FIRE (Financial Independence, Retire Early) Movement - An Introduction for New Zealanders
This guide is written to be an introduction to FIRE and breaks down what FIRE is, the main principles of FIRE and why New Zealanders choose to pursue FIRE as a goal.
Updated 12 May 2025
Summary:
Know This First: FIRE means different things to different people. Some like to focus on the FI part, valuing financial independence but still maintaining a job or a passion they like to pursue. Others focus on the RE part, wanting to retire early next to a beach or a lake.
FIRE is a pursuit that has grown exponentially as it becomes easier to work remotely, make money through the internet and improve your awareness of saving, investing and collaborating with others.
This guide is written to be an introduction to FIRE and breaks down what FIRE is, the main principles of FIRE and why New Zealanders choose to pursue FIRE as a goal. We cover:
This guide's purpose is to provide a holistic, general overview of FIRE and become a cornerstone resource for New Zealanders that want to learn more about and pursue FIRE. Our research team has focused on giving it a New Zealand context; it may not be suitable for overseas FIRE followers (especially when discussing cost of living, investment returns and salary information). All of our guides are updated regularly.
Looking to understand FIRE vs fatFIRE vs CoastFIRE and other variations? This guide is not for you - our Five Different Types of FIRE Plans guide has you covered.
Summary:
- In the past, the majority of the population would work from the age of 20 until 65, then retire. It was a foreign concept that you could retire any earlier than this point.
- Things have changed. In the last twenty years, a novel concept called FIRE (Financially Independent, Retire Early) has surfaced – primarily driven by the millennial cohort's desire to break free from the typical 40 to 50-year corporate working lifestyle.
- Traditional financial planning goals set the retirement age for most people at 65 – the FIRE community aims to cut this in half.
- FIRE followers would rather put in the hard work earlier by foregoing what they see to be frivolous luxuries and enjoy the freedom of retirement earlier than normal while in their peak physical and mental condition.
Know This First: FIRE means different things to different people. Some like to focus on the FI part, valuing financial independence but still maintaining a job or a passion they like to pursue. Others focus on the RE part, wanting to retire early next to a beach or a lake.
FIRE is a pursuit that has grown exponentially as it becomes easier to work remotely, make money through the internet and improve your awareness of saving, investing and collaborating with others.
This guide is written to be an introduction to FIRE and breaks down what FIRE is, the main principles of FIRE and why New Zealanders choose to pursue FIRE as a goal. We cover:
- What is FIRE?
- The Link between Money and Happiness
- FIRE - Understanding the Pros, Cons and Risks
- The Rationale for Not Retiring Early
- Frequently Asked Questions
This guide's purpose is to provide a holistic, general overview of FIRE and become a cornerstone resource for New Zealanders that want to learn more about and pursue FIRE. Our research team has focused on giving it a New Zealand context; it may not be suitable for overseas FIRE followers (especially when discussing cost of living, investment returns and salary information). All of our guides are updated regularly.
Looking to understand FIRE vs fatFIRE vs CoastFIRE and other variations? This guide is not for you - our Five Different Types of FIRE Plans guide has you covered.
What are the main reasons New Zealanders pursue FIRE for? MoneyHub Founder Christopher Walsh shares his views:
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"Life is short. Most people would like to live the best life possible. This could mean removing as many obstacles from having the best time as possible or the freedom to pursue any passion without thinking of how much it will cost and whether you can maintain this".
"Money is a core part of sustaining this dream. Many people worry about not having enough money when they get to retirement – people who don't think about retirement till the end especially run into this problem. People can worry a lot about the future as they get closer to 65, and the fear of having to work into old age just to maintain a certain standard of living can be daunting". "That doesn't mean that people don't want to work – but having the choice to retire and not working for money is a luxury that many people do not have today – but that doesn't have to be the case for the younger generations. By getting your money and investing sorted now, you can reap the benefits later". |
MoneyHub Founder
Christopher Walsh |
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Know This: Achieving financial independence means balancing investments, income, and lifestyle. For homeowners, property equity can be a powerful financial tool.
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Are New Zealanders achieving financial independence?
Yes - New Zealanders nationwide are opting to retire in their 50s, 40s, or even 30s as a result of the FIRE movement. However, sacrifices may need to be made to achieve the intended results. But in exchange for making the required efforts, some New Zealanders can retire up to 30 years before they traditionally would be able to. Advancements in technology, financial education and accessibility have allowed a growing number of people around the globe to retire early and pursue what really matters.
