
By Susan Johnson: Correspondent

FIRE stands for ‘Financially Independent to Retire Early.’ It helps individuals save towards a single goal and retire several decades before the usual retirement age. But does it really work?
Financial independence and early retirement have become very common in the corporate world. The internet is bombarded by blog posts and videos every day where people explain ways to be financially independent. One method that caught everyone’s attention was FIRE.
According to the finfluencers, the FIRE method/ movement is the best way to gain financial independence, allowing people to retire in the prime of life. A quick research about the FIRE method reveals that though its origins are unknown, some of its concepts come from a book called “Your Money or Your Life” written by Vicki Robin and Joe Dominguez and published in 1992. After closely following up on the FIRE method and trying to follow it, one thing is very clear, this method might not actually be a golden ticket to escape the rat race. In fact, it could be a mere fad that leaves people burnt out.
What Really Is it?
FIRE stands for Financial Independence, Retire Early. More than a method, advocates of FIRE say that it is a way of life that helps the practitioner achieve financial independence and retire from the workforce at a relatively young age, typically in the 40s.
There are two main components to the FIRE equation. The first is investing, and the second is saving. Anyone following the FIRE method is supposed to save and invest aggressively during their working years. Most practitioners save a significant portion of their income (50% to 70%) and invest part of it wisely to accelerate wealth accumulation.
Once their savings reach 30 times their yearly expense, they can retire/ quit their day job to pursue their hobbies or even work towards personal goals. Depending on how much one can save and invest, there are different variations of the FIRE method.
#1 Fat FIRE
Fat FIRE is for those who wish to retire early with a substantial amount of savings. Individuals who take this approach save more than an average worker and aim to save enough so as to not compromise on their current standard of living once they retire. One should typically have a high salary and be aggressive when it comes to saving and investing for this FIRE approach to work.

Lean FIRE
Lean FIRE followers take a more relaxed and frugal approach to early retirement. They rely on measures like stringent budgeting, minimalism, and reduced spending on non-essential items to build their retirement portfolio. While this is an ideal method for those who prefer a more modest lifestyle to achieve financial independence, it could mean extreme restrictions on their current quality of life.
Barista FIRE
Barista FIRE is a middle-ground approach that helps people achieve financial independence but not fully retire. Instead, they will drop their full-time job for part-time or less demanding work once they save up enough. Working low-stress jobs post-retirement helps maintain a source of income while enjoying more free time. This approach also provides a balance between financial independence and continued work for personal fulfillment. Here’s some tips…

Whether or not the FIRE method is fruitful depends on individual preferences, risk tolerance, and lifestyle choices. While some people find discipline and long-term financial security appealing, others view its strict withdrawal guidelines as too restrictive and taking the fun out of life.
How Can One Achieve FIRE?
Sticking to FIRE demands extreme frugality, mindful spending, and strategic investment decisions. Here are some ways people build their retirement portfolio using the FIRE method.
- Saving aggressively! FIRE followers might put down 70% of their monthly income if they wish to save at a faster pace.
- Learn to live more frugally. They refrain from overspending and only spend their money on things that are absolutely necessary.
- Planning and investing their savings at the earliest so it has the longest time possible to grow.
- Saving according to the rule of 30 for the post-retirement. In simple words, they save 30 times their annual expenditure.
- Never use too many credit cards.
The Most Challenging Part Of Fire Begins Post-Retirement.
When people first hear about the FIRE, they find it quite appealing. After all, who wouldn’t want a life where they can retire at an age when they are still healthy and able to go on adventures? However, the reality is that FIRE doesn’t end with saving enough money for retirement. In fact, the true test begins post-retirement!
After retiring, FIRE practitioners will no longer have income channels to rely on. Plus, quitting their professional career early means they have a longer retired life. So, their retirement portfolio (this link provides some great tips too) should be well preserved and the savings strategically used. The rationale behind this is to avoid outliving the savings.
One way the savvy-focused achieve this sustainability is by making conservative annual withdrawals of not more than 3-4 percent of their retirement portfolio. This is much like the bare minimum–the traditional retirement models allow individuals to withdraw a higher percentage of their savings!
So, Is the FIRE Method Really Fruitful?
Whether or not the FIRE method is fruitful depends on individual preferences, risk tolerance, and lifestyle choices. While some people find discipline and long-term financial security appealing, others view its strict withdrawal guidelines as too restrictive and taking the fun out of life.
Sometimes, even the most frugal people find the FIRE method overwhelming.
Imagine an average individual with a full-time job, a family, pets, or kids. This person would have a lot of expenses to take care of in their daily life. For example, electricity bills, house rent, groceries, student loans, mortgage payments, taxes, and utility bills. Plus, life is full of surprises. He/she might occasionally have to deal with car repair bills, traffic tickets, or purchases that cannot be controlled, and that is all part of life.
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So, in this scenario, this person might make nowhere enough to save and invest aggressively. Also, escaping their career may not be something they wish to do.
Another important aspect is that all those finfluencers who preach about the FIRE method have successfully built a business around offering guidance about saving, investing, and selling affiliate products.
In fact, most of them are earning more money selling the idea to unsuspecting people than they could have ever made in their day jobs. Now, it should be acknowledged that they share valuable pieces of advice, like “don’t spend wastefully,” “invest in low-cost index funds,” and “have an emergency savings plan.” So, it is up to everyone to carefully look into the FIRE movement and ask themselves, “Do I really have to live such a restricted life?”
Maybe those who wish to retire early shouldn’t always go with the crowd. Instead, they can come up with a strategy that works for their unique situation–a plan that works for them and not necessarily everyone.
Cover Photo: Kristina V / Man in blue Shivets Productions

Susan Johnson
As a medical student and freelance writer, I make science talk understandable for everyone. When I’m not buried in medical books, I’m all about DIY projects–sewing, baking, and even making and selling daily planners. I love diving into psychological thrillers for a break. Oh, and I’m the go-to cat caretaker in the neighborhood!