What is the FIRE movement?


When it comes to retirement planning, no one person has the same financial situation, goals and objectives. A personalized financial plan is so important because we all need to walk our own individual path towards achieving financial independence (and, ultimately, retirement).

In saying that, we often tend to share a similar idea of what an appropriate and realistic retirement age looks like. Most people usually aim to finish working in their late 50’s or early to mid-60’s. The exact age for each person usually depends on their physical capacity to continue working, their wealth accumulation and cashflow generation in the working years and the rules around accessing superannuation and retirement income streams.

So, what exactly is the FIRE movement and what does all of this have to do with it?

The FIRE movement

The FIRE (Financial Independence, Retire Early) movement is a social lifestyle movement that is often described as working to achieve financial independence and early retirement by having sufficient wealth to live on without having to depend on employment income. People working to achieve FIRE usually start their retirement planning in their 30s or early 40s , which is a concept we fully support and think is important – no matter what age you plan to retire!

People working towards FIRE usually engage in radical saving measures during the early part of their career, with the aim of using income from investments and savings from their employment income to retire in their 40s or earlier. These people are saving ≥40% of their income and investing it in growth-orientated assets, and aim to accumulate a net wealth of 25 times their annual expenses, then commence a drawdown of 4% per annum once they’ve retired.

Given the above, there have been (and continue to be) criticisms of the FIRE movement – it’s definitely not for everyone…

When considering low to middle-income earners and those living in an expensive area, most people in this situation may not be able to save and invest ≥40% of their after-tax income. Another criticism is the net wealth target and 4% drawdown, when considering the retirement time frame and the risks in retirement (investment, inflation, sequencing, expenditure, legislative, and longevity risk), this can seem pretty unrealistic and unsustainable.

So why do people want to live this way, and how do they get there? A recent study has delved into just that:


The financial independence (FI) component, and the financial security/peace of mind that comes with obtaining it, is the main driver for FIRE subscribers, and the early retirement component is more centred around living life on their own terms and having the means and freedom to achieve work-life balance. So spending more time with family and travelling seems to be a really big part of it all.

How do people achieve FIRE?

The pathway to achieving FIRE involves some pretty serious budgeting and tracking of spending; however, lifestyle/career decisions also play a supportive part. Things like downsizing lifestyle, relocating to a cheaper area and bringing in a second income can all help along the way.

In addition to the above, the majority of FIRE subscribers:

• Are clear on things that matter to them and prioritise saving and investing around these things.

• Acknowledge the benefits of making sacrifices in the short-term, however, they do have limits, and probably don’t want to live like they’re broke.

• Reduce spending, as opposed to increasing employment income, to maximise their savings rate.

• Understand investment risk (risk vs return, time horizons, etc.), and choose to invest in growth-orientated assets (shares and property) for long-term capital growth and income purposes.

• Take the time to invest in themselves, by improving upon their financial literacy in areas, such as cashflow and debt management, taxation, investments, and retirement savings.

Moving forward

Whether you agree with the FIRE movement or not, it does raise some interesting food for thought. No matter how, when or why you want to retire, assessing your financial situation, goals and objectives early is a key part in getting where you want to be. That means if you want to retire at age 65, don’t wait until you’re 64 to make your retirement plan.

A personalized financial plan is so important because we all need to walk our own individual path towards achieving financial independence.

Saving and spending

In our opinion, finding the balance between saving for your future but still giving yourself enough money to enjoy life now is key to a successful financial plan. So how do you find that balance? In a nutshell, know your future and immediate goals, figure out how long you’ll need to achieve them, and then figure out how much you need to put away based on these points.

Once you’ve got your retirement plan, don’t put too much pressure on yourself to stick to a certain rate of saving or spending. The goal is enjoying life and any progress is good progress!

If you have any questions about this article or your own retirement plan, please do not hesitate to contact us.

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