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Embracing the FIRE Movement: Financial Independence and Early Retirement

The Financial Independence, Retire Early (FIRE) model streamlines the process of early retirement by analyzing the post-retirement goal and generating a calculative approach to achieve it.

  • Jul 24, 2023

Updated on: 24 July 2023

Early retirement is a dream for many. Hence, the beginning of the FIRE movement, under which people are devoted to a plan that aims for aggressive savings and investment to enjoy early retirement. Moreover, FIRE provides a realistic approach based on your retirement needs.

    Key Takeaways

  • FIRE is defined as a financial movement that demands extreme savings and investment
  • The strategy under the FIRE movement can benefit anyone, even if early retirement is not the goal.
  • It helps to plan your post-retirement life effectively, with your current income.
  • The funds saved and invested through the FIRE model not only help you plan post-retirement life but can be of great help in case of financial or medical emergencies.
  • It helps build a habit of investment and saving, which is a crucial part of financial independence.

If you plan and invest your funds in the right way, you can smoothly achieve the goal of early retirement with no crunch of money. To understand the approach of early retirement plan through the FIRE movement, you must read ahead.

FIRE Movement

FIRE is a financial movement that is based on two pillars, i.e., saving and investment. The term FIRE was first coined in the year 1992 by Vicky Robin and Joe Dominguez in the book named, “Your Money or Your Life.” This model allows you to retire early by saving up to 70% of your annual income. The major elements of the FIRE Model are comprehensive planning, economic discipline, and a wise investment.

Understanding the Rules of FIRE

The FIRE movement promotes adjusting your financial planning and lifestyle to reach financial independence as soon as possible. This process starts with the FIRE number, that is, the money you need to attain the vision of financial independence. You can calculate it through the FIRE calculator by using the following two formulas:

The Rule of 25

This rule says that identify your present annual income and multiply it by 25. This will provide you with the idea of what rough figure you need to save to live life comfortably post-retirement.

The 4% Rule

According to the experts, the 4% rule denotes the amount you can withdraw from your retirement savings annually without going out of money for a 30-year retirement. For e.g., if you have ₹7.50,000 as your retirement saving, you can withdraw ₹30,000 annually (based on the 4% rule), adjusting each year for inflation.

Variants of FIRE Movement

As the FIRE movement focuses on financial aspects, the approach has to be based on income, family situation, and other factors. Hence, the need for the following different variants within the model:


The goal of this variant is to live a lavish lifestyle after early retirement. To accomplish this goal, you need to focus on aggressive savings along with a source of passive income. Thus, you require to work harder with higher efficiency than an average worker. Moreover, a high income combined with an aggressive salary and the right investment will help you in reaching your destination.


Under this variant, the goal is to retire early and live modestly. It focuses on the low cost of living along with extreme savings. You have to live a restricted lifestyle and keep the cost of living a minimum. This variant does not require any extra income source rather it focuses on cutting the cost of living to a significant level.


The goal of this variant is to retire early and work part-time throughout the retirement years. To achieve this goal, you can quit your regular job to retire early and grab the opportunity of part-time work to meet your daily expenses. By doing so, you can combine your savings with regular part-time income to lead a good lifestyle.


The aim of this variant is to achieve financial independence early in life. It requires you to save money that can generate continuous interest without working. It can cover your day-to-day expenses post-retirement without having to worry about part-time or Gig work.

Wrapping it Up

Financial planning is essential to enjoy every phase of life. It provides you with a strong base to rely on during rough terrains of life. Along with this, sound financial well-being provides peace of mind with limited uncertainties. Thus, it is advisable to start managing your finances as soon as you start earning, as early investments reap the maximum benefits post-retirement.

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