Something called the FIRE movement has been generating a lot of heat in financial circles with its central belief that if you take saving money to extremes, you can retire at an age when many people are still getting their careers off the ground.
But there's more to it than that, and FIRE also has become somewhat controversial.
What is the FIRE movement?
FIRE is an acronym that stands for "financial independence, retire early."
The FIRE movement is a financial strategy and lifestyle focused on achieving financial freedom far earlier than the traditional retirement age of 65 (or nowadays in Canada at 67).
At its core, FIRE is about saving aggressively, investing strategically, and reducing unnecessary expenses to build enough wealth to stop relying on a 9-to-5 job.
FIRE followers aim to save 50% or more of their income, with some extreme cases reaching savings rates of 70% or higher. The goal is to accumulate a portfolio (your FIRE number) worth at least 25 times their annual expenses, based on the 4% rule, which suggests retirees can safely withdraw 4% of their savings each year without running out of money.
The movement gained traction in the 1990s with the book Your Money or Your Life by Vicki Robin and Joe Dominguez, which introduced the idea of evaluating spending in terms of time traded for money rather than just dollar amounts.
"You need not be resigned to devoting the majority of your waking hours to making money," says the book's introduction. "The nine-to-five grind may be the societal default, but you can steer your life down different highways — with off-ramps to your true calling and a more pleasing future."
Another writer who gets credit for stoking FIRE is Jacob Lund Fisker, author of the 2010 book Early Retirement Extreme. Fisker says he was able to retire at 33 from his job as a nuclear astrophysicist by saving a ton of money, then learning to get by on just $7,000 a year.
The real problem is not how much we earn; it's how much we waste, perhaps to demonstrate our supposed wealth, when we spend it,
Jacob Lund Fisker
Today, FIRE is a growing global trend, with online communities, blogs, and podcasts dedicated to helping people escape financial stress and design their ideal lives.
Yes, it's possible. FIRE case studies
- J.P. Livingston, who blogs at TheMoneyHabit.org, has made a name for herself with her story of how she was able to retire with $2.25 million — at the age of 28.
- A Purple Life set out to retire at 35, and reached their goal in half the time and retire at 30 on Lean FIRE.
- Bridget Casey, cohost of the Money Feels Podcast and founder at Gilded Plan, hit FatFIRE before the age of 40.
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How to calculate your FIRE number
Your FIRE number is the amount of money you need to achieve financial independence — the point where your investments generate enough income to cover your expenses indefinitely.
Step 1: The 25x rule: Your FIRE goal
- Multiply your annual expenses by 25 to estimate how much you need to retire.
- This rule is based on the 4% withdrawal rate, meaning you can withdraw 4% of your portfolio each year without running out of money.
💡 Example: If you need $50,000 per year to cover expenses:👉 $50,000 × 25 = $1.25 million FIRE number
Step 2: The 4% rule: sustainable withdrawals
The 4% rule suggests you can safely withdraw 4% of your portfolio’s value in your first year of retirement, adjusting for inflation each year. This is based on historical market performance and assumes your portfolio is diversified across stocks and bonds.
However, some experts recommend a more conservative withdrawal rate (3.5% or lower), especially for those retiring decades early. A lower withdrawal rate means you’ll need more savings to sustain your lifestyle.
FIRE movement calculator | How fast can you retire early?
How inflation Impacts Your FIRE Number
Over time, inflation erodes purchasing power, meaning your savings must keep up. If inflation averages 2% per year, your $50,000 annual expenses today could be $82,000 in 30 years. Investing in stocks, real estate, and other appreciating assets helps counteract inflation.
FIRE strategies: Lean, Fat, Barista, Coast, and standard FIRE
The FIRE movement isn’t one-size-fits-all—there are different paths to financial independence depending on your income, savings rate, and desired lifestyle. Here’s a breakdown of the most common FIRE strategies to help you choose the best fit.
