What is FIRE movement?

fire retire early

In Australia, more and more people are pursuing their quest for financial freedom through FIRE principles, because they refuse to accept having to wait until the end of their life to enjoy their time freely.

What is the F.I.R.E. movement about?

In summary, the FIRE movement aims to acquire financial independence in order to retire early.

The FIRE movement brings together people who want to retire before the traditional retirement age in Australia which is currently 65 years and 6 months.

However, the pension age in Australia is being gradually increased from 65 to 67 years as set out in the table below.

Period within which a person was bornPension ageDate pension age changes
From 1 July 1952 to 31 December 195365 years and 6 months1 July 2017
From 1 January 1954 to 30 June 195566 years1 July 2019
From 1 July 1955 to 31 December 195666 years and 6 months1 July 2021
From 1 January 1957 onwards67 years1 July 2023

What does FIRE mean?

The acronym FIRE stands for Financial Independence Retire Early. The principle of the fire lifestyle is to put as much money aside to become independent, both in terms of work and income.

The FIRE movement is still relatively unknown in Australia and is much more common in the United States or Germany. FIRE is all about preparing for your financial future, understanding how you can live off your passive income, and how much money you need to invest to be able to maintain your current lifestyle without needing to work full-time.

By early retirement, you may be thinking of retiring at 50 years old. Think again! Within the FIRE movement, many fire proponents are contemplating retiring much earlier. Some have managed to retire in their 30s and 40s, and many are joining the movement with a plan to retire early.

Although the objective is very ambitious, being FIRE does not necessarily mean stopping working overnight at age 30, some followers of the fire movement continue to work part-time.

How does FIRE work?

For those that want to retire early, the beginning is often the easiest. The difficulty is that you have to maintain this save and invest activity consistently for years. It takes a lot of stamina to reach financial independence. People who live by the principle of FIRE strive to invest at least 50% of their income each year. 

The FIRE movement originated in the United States, pursuing fire might mean living frugally, that is to say, eliminating all living expenses deemed non-essential in order to save drastically for several years. 

It seduces many young people who are looking for a new way of life. The FIRE community aims to achieve the path to financial independence so they have enough to retire in their 30s or 40s. 

The purpose of FIRE is to raise enough funds to bring in a regular income allowing you to live on the returns for the rest of your life and allow you to be able to retire early. The idea is not to completely cease all work activity but to be able to freely dispose of their time to what they really like. As one of its followers, blogger Mr. Money Mustache, says, “FIRE means quitting any job you wouldn’t do for free.”

FIRE Dream: more than a concept, a savings education

The FIRE movement maintains that it is possible to save enough to allow them to retire far before the expected age. According to proponents of this concept, it is a financial model that allows people to retire earlier.

The idea of ​​FIRE is to first save money, then to make savings and investments that generate investment returns either through income or interest. To build up a relatively comfortable income, real estate and shares are favoured by supporters of FIRE. 


In Australia, followers of FIRE are also called “frugalists”. These supporters have adopted frugalism, a real way of life that consists of putting money aside in order to live better and work less. 

The concept assumes retiring well before the legal retirement age and being able to enjoy life by building up alternative and passive income.

The FIRE journey involves significant life sacrifices. The effort to save extra money is all the more difficult to maintain at the start of adult life. 

financial independence retire early

A Frugal Lifestyle

For those interested in early retirement embarking on the FIRE movement can involve drastic spending cuts so you can retire in your 30s. Fire approach requires

  • living in smaller and/or outlying accommodation (where rents are lower),
  • limit outings (restaurants and takeaways, etc.),
  • limit or abandon holidays and travel,
  • leave the car,
  • etc

Frugalism is an approach to achieving financial independence faster by limiting consumption through saving and targeted investment.

The path to achieving your FIRE number is based on three main pillars, which make it possible to gain financial independence and early retirement: savings, austerity, and investment. 

  • Savings: Save more, aiming to set aside half of their salary for FIRE supporters. This involves a drastic change in their lifestyle and spending habits.
  • Austerity: Spend less, because the key to saving is to live by spending less, in particular reducing expenses to a minimum, and eliminating all superfluous expenses, even those deemed non-essential. 
  • Investment: Obtain passive income, additional periodic income, through shares or real estate investments.
  • The 4% rule: Target investments that generate a 4% rate of return, profitability that allows you to experience annual benefits, without lowering your savings. This theory was established in 1998 by three professors from the Trinity University of Texas


It is important to note that the earlier you start saving for retirement, the greater your savings will be. To save in a regular and progressive way, it is necessary to be rigorous. FIRE followers have a formidable method to manage their monthly living expenses. 

Since the goal is to achieve financial independence through alternative income and/or passive income, regular investing is recommended. Investing allows you to grow your savings. With a target of 4% (not guaranteed), EFTs are an obvious option for FIRE enthusiasts.

An ETF is a collection of securities that cover investments such as Australian shares, international shares, bonds or metals.

The 4% Rule

The 4% rule, was established by three professors from the Trinity University of Texas in 1998. According to the 4% rule, if the percentage of profits you get from your investments is 4%, you can live forever on annual benefits, without detracting from your savings.

Once you determine how much money you can live off each year, you can work out how much money you’ll need to save for retirement using the 4% theory.

The “classic” FIRE movement emphasizes that you should be able to save the equivalent of 25 times your annual expenses.

For example, if your annual spending is $30,000, you first need to save $750,000. Then you can live your whole life with a profit of 4%, which is equivalent to your $30,000 in annual expenses. The time needed to save this $750,000 and achieve FIRE will depend on your salary and your level of savings.

This theory seems quite optimistic because a market slowdown or a financial crisis could undermine these calculations, not to mention the inflation and devaluation that currencies suffer over time. 

Moreover, this also leads to maintaining an identical lifestyle for the rest of your life, which does not seem obvious for a family, for example, for which the needs, and by definition, the expenses, will change over time.

While Aussie fire devotees tend to be savings enthusiasts by nature, the current economic climate highlights the importance of having an economy that can deal with the unexpected of everyday life.

Whether your goal is to retire early or simply to gain financial independence, the path to fire may be a FIRE plan that enables you to achieve financial independence and retire.

As always with any personal finance matters we would recommend potential fire investors seek independent financial advice from a certified financial planner who can look at your personal circumstances and your fire goal to recommend products based on your risk tolerance which will help you retire far earlier than traditional budgets and retirement plans would permit.

The information on this website is general information only and has been prepared without taking into account your personal objectives, financial situation or needs.

You should consider any advice on this website in light of your personal objectives, financial situation or needs before acting on it.

You may wish to consult a licensed Australian financial adviser to do this. The information on this website is no substitute for financial advice.

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