However, it is still a luxury few that can afford to retire early relative to the global population. The majority of FIRE followers will be from first world countries. However, more individuals are becoming aware of this movement and are striving to adopt principles to reduce the work they're less passionate about and move towards more meaningful work.
In general, FIRE is centred on conserving the majority of your income, living on the bare minimum, and investing wisely. Adopting this technique on any salary, through methods like saving the majority of your salary, living on a reduced budget and making wise financial investments – allows people to achieve financial independence, whether you've got an income of $40,000 or $200,000.
Know This: What does FIRE allow you to do?
More information: Visit New Zealand's Financial Freedom Authority - The Happy Saver. Ruth is a proven expert and has helped hundreds of New Zealanders on their journey to financial independence. Ruth also offers a phone-a-friend service which we believe is a helpful starting point to mapping out the financial situation you want to achieve. MoneyHub has no financial relationship with The Happy Saver, and mention it given its popularity, relevance, usefulness and trust.
However, it is still a luxury few that can afford to retire early relative to the global population. The majority of FIRE followers will be from first world countries. However, more individuals are becoming aware of this movement and are striving to adopt principles to reduce the work they're less passionate about and move towards more meaningful work.
In general, FIRE is centred on conserving the majority of your income, living on the bare minimum, and investing wisely. Adopting this technique on any salary, through methods like saving the majority of your salary, living on a reduced budget and making wise financial investments – allows people to achieve financial independence, whether you've got an income of $40,000 or $200,000.
Know This: What does FIRE allow you to do?
- Arguably, anything you want. The point of FIRE is less about setting regimented things to do, (e.g. "you must live in a motorhome, become a nomad and travel the globe twice a year").
- Instead, FIRE aims to provide you with the freedom to pursue what matters most to you.
More information: Visit New Zealand's Financial Freedom Authority - The Happy Saver. Ruth is a proven expert and has helped hundreds of New Zealanders on their journey to financial independence. Ruth also offers a phone-a-friend service which we believe is a helpful starting point to mapping out the financial situation you want to achieve. MoneyHub has no financial relationship with The Happy Saver, and mention it given its popularity, relevance, usefulness and trust.
What is FIRE?
- The concept of fire started back in the early 90s, originating from a book called "Your Money or Your Life" by Vicki Robin. Since then, the concept of early retirement has grown rapidly over the last 30 years.
- FIRE is a movement aimed at assisting people in achieving financial independence and taking control of their lives, rather than relying on the typical 9am – 5pm grind to support their lifestyle and family. The ultimate goal of FIRE is to retire early, relying only on your savings and investment income to cover the majority of your living expenses (either as an individual or as a family).
- For the most part – people who follow the FIRE movement attempt to live frugally and intentionally. They reduce frivolous spending, leading to less money spent each month, which flows onto less time you're required to work.
- They typically invest their excess cash into the stock market and spend the money they get from interest, rent or capital gains to cover day to day living costs.
- You may have heard stories about people living incredibly frugally in order to save as much income as possible, then investing that money in order to retire in their 30s. They may be able to save 50% of their income, or even more, in order to retire at such a young age, but this is not the only way to pursue and live the FIRE movement.
- Many New Zealanders are increasingly turning to frugality and conscious living (especially the younger, more eco-conscious generations), and the FIRE movement is a direct beneficiary of this seismic shift in approach to retirement.
- Retirement may not be what many people plan it to be – but for many, the thought of not having any obligations or expectations from others is a dream come true.
- You have the option of retiring early and spending the remainder of your life doing what you enjoy or are passionate about. You'd take more vacations, play golf, read more books, and spend more time with your family and friends. It would be like going on a 30-year vacation. This way of life has spawned an entire movement.
The Evolution of FIRE
Over time, the concept of FIRE has evolved to become much more inclusive and encompassing. Rather than retiring early, many people who follow the FIRE movement emphasise the "financial independence" part of FIRE rather than the "retire early" aspect. Whilst it may seem ideal to want to relax on a beach and do nothing in your 30s, this quickly becomes old, and broader questions around purpose, meaning, and passion lead people to quickly pick up work – but not in the way most people think about it.
FIRE requires a shift in mindset about money and employment, forcing you to consider what is most important to you and how you may achieve financial independence in a world where your decisions are not determined by the need to earn money and pay the bills.
