Retirement has long been thought of as finite: work hard every day of your life until you don’t.
Today, increased life expectancy, the rising cost of living, and fewer traditional career paths contribute to a vision of retirement that’s a little less clear cut. That might mean working less, but not stopping altogether.
Some have taken that concept a step further, arguing that “retirement” is possible much earlier. These are the followers of the FIRE movement.
Most of us won’t be able to fully retire at 30, but the FIRE movement shows us that work can look a little less, well, like work.
What does “retirement” mean to FIRE’s ardent followers? And what defines “early”? Well, that depends. The movement’s early adopters took an aggressive approach—one that is inaccessible to most. But while most people won’t be able to fully retire at 30, the FIRE movement shows that work can look a little less, well, like work.
Here, personal finance experts give their views on FIRE and offer advice for owning your financial future. And you can read the most accessible takeaways from the movement, including small-business ideas to help you increase and diversify income.
What is the FIRE movement?
FIRE (short for Financial Independence, Retire Early) allows its followers to “retire” early, usually in their 30s or 40s, and gain financial independence through means outside the 9-to-5 grind. This is generally achieved through a combination of frugal living, investing, and increasing income.
The heart of the FIRE movement is the dream of opting out of the grind. That’s what it’s offering.
Shannon Lee Simmons, The New School of Finance
The movement gained momentum in 2018 and has since amassed a huge following. In a late-2020 survey* conducted by Shopify and the Angus Reid Group, 9% of non-retired adults in the US reported they were actively pursuing FIRE, while another 39% said they were considering it.
Who is FIRE for?
On the face of it, FIRE is an extreme lifestyle that isn’t attainable without a certain degree of privilege. Shopify research found, unsurprisingly, that the demographic for this group skewed toward single, millennial men in a high earning bracket.
“The heart of the FIRE movement is the dream of opting out of the grind,” says Shannon Lee Simmons, Certified Financial Planner, Chartered Investment Manager, author, and entrepreneur. “That’s what it’s offering.” She cautions that the dream—at least the ultimate goal of retirement in its classic form—is unrealistic for many.
For underrepresented groups who face race or gender bias or other barriers in the financial system, pursuing FIRE can be even more challenging. But full retirement isn’t actually the goal for the majority of FIRE’s followers.
These days, a lot more people are willing to slow down their path to financial independence instead of taking a no-holds-barred, high-speed sprint approach.
Julien Saunders, co-founder, rich & REGULAR
Since its inception, the FIRE community has split into the purists and the Sunday drivers—that is, those leaning into the FI part of FIRE and taking realistic steps to secure financial independence. “These days, a lot more people are willing to slow down their path to financial independence instead of taking a no-holds-barred, high-speed sprint approach,” says Julien Saunders, co-founder of rich & REGULAR, a community he runs with his wife Kiersten.
FIRE movement types: Lean FIRE, Fat FIRE and more
With the focus on financial independence and finding a customized FIRE approach, a few terms have sprung up to distinguish these paths. Whether your goal is to retire early or simply to gain financial independence, there may be a version of FIRE that’s right for your goals.
Lean FIRE indexes high on the minimalist lifestyle. Followers of this version of FIRE generally save enough for expenses for 25 years before living on a fraction of the budget of the average household. Lean FIRE often involves living an extreme frugal lifestyle and is favored by those with anti-consumerist views.
Followers of the Barista FIRE movement aim to save enough to work less (gig work, part-time roles) in later years and not retire entirely. Barista FIRE is ideal for those with a lower risk tolerance or for those wishing to maintain employment health benefits.
Coast FIRE (or Coast FI)
Coast FIRE involves aggressively contributing to your retirement savings early to reach a certain portfolio value, then letting interest take care of the rest until retirement. Some followers of this version may supplement income with a side gig to more quickly reach contribution goals. Coast FIRE is often referred to as Coast FI, as this method indexes toward financial independence—retiring early is not the ultimate goal.
Fat FIRE involves aggressive income earning and saving to account for higher than average yearly expenses in retirement.
There are a few things to consider as the conversation around retirement is reframed. First, retiring at 65 is less realistic than it was for past generations. Second, retirement and work are not mutually exclusive.
“The word retirement is in desperate need of a makeover,” says Julien, “and should incorporate a wider range of lifestyles where people can retire from ‘required work’ and move along a spectrum of preferable work-life balance.” Julien and Kiersten have chosen the entrepreneurial path to FIRE, focusing more on business growth than a hard-stop retirement plan.