| Fire strategy | Description | Best for + downside(s) |
|---|---|---|
| 🔥 Lean FIRE: Minimalist living for early retirement |
◦ Requires strict budgeting and frugality to retire with a smaller portfolio
◦ FIRE number is lower because living expenses are kept to a minimum ◦ Ideal for those who enjoy simple living and can cut costs drastically ◦ Example: Living on $25,000 per year means needing only $625,000 to retire (25x rule). |
✅ Best for: Minimalists, digital nomads, and people comfortable with a low-cost lifestyle
⚠️ Downside: Little room for unexpected expenses or lifestyle upgrades. |
| 🔥 Barista FIRE: Semi-retirement with part-time work |
◦ Allows for part-time or passion-driven work (e.g. becoming a barista) to cover some expenses while still achieving financial independence
◦ Common for those who need health benefits or prefer staying active with light work ◦ Example: Instead of needing $1 million saved, someone with part-time income may only need $750,000. |
✅ Best for: People who enjoy working in some capacity but want financial freedom
⚠️ Downside: Still requires working, which may limit full retirement flexibility. |
| 🔥 Coast FIRE: Letting investments grow while reducing savings |
◦ Early investing does the heavy lifting — you invest aggressively when young, then stop contributing and let compound interest take over
◦ You still work, but no longer need to save because your investments will grow to sustain your retirement ◦ Essentially you stop investing and can use the money you'd been depositing into your investments to travel and live a little extra now ◦ Example: If a 30-year-old builds a $300,000 portfolio, they could stop putting money into their portfolio, and by age 50 or 60, it could naturally grow to $1 million |
✅ Best for: Young professionals who want financial security later without extreme frugality.
⚠️ Downside: Still requires working for a while before fully retiring |
| 🔥 Standard FIRE: The traditional FIRE approach |
◦Classic FIRE strategy—save and invest 50-75% of income to retire as early as possible
◦ Uses a mix of frugality and investing to reach the 25x rule ◦ Example: Someone earning $80,000 and saving 60% can retire in about 15-20 years. |
✅ Best for: Those willing to make sacrifices now for full retirement freedom later
⚠️ Downside: Requires strict discipline in savings and spending. |
| 🔥 Fat FIRE: Financial independence without sacrifices |
◦Focuses on aggressive saving and investing to retire early while maintaining a higher standard of living
◦ Requires a high income or business ownership to save large sums without cutting back on luxuries ◦ Example: If you want to spend $100,000 per year, you’ll need $2.5 million saved |
✅ Best for: High earners who don’t want to downsize their lifestyle in retirement
⚠️ Downside: Takes longer to reach FIRE due to higher savings goals |
FIRE movement pros and cons
Pros
-
Early financial freedom – FIRE allows you to quit the 9-to-5 grind decades early and live life on your terms
-
More time for passions – Whether it’s travel, hobbies, family, or volunteering, FIRE gives you the flexibility to pursue what truly matters
-
Less financial stress – Achieving financial independence means no longer worrying about paycheques or job security
-
Better money habits – FIRE encourages high savings rates, frugal living, smart investing, building lifelong financial discipline
-
Multiple FIRE options – From Lean FIRE to Fat FIRE, you can customize your FIRE strategy based on your goals and lifestyle
Cons
-
Requires extreme saving – Saving 50-70% of your income can feel restrictive, especially if you live in a high-cost city
-
Market risk – FIRE relies on investments, which means stock market downturns can impact your portfolio if not properly planned
-
Healthcare concerns – Early retirees must cover medical expenses without employer benefits, making private insurance a major cost
-
Lifestyle boredom – Some FIRE retirees struggle with finding purpose after quitting traditional work, leading to boredom or lack of fulfillment
-
Inflation and cost of living – Rising expenses may force adjustments to your withdrawal strategy, especially with long retirements
Investing for FIRE: Building a strong portfolio
Achieving financial independence requires more than just aggressive saving—it’s about investing wisely to grow your wealth. A strong FIRE portfolio balances growth, stability, and passive income to sustain early retirement. Here’s how to build a portfolio that works for FIRE.
