FIRE stands for Financial Independence, Retire Early, a strategy of saving and investing a large share of income to build enough wealth to live on investment returns rather than a salary. The target, often called the FIRE number, is commonly estimated as annual expenses multiplied by 25, based on a 4% safe withdrawal rate.
Worked example
Someone who spends $40,000 a year would have a FIRE number of 40,000 × 25 = $1,000,000. Once their invested portfolio reaches that, work becomes optional under the 4% rule.
Why it matters
FIRE reframes retirement around expenses and savings rate rather than age. Variations, Lean, Fat, Coast and Barista FIRE, adapt the idea to different lifestyles and risk appetites.
Frequently asked questions
It is a useful planning guide drawn from historical US data, not a guarantee. Many people use a more conservative 3%–3.5% rate, especially when retiring young with a long horizon.