Financial Independence, Retire Early (FIRE)
The Math of Escaping the Rat Race
The FIRE movement is based on a surprisingly simple mathematical formula: if you can save and invest 25 times your annual expenses into broad-market index funds, you can theoretically retire forever. This is based on the Trinity Study, which found that a 4% withdrawal rate will almost never deplete a portfolio over a 30-year timeframe.
Frequently Asked Questions
What are Lean FIRE vs Fat FIRE?
Lean FIRE is retiring on an extremely frugal budget (e.g. $30,000 to $40,000/yr) to hit your numbers as fast as possible. Fat FIRE means retiring with a luxurious budget (e.g. $100,000+/yr), which requires a much larger portfolio ($2.5M+) and more time.
Does inflation destroy FIRE?
Inflation is built into the rule, but not the way that explanation suggests. The 4% rule means withdrawing 4% of your portfolio in the FIRST year, then raising that dollar amount by inflation each year afterwards — not taking 4% of whatever the balance happens to be. So the withdrawal keeps its purchasing power while the percentage drifts with the market. One caveat that matters for FIRE specifically: the research behind the rule tested 30-year retirements. Someone retiring at 40 is planning for 50 years or more, and over that horizon 4% has a meaningfully higher failure rate. Many people planning an early retirement use 3.25% to 3.5% instead, which means a larger target.