What is FIRE? A Beginner’s Guide to Financial Independence and Early Retirement

FIRE stands for Financial Independence, Retire Early — a lifestyle movement that encourages people to save and invest aggressively so they can stop working much earlier than the usual retirement age.

The idea is simple: spend less, save more, invest smartly, and build enough wealth to cover your living expenses for the rest of your life. Once you reach that point, you no longer need to rely on a regular job and can choose how to spend your time — whether that means actually retiring, working part-time, or pursuing hobbies and travel.

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How Does FIRE Work?

People who follow FIRE often save between 50% to 70% of their income. They avoid unnecessary spending, live frugally, and invest mostly in stocks, index funds, or real estate. Over time, these investments grow and generate income.

A common rule in the FIRE world is the 4% rule. It says that if you withdraw 4% of your total investments each year, your money should last for 30 years or more. So, if you want to spend Rs 10 lakh per year, you’d need a corpus of Rs 2.5 crore (10,00,000 ÷ 0.04).

Types of FIRE

Lean FIRE: Retiring early with a simple, low-cost lifestyle

Fat FIRE: Retiring early with a higher standard of living

Barista FIRE: Working part-time after reaching partial financial independence

Coast FIRE: Saving early so your investments grow on their own over time

Is FIRE for Everyone?

FIRE can be challenging. It takes discipline, planning, and a good income to save so much. In India, rising living costs, healthcare expenses, and family responsibilities can make early retirement harder.