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.