Money tips and tricks from people who want to retire early

Rasheeda Creighton, of Richmond, Va., discovered FIRE—Financial Independence, Retire Early—at a time when she needed it: She was going through a divorce, had a toddler, and didn’t know how far her retirement savings would take her.

At 40, she was already at retirement age for some FIRE participants. But Creighton says there were still aspects of the movement that resonated with her: investing aggressively in index funds outside of your retirement funds, and carefully calculating exactly how much you would need to say goodbye to work forever, for instance. 

Creighton says there are a lot of aspects of FIRE’s frugality she ignores. (She isn’t going to change her car insurance regularly in hopes of snagging a lower-cost plan—an example she says she saw in one of her FIRE Facebook groups). But now at 47 and five years into running her own consulting business and a nonprofit, she says she is living a life she wouldn’t have if the FIRE community hadn’t given her the confidence to leave her corporate job in financial services.

“It gave me a level of comfort and peace that I wouldn’t have otherwise had,” says Creighton.

The FIRE movement took off in the early 2000s and has garnered a community of extreme savers—so extreme, some save 50% to 70% of their income to be able to retire decades before age 65. Eating a diet of rice and beans became a common reference for the movement. For most people, that type of saving and investing has been deemed unrealistic.

But FIRE has evolved, introducing approaches that don’t require full retirement before 65. Melissa Caro, a 53-year-old financial planner based in New York City, says she has been saving aggressively since she was 24 years old. The “retire early” part of FIRE doesn’t necessarily mean she’s going to give up her work.

“Retirement for me doesn’t mean doing nothing,” she says. “It just means there’s a time when I won’t think about making money at all.”

The FIRE movement has grown to make room for not only people who don’t want to work beyond a certain age, but also people who simply don’t want to have to work. 

There’s Barista FIRE, which entails saving enough to leave a corporate job for a more relaxed, part-time one; and Cashflow FIRE, which involves generating enough money through passive income and side gigs to cover the cost of your current lifestyle. There’s also Coast FIRE for those who have enough invested that will eventually grow to cover their retirement, but still tend to work so they can “coast” into retirement.

Another lesson from FIRE is strategically using different types of accounts to create tax diversification, says Bryan Hasling, financial planner at Modern Financial Planning.

“People have traditionally used their employer’s retirement plan as the main thing that they’re going to use for retirement…it says the word ‘retirement account’ so people think that that’s the only thing that you can use for retirement,” Hasling says. 

But he has found that the people who are able to retire early are those who have maxed out workplace retirement accounts and have significant savings in taxable brokerage accounts and Roth individual retirement accounts (IRAs), which allow you to withdraw contributions before age 59 ½ without penalty.

It is also important to remember what the FIRE movement might get wrong.

Monica Dwyer, a senior vice president and wealth advisor at Harvest Financial Advisors, attended a FIRE conference in Cincinnati in 2020. She said other attendees kept asking her what her “number” was, which is the total amount of money you need to save and invest to achieve financial independence and retire early. It is typically calculated by multiplying your projected annual expenses by 25. Dwyer says the concept doesn’t make sense to her, since it doesn’t take into consideration that different types of expenses, such as healthcare, inflate at a higher rate.

There are other aspects of the FIRE movement that won’t make sense for everyone, but it also isn’t a strategy that should be written off as an approach just for minimalists who are willing to cut spending.

“I firmly believe in enjoying life,” Creighton says. Now she has more tools to build a budget around the life she wants to live today and later. “That is the gift that FIRE gave me.”