What Is FIRE?
FIRE stands for Financial Independence, Retire Early. It's a movement built around a simple idea: save and invest aggressively so you accumulate enough wealth that the returns from your portfolio cover your living expenses — making work optional.
How your FIRE number is calculated
Your FIRE number is your annual expenses divided by your safe withdrawal rate. The default 4% rate comes from the Trinity Study, which found that a retiree withdrawing 4% of their portfolio annually (adjusted for inflation) has a very high probability of their money lasting 30+ years. If you spend $40,000 per year, your FIRE number is $40,000 / 0.04 = $1,000,000.
Types of FIRE
There are several approaches to FIRE. Lean FIRE means retiring on a minimal budget (typically under $40,000/year). Fat FIRE targets a more comfortable lifestyle ($100,000+/year). Coast FIRE means you've saved enough that compound interest alone will grow your portfolio to your FIRE number by traditional retirement age — so you only need to earn enough to cover current expenses. Barista FIRE means you work a low-stress part-time job for benefits while your portfolio grows.
Why savings rate matters more than income
Someone earning $60,000 with a 50% savings rate will reach FIRE faster than someone earning $200,000 with a 10% savings rate. This is because a high savings rate does two things simultaneously: it increases the amount you invest AND decreases the amount you need in retirement. The chart above shows how dramatically your timeline shrinks as your savings rate increases.