Financial Independence, Retire Early — the math and reality
FIRE (Financial Independence, Retire Early) is a movement built around aggressive saving and investing to achieve financial independence decades before traditional retirement age.
The goal: Save 25x your annual expenses, then live off 4% withdrawals indefinitely. At a 50% savings rate, you can retire in ~17 years instead of 40+.
$40,000/year expenses → $1,000,000 FIRE number
Years to FIRE based on savings rate (assuming 5% real returns):
The Trinity Study found that withdrawing 4% of your portfolio annually (adjusted for inflation) has a 95%+ success rate over 30 years. This is the foundation of FIRE math.
Caveats:
1. Maximize income
High salary, side hustles, career jumps. The math only works if you earn significantly more than you spend.
2. Minimize expenses
House hack, used cars, cook at home, no lifestyle inflation. Every dollar not spent is a dollar invested.
3. Invest tax-advantaged
401k up to match → HSA → Roth IRA → max 401k → taxable brokerage. Low-cost index funds (VTI, VOO).
4. Plan for healthcare
ACA subsidies help if income is low. Budget $10-15K/year for a couple pre-Medicare.
Reality check: FIRE isn't for everyone. It requires high income, low expenses, or both. A 50% savings rate on $50K is very different from 50% on $150K. If FIRE feels unrealistic, focus on building wealth slowly — financial security is valuable even without early retirement.