FIRE Framework (Financial Independence, Retire Early)

FIRE calculates the savings amount at which investment returns can sustainably cover living expenses indefinitely. The core calculation is the '4% rule' (Trinity Study): if annual expenses are X, then 25X invested in a diversified portfolio has historically survived 30+ year withdrawal periods in 95% of scenarios. Practitioners determine desired spending, multiply by 25, then optimize savings rate to reach that number. Variants include: LeanFIRE (minimal expenses), FatFIRE (comfortable lifestyle), BaristaFIRE (part-time work covers some expenses), and CoastFIRE (save enough early that compounding alone reaches the target by traditional retirement).

When to use it

When creating long-term financial goals. When deciding between a higher-paying job you dislike and a lower-paying one you love. When calculating career runway. When evaluating whether early retirement is realistic for your situation.

How it can help

FIRE reframes planning from 'save for retirement at 65' to 'buy your freedom as fast as possible.' The math provides a specific, motivating target rather than vague 'save more' advice. Even those who never plan to stop working benefit: knowing your FIRE number reveals how many years of flexibility you've accumulated—having 10 years of expenses saved changes how you negotiate, take risks, and tolerate bad jobs. The variants (Lean, Fat, Barista, Coast) make the framework adaptable to different lifestyles and risk tolerances.