Millennials Are Retiring At 40 Thanks To The FIRE Movement

What is the FIRE movement?

FIRE stands for ‘Financial Independence, Retire Early’. It involves extreme frugality and penny-pinching in every aspect of your life in order to retire early, never having to work again. Instead people live off  investments, leaving them  free to live how they please. Much talk of this movement has manifested itself on Reddit message boards or money-hack blogs like Mr. Money Mustache, which attempt to give you strategies for increasing the amount you save to about 70% of your income. This includes things like cheap holidays using airline rewards cards and saving small change.

It doesn’t sound that revolutionary, but by following these titbits of advice, some have actually been able to retire at a relatively young age. Denver software engineer Carl Jensen and his wife came up with a plan to save a large amount of their income over a five-year period, whilst dramatically reducing their expenses, until their net worth was $1.2 million (£910,680). He was able to retire aged 43.

Furthermore, the man behind Mr. Money Mustache, Peter Adeney, retired at 30 with his wife so they could start a family, which he did through saving, avoiding credit and debit cards, and cutting out any unnecessary spending.

The movement has continued to make waves in the US and is now being considered by young professionals in the UK, too: 900 people attended a recent FIRE meeting in London to find out how to quit their jobs whilst they’re still young.

How do you do it?

At its most basic, FIRE is about being stingy with your money. Really stingy. It’s imperative  you save as much of your income as possible – ideally around 50-70% – pay off all forms of debt, from student loans to credit cards to mortgages. The idea is you build up a worth  roughly 25 times your annual spending, either to be invested in a buy-to-let property or in the stock market.

But obviously, this means sacrificing nearly all of the fun things in life: no dinners out, no holidays, no payday spending sprees at Topshop. As most people aren’t on the same wage, there are different levels to FIRE: ‘lean FIRE’ practice extreme frugality, while ‘fat FIRE’ sees users maintain a more typical standard of living whilst saving and investing. ‘Barista FIRE’ means continuing to work a part-time job after retiring to still get a bit of incoming cash, or using it as a means to get health care if you live in America.