Many of the ideas of FIRE are universal, such as adopting a saving mindset and being careful of how much you're spending, but how people choose to implement these principles in their own lives and the actual conclusion they hope to reach may differ.
According to the FIRE methodology, the key to financial independence is spending less than you make and focusing on having the best potential savings rate.
Looking to understand FIRE vs fatFIRE vs CoastFIRE and other variations? This guide is not for you - our Five Different Types of FIRE Plans guide has you covered.
FIRE requires a shift in mindset about money and employment, forcing you to consider what is most important to you and how you may achieve financial independence in a world where your decisions are not determined by the need to earn money and pay the bills.
Many of the ideas of FIRE are universal, such as adopting a saving mindset and being careful of how much you're spending, but how people choose to implement these principles in their own lives and the actual conclusion they hope to reach may differ.
According to the FIRE methodology, the key to financial independence is spending less than you make and focusing on having the best potential savings rate.
Looking to understand FIRE vs fatFIRE vs CoastFIRE and other variations? This guide is not for you - our Five Different Types of FIRE Plans guide has you covered.
The Link between Money and Happiness
In general, the link between money and happiness breaks down after approximately $200,000 NZD per this Stuff article and this data set). Any additional income beyond this point does not materially increase reported happiness levels. One of the more important factors for people's overall happiness is generally being in good health.
Should I pursue FIRE?
FIRE is not for everyone. Some people are completely happy to continue working and living their lives until 65 and let NZ Super support their retirement. Others like to live the high life and go on lavish holidays, take once in a lifetime experiences and generally spend higher in their earlier years. There is no right answer - it all comes down to what kind of life you envision yourself having (from youth to sunset years).
FIRE particularly appeals to people who may not have yet found their passion or are not currently encouraged or happy in their current job roles. It also appeals to those who wish to pursue a more relaxed lifestyle with the flexibility to work on whatever they choose, whenever – without having to worry about whether the particular activity they're currently doing can generate enough money to sustain them. Some wish to read for hours on end; others wish to backpack around South America. Many of the most important things that give us the most joy are typically inexpensive (or otherwise free – think of connection, supporting others or pursuing interests you care about or really enjoy). It is under this idea that FIRE was born and that the majority of people pursuing FIRE hope to accomplish.
FIRE particularly appeals to people who may not have yet found their passion or are not currently encouraged or happy in their current job roles. It also appeals to those who wish to pursue a more relaxed lifestyle with the flexibility to work on whatever they choose, whenever – without having to worry about whether the particular activity they're currently doing can generate enough money to sustain them. Some wish to read for hours on end; others wish to backpack around South America. Many of the most important things that give us the most joy are typically inexpensive (or otherwise free – think of connection, supporting others or pursuing interests you care about or really enjoy). It is under this idea that FIRE was born and that the majority of people pursuing FIRE hope to accomplish.
Can New Zealanders achieve FIRE?
New Zealanders are typically in all sorts of jobs; self-employed business owners, professionals, farmers, real estate brokers, residential property investors and many other job professions (some of which pay very high salaries). However, it can't be overlooked how difficult it will be for most New Zealanders to achieve FIRE:
- The median salary in New Zealand is around $50,000 per Stats NZ.
- Most New Zealanders may take significantly longer to reach the required savings levels for a 20 to 30 year FIRE target.
- FIRE requires a lot of money, sacrifice, single-mindedness and attention to achieve.
It is possible to become "FIRE'd" even at the median level of income?
The key to retiring at an earlier age is to build a portfolio of investments and use the returns to match your living expenses. Early retirees typically don't get access to superannuation in New Zealand until they're 65 years old, so somebody retiring when you're 40 or 50 means a significant runway is necessary to get support from the New Zealand government.
When compared to someone retiring at 65, more money will be required for "cash burn" during retirement. It is also for a longer period, so if individuals are spending capital as well as income, they are unlikely to be able to draw as much. Individuals who follow FIRE will typically require a much larger asset base to draw down from.
When compared to someone retiring at 65, more money will be required for "cash burn" during retirement. It is also for a longer period, so if individuals are spending capital as well as income, they are unlikely to be able to draw as much. Individuals who follow FIRE will typically require a much larger asset base to draw down from.
Is FIRE realistic for all New Zealanders? How exclusive is it?
