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?
No, because the 4% Safe Withdrawal Rate rule explicitly accounts for standard inflation. Historically, the stock market returns roughly 7-10% annually. If you withdraw 4%, and inflation is 3%, your money is still theoretically growing.