| Asset type | Description | Pros and cons |
|---|---|---|
| Index funds and ETFs: Low-cost, high-growth investing |
Why they work for FIRE: Passive investing with low fees and strong historical returns
Index funds and ETFs track the S&P 500, TSX, or global markets, providing diversification Example: Investing in the S&P 500 ETF (like VFV or VOO) has historically returned 7-10% annually Best for set-it-and-forget-it investors who want steady growth over decades. Related read: Best ETFS in Canada |
✅ Pros: Easy to manage, low fees, historically strong returns
⚠️ Cons: No guaranteed short-term gains, market fluctuations |
| Real estate: Rental income as a FIRE wealth builder |
Why they work for FIRE: Rental properties provide passive income while appreciating over time
Some FIRE followers use real estate to replace part of their portfolio withdrawals. Strategies include long-term rentals, short-term Airbnb rentals, or REITs (Real Estate Investment Trusts). Example: A paid-off rental property generating $2,000/month can cover a big portion of FIRE expenses. |
✅ Pros: Steady cash flow, asset appreciation, tax advantages
⚠️ Cons: Requires property management, upfront capital, and market risks |
| Dividend stocks: Passive income from your investments |
Why they work for FIRE: Dividend-paying stocks provide cash flow without selling assets
Companies with consistent dividend growth (like Canadian banks, utilities, or blue-chip stocks) are ideal Example: A $500,000 portfolio yielding 4% in dividends provides $20,000 per year—helping cover FIRE expenses. Related: Best Dividend stocks |
✅ Pros: Reliable cash flow, potential for stock appreciation
⚠️ Cons: Dividends can be cut, requires diversification to minimize risk |
| Bonds and fixed income: Stability in FIRE retirement |
Why they work for FIRE: Bonds add security and reduce volatility in a FIRE portfolio
Government and corporate bonds provide steady income with lower risk than stocks. A bond ladder (holding bonds with different maturities) can help create a predictable income stream. Example: A mix of GICs, Canadian bonds, and bond ETFs can help smooth out market downturns. |
✅ Pros: Lower risk, stable income, inflation-protected bonds available
⚠️ Cons: Lower returns than stocks, interest rate risks |
Self-directed investing: Control your FIRE journey
Managing your own investments lowers fees and gives full control over your FIRE strategy. Use TFSA for tax-free growth and RRSP for tax-deferred savings. In fact, maxing out a TFSA with index funds can create a tax-free passive income stream in retirement.
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FIRE lifestyle and expense management
Achieving financial independence isn’t just about how much money you make — it’s about how you manage it.
The FIRE movement prioritizes cutting unnecessary expenses, maximizing savings, and creating multiple income streams to build wealth efficiently. It’s not about extreme sacrifice but about making intentional choices that align with your long-term goals.
Here's how to help you achieve FIRE through lifestyle choices
FIRE isn’t about living on rice and beans — it’s about spending intentionally on what truly adds value to your life.
This means identifying and cutting unnecessary expenses while maintaining a lifestyle that feels fulfilling.
Common areas where FIRE followers trim spending include dining out, unused subscriptions, luxury purchases, and lifestyle inflation — all of which can add up quickly.
- Instead of that fancy restaurant with friends, start a monthly supper club at each other's houses.
- Instead of holding onto to subscriptions, cancel and restart based on the binge watch you're prioritizing that month.
- Instead of luxury purchases, go for function over fashion and get the style when you get to FIRE
One effective way to shift your spending mindset is to measure purchases in hours worked rather than just dollars (a concept from Your Money or Your Life).
For example, if you earn $25 per hour, that $5 latte isn’t just five bucks — it’s 12 minutes of your life.
Over time, small cuts in spending make a big impact. Brewing coffee at home instead of buying a daily latte can save over $1,800 per year, which could grow into six figures over a few decades if invested wisely. The key isn’t to deprive yourself — it’s to ensure every dollar spent adds genuine value to your life.
One of the most effective ways to achieve FIRE faster is by increasing your savings rate. In fact, many FIRE enthusiasts aim to save a whopping 50% to 75% of their income.
This is far above the 10% to 20% savings rate traditionally recommended for retirement, but it’s possible through strategic lifestyle choices and smart financial planning.
High savings rates are achieved by reducing major expenses and optimizing income.
You can use strategies like:
- House hacking: renting out part of your home or having roommates.
- Can you use public transit, ride a bike, or use car sharing? The cost of car ownership is a lot after buying one, paying for gas, insurance and wear & tear. If you can, opt for active modes of transportation. Otherwise driving used or fuel-efficient cars can help you cut back a bit.
- Meal prepping: Cutting grocery waste and avoiding takeout. Getting Uber Eats deliveries add up quickly.
- Investing every raise or bonus instead of increasing spending: To make it easier, use 10% of your bonus on guilt-free spending.
- Automate your savings during your work years: Allow your money to be whisked out of your pay before you ever see it. Using an automated investment service like Wealthsimple can help diversify your investments and protect you from market gyrations.