Many people believe that FIRE is reserved for a small slice of high earning New Zealanders that have excess income to sock away or for a small fraction of highly frugal savers that live on a shoestring budget. While some aspects of FIRE are more exclusive and beyond the reach of others, the FIRE principles can apply to everyone. Not everyone can save 20%+ monthly if you have some core expenses or are on a salary that's lower than average. As a result, the "retire early" portion of FIRE may be more exclusive. Having said that, many people benefit from the FIRE principles even if their primary goal is not to retire early. Saving 5%+ of your pay and investing it can lead to less debt, less financial stress and greater freedom. These benefits apply whether you save 5% or 50% of your income. Overall, anyone can benefit from FIRE.
While many of the principles of FIRE apply to everyone, particularly those who struggle to save money, they are likely more focused on increasing financial security and retirement prospects than on 'retiring early'. The idea of quitting your job in your thirties is a somewhat uncommon goal – most FIRE followers will have more flexible goals (choosing instead to retire in their 40s or 50s).
FIRE includes many easily accessible aspects because it focuses heavily on how you spend and save your money, regardless of how much money you make or your motivations for pursuing FIRE. So whether you want to just feel financially secure or dream of retiring early, the principles of FIRE will be useful to you. Planning for the future, making meaningful purchases, and saving money are all valuable skills to have.
FIRE, on the other hand, is not a one-size-fits-all. Some people aspire to be financially self-sufficient, while others are hell-bent on beating the system and retiring early. Thus, individual perceptions of FIRE are influenced by how much people are willing to save each year and what they intend to accomplish in "retirement".
While many of the principles of FIRE apply to everyone, particularly those who struggle to save money, they are likely more focused on increasing financial security and retirement prospects than on 'retiring early'. The idea of quitting your job in your thirties is a somewhat uncommon goal – most FIRE followers will have more flexible goals (choosing instead to retire in their 40s or 50s).
FIRE includes many easily accessible aspects because it focuses heavily on how you spend and save your money, regardless of how much money you make or your motivations for pursuing FIRE. So whether you want to just feel financially secure or dream of retiring early, the principles of FIRE will be useful to you. Planning for the future, making meaningful purchases, and saving money are all valuable skills to have.
FIRE, on the other hand, is not a one-size-fits-all. Some people aspire to be financially self-sufficient, while others are hell-bent on beating the system and retiring early. Thus, individual perceptions of FIRE are influenced by how much people are willing to save each year and what they intend to accomplish in "retirement".
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Know This: Achieving financial independence means balancing investments, income, and lifestyle. For homeowners, property equity can be a powerful financial tool.
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FIRE - Understanding the Pros, Cons and Risks
The Benefits of FIRE
FIRE promotes people to think about retirement and plan for their future, which is one of its key benefits. It shows you how much money you'll need in retirement to live the lifestyle you want and helps you make a strategy to get there, in contrast to many other individuals who don't plan ahead enough for their retirement.
FIRE also provides you with the financial means and the freedom to make life decisions. If you save enough money to retire early, you won't have to work for anybody else, or even at all, and you'll have more time to do what you want, whether it's travelling, spending time with loved ones or pursuing hobbies. However, FIRE can bring benefits even if you don't retire early.
Reaching financial independence can bring relief knowing you're secure financially and are self-sufficient while working. It implies that you can continue doing what you enjoy while yet having the option to stop when you wish. You're able to work because you want to, not because you have to pay the bills. FIRE may also educate you on how to conserve money and develop long term financial habits. Setting savings goals and sticking to a budget can teach you money management skills and make you more conscious of your expenditures.
FIRE also provides you with the financial means and the freedom to make life decisions. If you save enough money to retire early, you won't have to work for anybody else, or even at all, and you'll have more time to do what you want, whether it's travelling, spending time with loved ones or pursuing hobbies. However, FIRE can bring benefits even if you don't retire early.
Reaching financial independence can bring relief knowing you're secure financially and are self-sufficient while working. It implies that you can continue doing what you enjoy while yet having the option to stop when you wish. You're able to work because you want to, not because you have to pay the bills. FIRE may also educate you on how to conserve money and develop long term financial habits. Setting savings goals and sticking to a budget can teach you money management skills and make you more conscious of your expenditures.
The hidden drawback of FIRE
For many, early retirement is the goal they aspire to reach. However, some studies outline that retiring early can be a bad idea. It is argued that people may not be mentally prepared for the next 30 – 40 year period after they retire, and this can impact the overall quality of life once someone has retired early.
