The average retirement age in the U.S. was 62 in 2023, but that number's been slowly ticking up over time. Rising life expectancies and rising costs, coupled with incomes and Social Security benefits that haven't kept pace with inflation, are forcing many workers to wait longer before leaving the workforce.
But there's a group of younger adults who have no interest in following the traditional path. The Financial Independence, Retire Early (FIRE) movement aims to save aggressively in order to retire years -- or even decades -- earlier than is typical.
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You don't need a large income to be part of the FIRE movement, although it helps. But you need to be prepared to make some sacrifices in the present. Here's a closer look at what you'd need to do if you hoped to use FIRE to help you retire at 55.
Take stock of what you have already
The start of a FIRE retirement plan is the same as the start of any other retirement plan. First, you need to know what you have. That means noting the current balances of all of your retirement accounts, including IRAs and 401(k)s from past employers.
You also need to take stock of your financial situation today. Write down how much income you make each year and compare this to your monthly expenses. FIRE is all about saving as much as possible, and this often involves reducing your current expenses to the bare minimum or close to it.
You may also want to take stock of your time and skills. Many FIRE participants choose to work a side hustle in addition to a regular job in order to bring in extra money for investing.
Determine your FIRE number
Your FIRE number is the amount of money you'll need to cover all your expenses during your retirement. Most adherents calculate their number using the 4% rule. This says that you should save 25 times your expected annual retirement expenses. So if you think you'll need $50,000 per year in retirement, your FIRE number would be $1.25 million.
However, it's important to note that the 4% rule was only intended to help your savings last 30 years. For some FIRE participants, especially those with long life expectancies, this may not be enough. It may also not be enough in times with high inflation. Those who are worried about this may want to choose a higher FIRE number.
Plan a savings strategy
FIRE participants typically save at least 50% of their annual income for retirement, though some set aside even more. Doing this requires a lot of sacrifice in the present, and it's not feasible for everyone. Don't be discouraged if you can't quite hit that mark. Even if you only manage to set aside 25% to 30% of your income, you're still ahead of the majority of Americans.
If your job doesn't provide enough income today, you may have to trim your expenses, negotiate a raise, or start a side hustle. Or you could push back your chosen retirement date to give yourself more time to save.
You'll also have to decide which retirement accounts to use. In 2025, 401(k)s have a contribution limit of $23,500 for adults under 50, while IRAs limit these workers to just $7,000 per year. Exceeding these limits brings tax penalties, so it's not worth it. If you want to set aside more money, consider stashing some in a health savings account (HSA) if you qualify for one, or in a taxable brokerage account.
Check in with yourself regularly
Put your plan into action for a few months and then check in with yourself to see how you're doing. If you spot an opportunity to save more, take it. If you're worried that you may not meet your FIRE number by your planned retirement date, reevaluate your savings strategy.
Burnout is a very real issue with some FIRE participants, so watch out for that as well. It's OK if you find you aren't able to save half your income like you'd planned. Cut yourself some slack and allow yourself to enjoy some of that money today, so you have the energy to meet your other obligations.
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