Shopify’s research found that those pursuing FIRE were more likely to find work enjoyable and say that work gives their life purpose. Sixty-one percent of this group reported being satisfied with their careers (versus 40% among the non-FIRE set), and 51% said they’d work even if they didn’t need the money.
People can decrease their spending while not decreasing their quality of life, by just being more conscious about how they’re actually spending their money.
Nick True, Mapped Out Money
Nick True, founder and host of Mapped Out Money, rejects the traditional vision of retirement. “I believe that humans have this innate desire to create and need to be productive in order to be fulfilled,” he says. He believes in retiring to something—a hobby, other interests, or part-time work.
Ultimately, you need to define retirement for yourself. For the FIRE pursuers in the research, 68% consider retirement to be a “prosperous” time (versus 30% among those not pursuing FIRE), meaning that foregoing income altogether isn’t part of the plan. For this group, work is enjoyable—and even relaxing. Suddenly, the lines between work and retirement have become blurred.
3 (realistic) financial lessons from the FIRE movement
There’s no reason to go all in on FIRE if it’s unsustainable for your lifestyle—you’ll end up burnt out, which is far from the take-it-easy promise of the movement. “Just focus on improving your personal financial situation a little bit at a time,” says Nick. “One percent every day.”
Here’s a breakdown of the three paths to FIRE—frugal living and saving, investing, and increasing income—and ways for the average person to incorporate them into their lives.
1. Spend less than you make
Spending less than you make is a fairly basic concept, but can be challenging for many whose lifestyle expectations don’t match their realities. Or for low-income groups who see their cost of living rise and no opportunities to better their situation. “You can’t out-save a low income,” says Nick.
Nick does believe, however, that most of us can benefit from a budget. “People can decrease their spending while not decreasing their quality of life by just being more conscious about how they’re actually spending their money,” he says.
FIRE gets people critical of their own spending and keen to diversify their income stream, which are very good pillars of financial planning.
Shannon Lee Simmons
“FIRE gets people critical of their own spending and keen to diversify their income stream,” Shannon says, “which are very good pillars of financial planning.” When clients approach her about FIRE, she works to apply the best elements of the movement to their specific situations.
Budgets might not be for everyone, though, which is something Shannon recognized when she wrote her book Worry-Free Money. The book offers a simple way to break out after-tax income into four categories:
- Fixed expenses (rent, utilities, and transit)
- Meaningful savings (debt repayment or saving for a house downpayment)
- Short-term savings (vacation savings, an emergency fund, or car repairs)
- Spending money (everything else)
If you embrace frugal living in order to decrease your living expenses, beware of the “Instagram pitfalls.” While Nick and his wife decided to live and work from an RV on the road, they did so more for the adventure than the savings. In reality, this lifestyle can still be expensive—unexpected repairs, gas, mobile internet, and campground fees may still cost you as much as your usual lifestyle.
2. Invest in your future
Investing doesn’t necessarily mean you should run out and buy shares. DIY trading is not for everyone and can be risky. Investing in your future can also mean:
- Finding space in your budget to add a percentage of income every month into low-risk retirement savings plans.
- Investing in your future self by adding to your skills. These can then be used to earn extra income through consulting or a side project. “You can learn skills on the internet by watching YouTube,” says Nick.
- Investing in your financial literacy. Depending on your means, that could be either hiring a financial planner, reading personal finance books, or researching online. Learn about investment tools and budgeting strategies that can improve your chances of financial success.
3. Diversify your income
This is the one takeaway from the FIRE movement that is the most universally accessible. Maybe you can’t save, maybe you’re unable to invest. Increasing your income can help you widen your savings gap and open up opportunities to invest in your future.
Relying on a single source of income can be risky. Many who lost employment over the past few years turned to other sources for income: gig work, freelancing, part-time work, and even starting a small business. In the aftermath of the pandemic, this diversification of income is here to stay.
PULL QUOTE: 35% of FIRE devotees currently own a business and 62% have owned a business at some point.
Entrepreneurship can be a gateway to the FIRE dream. In fact, many of those actively pursuing the method have used entrepreneurship to help them achieve their goals. Shopify’s research found that 35% of FIRE devotees currently own a business and 62% have owned a business at some point.
Decentralizing your income is also a stepping stone to a semi-retired, or more independent, lifestyle. If your reality means that work and retirement will blend together for many years, you can still achieve the essence of FIRE by finding work that is meaningful, flexible, and enjoyable. Entrepreneurship is hands down the best way to own your freedom and financial future.
5 business ideas inspired by the FIRE movement
Adding more to your plate isn’t necessarily going to be easy. “There’s no such thing as passive income,” says Shannon. But if you’re serious about pursuing FIRE through entrepreneurship and increasing income, here are a number of business ideas to get you started on your path to financial freedom.