People struggle with their identity, have issues comprehending who they are, and accept that they are no longer where they once were. Things that used to come from the workplace must now originate from within. They also have to deal with a new dynamic in their relationship with their spouse or partner. People begin with a fantasy of their ideal retirement, followed by a honeymoon time during which they travel, play golf, and do everything they imagined they wanted to do. However, life gets regular after approximately three years, and many people become disenchanted four to six years after they quit working. As people adjust to health concerns, depression is frequent, and many face challenges adjusting to retirement in the context of relationships.
"Retirement" is not a simple term
People struggle with their identity, have issues comprehending who they are, and accept that they are no longer where they once were. Things that used to come from the workplace must now originate from within. They also have to deal with a new dynamic in their relationship with their spouse or partner. People begin with a fantasy of their ideal retirement, followed by a honeymoon time during which they travel, play golf, and do everything they imagined they wanted to do. However, life gets regular after approximately three years, and many people become disenchanted four to six years after they quit working. As people adjust to health concerns, depression is frequent, and many face challenges adjusting to retirement in the context of relationships.
"Retirement" is not a simple term
- People have a hazy understanding of what retirement entails. They approach it as if it were a 30-year weekend with Saturdays on every day. This isn't the case.
- With one difference — the nature of your profession – early retirement is just like any other day.
- The majority of people have a distinct interpretation of the term "retirement." People aren't saving for their golden years. Instead, people are making bucket lists, planning continuous trips, and playing perpetual golf. They believe it's all one long vacation.
- In reality, FIRE provides the freedom to pursue your wider interests, hobbies and passions, which may incorporate any and all of the above bucket list items, but not always to the extent that people think.
Risks with FIRE
- Though many people are drawn to FIRE, sceptics hold beliefs that the concept is risky and dangerous. Specifically, the classic 4% rule, which is deemed a "safe withdrawal rate" for a 30-year retirement, is based on saving 25X the amount of annual expenses. Thus, an individual who chooses to retire at the age of 40, rather than the traditional retirement age of 65, may rapidly outlive their resources.
- Some people seeking FIRE try to limit this risk by acquiring other passive income streams in the form of rental properties, stocks or a part-time job such as blogging to complement their annual drawdown income.
- Many young people pursuing FIRE (<35 years old) have not yet experienced a significant economic downturn and may be surprised by the current economic expansion/bull market. However, this is unlikely to continue forever. It is typical for an individual's personal net worth to drop by 20% - 40% during a recession; younger FIRE followers may not be prepared for the mental hit if financial markets enter a prolonged recession. The 2020 Covid-19 pandemic was a good example of this, but even in this case - the US financial markets bounced back almost instantly.
- Currently, there is a peak FIRE in the market – New Zealanders are feeling very wealthy (on paper) and fantastic (especially if they own a house), but caution is required going forward. With interest rates expected to rise in the short to medium term and global growth expected to slow compared to the last few decades, things can go wrong in a hurry. Therefore, FIRE followers should understand where their assets are, and to diversity if suitable for their financial goals and overall situation.
- Most New Zealanders would love to retire by 30 or 40. In general, FIRE is becoming more of a trend with recent developments in remote work, starting businesses online or some form of hybrid arrangement. Financial independence is something that all New Zealanders can strive for – but to the extent this influences work post-retirement, the type of lifestyles you intend to live and the timeframes with which you are attempting to become financially independent are all unique to each New Zealander.
The Rationale for Not Retiring Early
We've outlined the benefits (and a few drawbacks) of FIRE. However, there are other factors to consider when potentially pursuing FIRE. In particular – there are several reasons not to retire early:
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Your overall health and wellbeingPeople who work in their later years are generally healthier than those who retire. There is conflicting research on the impact of early retirement. Those who retire and live a leisurely life may have an increased risk of having a heart attack, getting diabetes or developing dementia. However, these claims are conflicted depending on the location of where the study was undertaken. More information is required to understand this link, but there may be a risk that early retirement is detrimental to overall health and wellbeing.
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Oversaturation of leisure / general lack of purposeThe majority of people believe that leisure is good for us. However, leisure can be harmful to our health. Most people envision their retirement as drinking Mojitos on a beach somewhere in New Zealand. While this may be an enjoyable stint for a month at a time, doing this alone for 30 years is unlikely to generate long term happiness.
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You're disconnected from your non-FIRE-following friends and familyWith so much leisure time, you'll find it hard to relate to the stresses and problems of your friends and family who are working. This can leave you disconnected from your support group. People may also resent you for taking "another holiday" or "living the life of Riley" - money or perceived wealth can complicate even the best friendship. To avoid drama, you'll most likely need to tone down or withhold information about your activities.
