire Early.

What Is the FIRE Movement?

The FIRE movement is made up of people around the country who think that you should be retired well before you hit your 60s, with some even advocating for retiring by 30. If you think that’s impossible, just look at one of the de facto leaders of FIRE, Mr. Money Mustache.

In real life, Mr. Money Mustache goes by the name of Peter Adeney. Adeney and his wife strived to live an incredibly frugal lifestyle in their hometown of Longmont, Colorado. They saved about 50% of their income in low-cost Vanguard funds, according to his website. Between the low cost of living, two rental properties, and Vanguard investments, he was able to retire at 30 years old.

While Adeney remains an important leader in the FIRE community, the movement has spread beyond him, with destinations on the web including the FIRE Reddit forum, Early Retirement Extreme, Mad Fientist, Frugalwoods, and many other FIRE blogs and resources.

Steps to Extreme Frugality

To make FIRE work, you need to combine both aggressive savings with extreme frugality. It is probably the most difficult part of FIRE for most people with a middle-class income. If you have read about frugality before, you may have just been scratching the surface compared to how some people in the FIRE community choose to live.

Mr. Money Mustache shared a detailed accounting of his family’s budget for 2016, which comes out to about $30,000. Yes, that’s the whole annual budget for a family of three living a roughly middle-class lifestyle in a smallish city near Denver. Can you imagine getting your expenses down to such a point?

Cutting your expenses to less than $10,000 per person per year requires some sacrifice and lots of planning. It means cutting back on groceries and shopping at the warehouse store, and it also might mean bikes instead of cars, the library instead of Amazon, and turning things like coffee shops and restaurants into true luxury items rather than daily or weekly occurrences.

Save 50% or More of Your Income

What do you do with all of this extra savings when you are no longer handing it over for regular purchases, shopping, and bills? Save it in a low-cost index fund. Many FIRE-focused families and individuals put all of their money in Vanguard’s S&P 500 index fund; it charges just 0.04% in fees for the Admiral version, which is available for those with at least $3,000 to invest.

We could go into a big debate on the wisdom of putting all of your money, or most of it, in one or a small number of funds. The FIRE community would argue that the S&P 500 increases by about 10% per year on average, and diversifies your portfolio by giving you ownership of 500 large-cap American stocks with one simple investment purchase.

Many investment experts suggest saving at least 10% to 15% of your income in a 401(k) or IRA, but these funds restrict access to your money until you reach the IRS-approved retirement age. FIRE argues the tax benefits may not be worth it, and some FIRE bloggers like Mad Fientist discuss options to get around IRS retirement account restrictions.

But if you can make it work, consider this: Each year of work could give you a full year of living expenses now, and a full year of retirement, if you can save at the 50% rate. This means every five years you work gives you five years of retirement, and that assumes no investment growth. When you factor in a long-term average 10% return on investment, you can approach retirement at a rate faster than one year of retirement added per year of work.

Calculate Your FIRE Date to Retire Early

If you spend $25,000 per year, $100,000 in savings gives you four years of living expenses. By bringing your expenses down as much as possible and saving at an aggressive rate, you will eventually hit your early retirement point that lets you leave your job for good.

Many in the FIRE community use the 4% withdrawal rule to decide what they can safely afford to take from savings each year without running out of funds. With that logic, here are the savings levels required for early retirement at a handful of expense points, thanks to The College Investor.

Annual Expenses

Retirement Number











This means that if you live on $48,000 per year, you can leave your job with $1.2 million in savings without ever running out of funds. But if you can live on $24,000 per year, as some FIRE community members strive to do, you could retire with just $600,000 saved.

Of course, most people want—or need—to spend more than $25,000 on expenses. While many have found success with the FIRE movement, the truth is that most people would never be happy living such a lean lifestyle, if they could sustain it at all.

But that doesn’t mean you can’t learn something from the FIRE movement. If you can take small steps to cut expenses and grow savings, you might just find yourself on track for early retirement, too—maybe not by 30, but certainly well before you turn 65.

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  1. Mr. Money Mustache. "About."

  2. Mr. Money Mustache. "Exposed! The MMM Family’s 2016 Spending!"

  3. Vanguard. "Vanguard 500 Index Fund Admiral Shares."

  4. Vanguard. "Vanguard 500 Index Fund Summary Prospectus," Page 4.

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