1. Create and monetize online content
Many in the FIRE space, like Kiersten and Julien, have actually found success in documenting (and monetizing through ads or paid content) their path to FIRE and sharing their learnings through content to help others onboard to the movement. This gives them financial independence doing the work they love.
You can also monetize a personal brand by choosing a topic—cooking, houseplant care, makeup tutorials—and creating unique value for that topic’s audience on YouTube, TikTok, or a podcast. Even better? Cultivate a new audience or tap into one that’s underserved.
📚 Learn more: How to Start a Successful YouTube Channel for Your Business
2. Take on freelance or gig work
Taking on extra work might mean leaning into your skills by adding freelance work to your plate or picking up gig work. What skills do you have that are in demand? You could:
- Create a simple website marketing your services (whether that’s dog walking, custom upholstery, or graphic design)
- Add a profile to a site like Fiverr or Upwork
- Pick up hours doing gig work
📚 Learn more: The Top 24 Side Hustles To Make Extra Money
3. Start a dropshipping business
Dropshipping stores generally require much less upfront investment than other online stores because you don’t need to buy or store inventory. You can quickly spin up a business selling trending products—anything from yoga wear to massage guns to coffee beans—without having to deal with handling or shipping any product. You may even be able to white label these items with your own branding.
📚 Learn more: The Ultimate Guide to Dropshipping
4. Try a print-on-demand business
Print on demand is another type of business you can start with little investment and is one that allows you to sell your creativity. Artists and designers can have work printed by a third-party company onto products like mugs, t-shirts, and tote bags.
After an initial set-up, products are printed and shipped automatically when a customer places an order. Check out the Shopify App Store for print-on-demand services that plug directly into your Shopify store.
📚 Learn more: What Is Print on Demand? Services for Custom Apparel, Books, Etc.
5. Sell digital products or virtual services
“Most of the clever ideas we’ve seen come from bloggers who are serving specific needs to an audience and community they’ve cultivated,” says Julien. “They primarily fall in the area of courses, coaching programs, and digital products.”
Are you a designer or photographer by trade? Sell templates or Lightroom presets. Do you teach yoga? Expand your reach to sell virtual classes online. How can you use your existing skill set to teach, coach, and consult? Or how can you make money from a hobby?
Selling digital products or services is another strategy that involves no physical inventory, so therefore: less upfront investment and no need to manage shipping and fulfillment.
📚Learn more: 12 Things to Sell on Shopify (Other than Physical Products)
FIRE up your future
Whether or not FIRE—or a modified version of it—is for you, the lessons learned from the movement can help almost anyone improve their outlook and potential to reach a more secure financial future.
FIRE can be approached more as a set of loose guidelines rather than a dedicated way of life. “What matters is that we should be promoting healthy financial habits for people,” says Nick, “and the idea of trying to improve your financial situation, however you can.”
Remember, retirement is a state of mind, not necessarily an abrupt end to working life. Succeeding at FIRE means crafting a future that gives you ownership over your time and resources. There isn’t a magic formula or a one-size-fits-all answer—take from the movement what works for you and leave the rest. “We’re not special and there are no secrets to our success,” says Julien. “We’ve simply tapped into the power of time and compound interest.”
Illustrations by Gracia Lam
Additional research by Bianca Johnston
*Research for this article was conducted by Shopify’s Market Insights team. Data was collected via an online survey of 2,024 adult respondents in the US from December 18–23, 2020. Fielding was conducted by Angus Reid Group for Shopify.
Note: the information in this article is not to be taken as financial advice. Speak to your accountant or financial adviser for guidance.
FIRE movement FAQ
What is the 4% rule?
The 4% rule refers to the suggested percentage of total investments that a retiree should withdraw in each year of retirement. This amount is adjusted after the first year to account for inflation. The concept of this principle is that a typical retirement portfolio would last for 30 years.
How much money do I need for FIRE?
The amount of money you need to save to achieve FIRE (otherwise referred to as your FIRE number) will depend on your goals and approach. A typical calculation used by FIRE proponents is: annual expenses x 25. This assumes you’re following the 4% rule to calculate your yearly expense amount.
What should I invest in for FIRE?
What you invest in to help you save for FIRE will depend on your income, risk level, desired retirement age, and financial goals. Your investment and savings strategy should be developed in partnership with a professional financial adviser to help you reach financial independence in a way that is best suited to your plans. A pro can walk you through options for retirement accounts and advise you on contribution limits.