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We weren't made to sit around doing nothingMost people have interests and hobbies they would like to pursue or want to give back to friends, family or the wider community. Retiring early can potentially lead people to lack meaning in their lives and generally be more dissatisfied in retirement than if they were working somewhere else (and ideally making an impact).
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RelationshipsOne of the biggest decisions of your life will be who you get into a relationship with. While marriages are a common rite of passage for many couples, the risk of divorce will always be there. While relationships are so much more than the monetary and cost-sharing aspect, a divorce is likely to significantly impact a FIRE follower's path to financial freedom. Similarly, retiring early leaves most individuals with a significant amount of time. If your partner is not a FIRE follower, this can cause undue strain on the relationship where one individual is working, and the other may not be working.
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Frequently Asked Questions
How much do I really need to retire early?
This will depend on many factors. Everyone has different needs and responsibilities corresponding to their unique circumstances. Some live relaxed lifestyles without feeling like they are too frugal, even though the variation in retirement spending is significant. Our Types of FIRE guide explains what amount of money you might need to retire on.
When do you need to start saving to retire early?
You can begin saving at any age, but the earlier you start, the more you will be able to save and the sooner you will be able to retire. Anyone of any age can try to incorporate FIRE concepts into their lives, but the only way to find out if you can retire early is to review your finances thoroughly.
Your income, how much you already have in savings or investments, when you want to retire, how much of your income you can save, and how much you need to live on in retirement will all determine whether you can retire early. Understanding whether you have debt, whether you own your home, whether you are likely to inherit anything, whether you will have any pension income in retirement, and many other aspects are also necessary to take into account.
Your income, how much you already have in savings or investments, when you want to retire, how much of your income you can save, and how much you need to live on in retirement will all determine whether you can retire early. Understanding whether you have debt, whether you own your home, whether you are likely to inherit anything, whether you will have any pension income in retirement, and many other aspects are also necessary to take into account.
How much sacrifice does FIRE involve?
Know This - To say that FIRE doesn't require any sacrifices would probably be lying. Compromise may be necessary for specific areas, but it is almost always less than what people typically expect. Most people think that FIRE followers are aggressive penny pinchers that don't spend money on anything. While it may optically seem this way, the reality is that most FIRE followers live fulfilling lives while on their journey. However, they commonly avoid spending on items that don't make sense or add value to their lives.
To sum up – sacrifice is necessary, but not to the extent people think.
To sum up – sacrifice is necessary, but not to the extent people think.
Is FIRE just for people who are already rich?
No - most FIRE followers are no wealthier than the average person (at least when they start their FIRE journey). Most start with debt and simply want to become more financially free. Over time, the FIRE habits that focus on increasing income, reducing expenditure and saving / investing the rest result in FIRE followers outstripping others in terms of net worth – but in some instances, FIRE followers are poorer than the average New Zealander. It's the mindset held for the long term that makes these people wealthy.
What are the main reasons New Zealanders pursue FIRE for?
Life is short. Most people would like to live the best life possible. This could mean removing as many obstacles from having the best time as possible or the freedom to pursue any passion without thinking of how much it will cost and whether you can maintain this. Money is a core part of sustaining this dream. Many people worry about not having enough money when they get to retirement – people who don't think about retirement till the end especially run into this problem.
People can worry a lot about the future as they get closer to 65, and the fear of having to work into old age just to maintain a certain standard of living can be daunting. That doesn't mean that people don't want to work – but having the choice to retire and not working for money is a luxury that many people do not have today – but that doesn't have to be the case for the younger generations. By getting your money and investing sorted now, you can reap the benefits later.
People can worry a lot about the future as they get closer to 65, and the fear of having to work into old age just to maintain a certain standard of living can be daunting. That doesn't mean that people don't want to work – but having the choice to retire and not working for money is a luxury that many people do not have today – but that doesn't have to be the case for the younger generations. By getting your money and investing sorted now, you can reap the benefits later.
How do FIRE followers reach $1 million invested? Is this realistic when it can be so hard to save?
To begin, go slowly. It may appear that you are making little progress at first (or for years), but as you invest more, things begin to snowball. Those small $100 weekly investments may appear insignificant compared to a $1 million investment, but the stock market rises on average by around 9 - 10% each year.
