MAKE MONEY WORK FOR YOU: THE FIRE MOVEMENT

Generation Z and Generation X want a better deal than working 9-5 for 30 years

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Maurice Showers

3/5/20253 min read

MAKE MONEY WORK FOR YOU: THE FIRE MOVEMENT

Imagine a future where your money isn’t just a paycheck, you control it, and it works tirelessly for you. That’s the essence of the Financial Independence, Retire Early (FIRE) movement, a philosophy embraced not only by millennials but also by a new generation of financial freedom seekers. In the “Make Money Work for You” series, we explore strategies to transform your financial life, and FIRE is a powerful part of that transformation.

Generation Z and FIRE: A New Paradigm

For too long, previous generations sacrificed 30 to 40 years of their lives to a 9-to-5 grind, many unable to retire at all. Generation Z, having watched their parents struggle with unfulfilling careers and delayed retirements, has rejected that model. They crave freedom, both financial and personal. According to a Bank of America survey, 70% of Generation Z focused on savings and financial literacy during the pandemic. They’re not waiting until they’re older to enjoy life; they’re embracing FIRE now, aiming to retire early or achieve financial independence to live life on their own terms. Here’s a refresher if the names of the various generations escape you (as they often do me).

F.I.R.E.: How It Works

FIRE followers often plan to retire well before age 65 by saving up to 75% of their income while still employed full-time. Once their savings reach roughly 25 times their annual expenses, they may quit their day jobs or retire from the workforce entirely.

Key Takeaways:
  • FIRE is a movement defined by frugality, extreme savings, and investment.

  • FIRE proponents typically calculate their “FIRE number” as about 25 times their yearly expenses.

  • Withdrawals of 3% to 4% of savings annually are common to cover living expenses in retirement.

  • Despite its popularity, few U.S. workers actually retire early.

Flavors of FIRE: FIRE Variations

1. Fat FIRE

For individuals with a higher salary who don’t want to downsize their current lifestyle. They save aggressively and invest in higher-yield strategies to retire early without sacrificing comfort.

2. Lean FIRE
For those living a minimalist lifestyle. They can exist on $25,000 or less per year, drastically cutting expenses to retire as soon as possible.

3. Barista FIRE

A middle ground for those who leave their 9-to-5 but pick up part-time work to cover essential expenses. This allows them to maintain a “more than minimalist” lifestyle while preserving retirement funds.

The FIRE 25 Rule

At its core, the FIRE movement is about extreme savings, frugality, and smart investing. Followers often save 60-75% of their income and aim to accumulate a “FIRE number” equal to 25 times their annual expenses. Once they reach that milestone, they can withdraw 3-4% annually—enough to sustain a comfortable lifestyle.

The 4% Rule

The 4% rule is a key guideline for FIRE advocates, suggesting that if you withdraw 4% of your savings in the first year of retirement—and adjust for inflation thereafter—you’ll likely never run out of money. However, this model assumes a 30-year retirement period, so it may need tweaking for those who retire very early.

FIRE Ain’t Easy

How Many People Achieve FIRE?

  • Ages 40 to 44: 1%

  • Ages 45 to 49: 2%

  • Ages 50 to 54: 6%

  • Ages 55 to 59: 11%

Who Started the FIRE Movement?

Vicki Robin and Joe Dominguez are credited with originating the Financial Independence, Retire Early movement in their 1992 book, "Your Money or Your Life". Their work encourages readers to save more, spend less, and invest wisely to achieve early retirement or financial independence before the traditional age. I am an Amazon Affiliate. If you use my link to buy the book, I may make a small commission.

The Bottom Line

FIRE offers an alternative approach to retirement, letting you envision leaving the workforce on your terms—sometimes decades earlier than the norm. Whether your goal is to retire completely or just gain enough financial independence to work less, careful planning and disciplined execution are key. Traditional retirement guidelines often assume a 30-year window, so if you’re aiming for a much longer retirement, consider consulting a financial planner to adjust your strategies.

Make Money Work for You”

In the Make Money Work for You series, we explore how to take control of your finances so you can live life on your own terms. The FIRE movement aligns perfectly with this philosophy: shift your mindset from living paycheck to paycheck to proactively designing a future where your money works as hard as you do—if not harder.