FIRE (Financial Independence, Retire Early)

FIRE describes reaching the point where invested assets can cover your living costs indefinitely, so paid work becomes a choice rather than a requirement. The "retire early" half of the acronym is the part most adherents treat loosely — many keep working, and what they are actually buying is the option to stop.

The engine is savings rate, not income or investment skill. Because a higher savings rate simultaneously grows the portfolio and shrinks the spending it has to support, it compresses the timeline far more sharply than a better return does. Saving 10% of income implies a working life of some five decades; saving half of it implies closer to seventeen years, largely independent of salary.

The common target is 25 times annual expenses, the inverse of the 4% withdrawal guideline drawn from the Trinity study of historical US portfolios. It is a planning heuristic rather than a law: it was tested over 30-year retirements, and a retirement starting at 40 may need to last twice that, which is why many people now plan around 3% to 3.5% instead.

Variants describe how the same math is applied. Lean FIRE targets a deliberately modest budget, fat FIRE a comfortable one, coast FIRE means saving enough early that existing investments will grow into the target without further contributions, and barista FIRE covers the gap with part-time work.

Two obstacles get underweighted. Health coverage before Medicare eligibility is a substantial and volatile expense, and most retirement money sits in accounts penalized before 59½ — reachable early through a Roth conversion ladder, the Rule of 55, or substantially equal periodic payments, but only with planning.