Over time, your investment returns will compound. This, coupled with other factors including salary raises and bonuses can make it easier to save more. As your income increases, you'll naturally start seeing progress and will likely start investing more than you did when you first started. Setting smaller goals and building your way up is the best strategy. It requires a lot of perseverance and dedication over a long time, but the payoff is worth it (in the eyes of FIRE followers). Investing differs from saving in that you don't have to save $1 million to attain $1 million as your money increases over time.
You may only need to put in $300,000 of savings across 30 years, but the money has compounded overtime at 10% to reach $1 million. It takes emotional fortitude to resist the urge to withdraw money from assets, as you won't always get 10% returns on your savings each year consistently. However, in the long run, investment returns will likely average this percentage.
Over time, your investment returns will compound. This, coupled with other factors including salary raises and bonuses can make it easier to save more. As your income increases, you'll naturally start seeing progress and will likely start investing more than you did when you first started. Setting smaller goals and building your way up is the best strategy. It requires a lot of perseverance and dedication over a long time, but the payoff is worth it (in the eyes of FIRE followers). Investing differs from saving in that you don't have to save $1 million to attain $1 million as your money increases over time.
You may only need to put in $300,000 of savings across 30 years, but the money has compounded overtime at 10% to reach $1 million. It takes emotional fortitude to resist the urge to withdraw money from assets, as you won't always get 10% returns on your savings each year consistently. However, in the long run, investment returns will likely average this percentage.
Do you need to earn a lot of money to get FIRE'd?
FIRE is about how much money you spend, not how much money you make. It makes less of a difference in how much money you make because the core principle is to spend less than you make and invest the rest. It's considerably more difficult to reverse a lavish lifestyle than it is to maintain a more modest one.
Because FIRE is based on your lifestyle, it will scale according to how much you spend. While some may be able to reach their FIRE targets faster if they are on a higher income, typically, people who earn a higher income are subject to lifestyle inflation, meaning their % savings rate will be the same as everyone else (and will take the same amount of time to get FIRE'd). However, there is a lower limit, and if you can keep your spending under control, earning more will have a disproportionate impact on reducing the time it takes to get FIRE'd.
For example, if you make $100,000 a year and spend it all, you'll need a FIRE number of approximately $2m in investments to maintain your lifestyle. You could virtually halve this ($1m) if you can live on a $50,000 salary. If your income continues to rise, but your expenditure does not, you will reach FIRE much faster than someone who experiences lifestyle inflation.
FIRE is about how you spend your money rather than how much you make. So focus on managing lifestyle creep (which is somewhat inevitable as most people will get small, steady pay rises over time) rather than trying to remove it altogether entirely.
Because FIRE is based on your lifestyle, it will scale according to how much you spend. While some may be able to reach their FIRE targets faster if they are on a higher income, typically, people who earn a higher income are subject to lifestyle inflation, meaning their % savings rate will be the same as everyone else (and will take the same amount of time to get FIRE'd). However, there is a lower limit, and if you can keep your spending under control, earning more will have a disproportionate impact on reducing the time it takes to get FIRE'd.
For example, if you make $100,000 a year and spend it all, you'll need a FIRE number of approximately $2m in investments to maintain your lifestyle. You could virtually halve this ($1m) if you can live on a $50,000 salary. If your income continues to rise, but your expenditure does not, you will reach FIRE much faster than someone who experiences lifestyle inflation.
FIRE is about how you spend your money rather than how much you make. So focus on managing lifestyle creep (which is somewhat inevitable as most people will get small, steady pay rises over time) rather than trying to remove it altogether entirely.
Can't you just be happy with life?
Absolutely. FIRE is not about trying to become extremely wealthy or completely change your current lifestyle. It's about providing more options for you and your family in the case of uncertainty and not wasting your time on things that don't add value to you. Being fortunate is an absolute privilege, and practising gratitude daily can contribute to overall happiness, regardless of wealth levels.
However, research has shown that money is tied to happiness (up to a certain level – in New Zealand, this is around $150,000-200,000), and for those that do not have money, it can bring significant stress into their lives. FIRE provides a way to reduce stress by pushing people to develop good financial habits (primarily through controlling spending, saving more and investing more).
When you don't have a choice, work may feel like a chore. FIRE is less about trying to stop work altogether and more about removing people's dependency working. Some people find that after they get FIRE'd (e.g. reach their FIRE target), they start to enjoy their day to day work more as they no longer feel forced to work to cover the bills. The increased determinism and sense of autonomy and control in what they do provides much more satisfaction in the work than previously.