Someone earning $100,000 per year and saving 60% ($60,000 annually) could retire in 15-20 years with the right investment strategy.
Fisker, our FIRE case study from above, says he set aside 70% of what he earned. The FIRE movement has adopted saving 70% as the ultimate goal.
The FIRE faithful say it's simple: make more money, invest it well, and don't spend any more than you absolutely have to.
Livingston, the woman who retired at 28, tells CNBC she saved big by using a mind trick to keep expenses down: Before making any major purchase, she'd calculate how many hours she'd have to work to pay it off. And then she'd ask herself, Is it worth it?
Geoarbitrage is a powerful FIRE strategy that involves relocating to a lower-cost area while keeping your income high.
This can mean moving to a different city, province, or even country where the cost of living is significantly lower. Thanks to remote work, this has never been easier.
Many FIRE chasers permanently move abroad to countries with lower expenses and favourable tax policies like Portugal, Mexico and Thailand.
However, geoarbitrage doesn’t require moving internationally.
Domestic geoarbitrage involves relocating from high-cost cities like Toronto or Vancouver to smaller, more affordable towns or provinces while maintaining a remote job or freelance income.
For example, moving from Toronto (where the average home costs $1.2 million) to Halifax (where homes cost around $500K) could cut housing expenses by more than half, significantly accelerating your path to FIRE.
Saving money is essential, but increasing your income can drastically speed up your FIRE journey.
Side hustles and passive income streams boost savings which can sometimes replace full-time work, or retire even earlier than you had planned.
Think about freelancing, consulting, e-commerce, and gig work, all of which can provide extra cash to invest. A millionaire has 7 streams of income:
- 1.
Dividend income from stocks
- 2.
You salary and paycheque
- 3.
Real estate renal income
- 4.
Royalty payments from intellectual property or inventions (or your YouTube channel).
- 5.
Capital gains when you sell appreciating assets
- 6.
Profits from your business
- 7.
Interest payments from high interest savings accounts or bonds
For example, someone earning an extra $1,000 per month from a side hustle can either cover a major expense (like rent) or invest it to grow exponentially over time.
Passive income provides an additional safety net, making FIRE more sustainable and less reliant on stock market returns alone. The more income sources you create, the more flexibility and security you’ll have in early retirement.
Challenges and risks of the FIRE movement
While the FIRE movement offers the promise of early financial freedom, it comes with its own set of challenges and risks. Planning ahead for these potential obstacles is crucial to making FIRE sustainable.
What do critics of the movement say?
The FIRE movement has attracted some doubters, including personal finance icon Suze Orman — who is definitely not a fan.
"I hate it. I hate it. I hate it. I hate it," Orman said, when she was asked about FIRE by podcaster Paula Pant.
Orman says if you want to retire way early, you'll need $5 million, $6 million or maybe even $10 million, because you never know what life might throw at you. "You will get burned if you play with FIRE," she said during the interview.
But Pant is an enthusiastic FIRE supporter — "I love it, I love it, I love it" — and says that, as someone who achieved financial independence at 31, she was shocked by Orman's take.
"I believe the act of generating sufficient passive income that you have freedom from mandatory work is life-changing," Pant tells Money.ca.
She adds that she still works — in fact, harder than ever: "The difference is that I know I don't have to punch a clock in order to keep the lights on and the refrigerator full."
What can the rest of us learn from FIRE?
Other followers of FIRE say Orman, who's worth a reported $35 million, doesn't seem to get that few people need an excessive amount of money to live on comfortably.
Or that insurance and an emergency fund can protect you from financial disaster. Or that financial independence doesn't necessarily mean complete retirement from all work, as Paula Pant knows.
The FIRE movement isn't for everybody, but it's hard to argue with its underlying principles:
- Live below your means.
- Save and invest as much money as possible.
- Look for other income sources.
- Think about and start planning for your retirement
That's a good course of action for leading a wise financial life — regardless of whether you dream of retiring decades earlier than most people.
FAQ
Doug Whiteman was formerly the editor-in-chief of Money.ca. He has been quoted by The Wall Street Journal, USA Today and CNBC.com and has been interviewed on Fox Business, CBS Radio and the syndicated TV show First Business.
Tyler Wade has worked in personal finance for over 5 years writing for brands like Ratehub, Forbes, KOHO, and now Money.ca.
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