However, research has shown that money is tied to happiness (up to a certain level – in New Zealand, this is around $150,000-200,000), and for those that do not have money, it can bring significant stress into their lives. FIRE provides a way to reduce stress by pushing people to develop good financial habits (primarily through controlling spending, saving more and investing more).
When you don't have a choice, work may feel like a chore. FIRE is less about trying to stop work altogether and more about removing people's dependency working. Some people find that after they get FIRE'd (e.g. reach their FIRE target), they start to enjoy their day to day work more as they no longer feel forced to work to cover the bills. The increased determinism and sense of autonomy and control in what they do provides much more satisfaction in the work than previously.
Is getting FIRE'd easy?
Nothing in life is easy – and FIRE is no exception. However, setting habits can be a great way to work towards FIRE without too much effort. It's much more difficult to break a habit than it is to form a new one. This habit could be as simple as investing a certain amount of money as soon as it lands in your account. It won't be easy (especially if all your friends and family are spending it up and posting about it on social media), but it can help to recognise that you will need to make sacrifices. Also, being honest about your FIRE goals and discussing them with like-minded people makes the process much easier.
Is FIRE realistic for all people? How exclusive is it?
It comes down to the type of lifestyle you choose to lead. Some people spend less money on things that provide pleasure, while others spend more. Finding where you can compromise on some of the less important spending while focusing on what truly matters in your life is what FIRE is all about; i.e. "I want to do the same kinds of activities in the months leading up to FIRE as I would afterwards".
I have a big family (5+) - is FIRE possible?
Yes – absolutely. FIRE can work with any situation; it will require a bit of tweaking on the annual expenses to work. With families greater than 5, it can be more cost-effective per person as you're likely able to get discounts by buying in bulk for expenses that other FIRE followers (e.g. a single person) won't be able to access. However, in general, your costs will be higher, so this will have to be accounted for in the magic number calculation.
How much money do I need to be financially independent? What should by "magic number" be for retirement?
This will depend on how much you burn but is typically 25X your annual expenses. So, for example – if you spend $50,000 a year, your "magic number" is around $1.25 million. The purpose of the magic number is to be a sum large enough that you can comfortably live off the income generated from the $1.25m – however, this may be changing. Our guide to the 4% rule explains more.
Can I FIRE with a partner? What if my partner isn't frugal?
Absolutely. Many FIRE followers have partners that may not necessarily be as FIRE-focused or even know what FIRE is. Communicating your values, why FIRE matters to you, what that looks like practically and understanding your partner's position on this are all important to discuss.
While it may be much easier to have a partner that sees finances and money in the same way that you do, that isn't to say that living with a non-FIRE person isn't possible. Just be cognizant that your partner may have differing views on certain things (e.g. decorations, buying things, savings, spending etc.) and talk it through with them. Compromise is important, and in the process, you may both learn a thing or two from each other.
While it may be much easier to have a partner that sees finances and money in the same way that you do, that isn't to say that living with a non-FIRE person isn't possible. Just be cognizant that your partner may have differing views on certain things (e.g. decorations, buying things, savings, spending etc.) and talk it through with them. Compromise is important, and in the process, you may both learn a thing or two from each other.
How do you approach talking with friends and family about FIRE?
It can be great to share your FIRE journey with others, but this comes with a caveat – friends and family can be unsupportive. This is a reality of doing something different, or that other people may not be doing. It feels safe to follow the herd (and spend it up on brunches, travel and new cars/houses), but if you care about becoming financially independent and having the freedom to do what you would like, the trade-offs are worth it.
Be mindful about FIRE when talking to others, as they may potentially be jealous of your boldness or financial position. Be honest with your goals and intentions, but don't expect much sympathy from friends and family that are big spenders.
Many FIRE followers join a community on Facebook, Reddit or subscribe to blog posts where followers can interact. It can help to stick to your goals when you are with like-minded people that have the same aspirations as you.
Be mindful about FIRE when talking to others, as they may potentially be jealous of your boldness or financial position. Be honest with your goals and intentions, but don't expect much sympathy from friends and family that are big spenders.
Many FIRE followers join a community on Facebook, Reddit or subscribe to blog posts where followers can interact. It can help to stick to your goals when you are with like-minded people that have the same aspirations as you.
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Know This: Achieving financial independence means balancing investments, income, and lifestyle. For homeowners, property equity can be a powerful financial tool.
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