The FIRE movement — financial independence, retire early — is a personal finance strategy that involves extreme investing and frugality during working life to enable early retirement. The concept was first established in the US in the 1990s and encourages tactics that could allow someone to give up work in their 40s.
Approaches include 'LeanFIRE', which requires strict frugality and a bare minimum budget; 'FatFIRE', which involves putting significantly larger amounts away for a more luxurious retirement; and 'BaristaFIRE', which funds early retirement with an income-generating investment pot topped up by part-time work. Katharine Photiou, managing director of workplace savings at Legal & General, says the third approach appeals to most people because it offers maximum choice for less sacrifice.
Alex King, founder of Generation Money, cautions that the movement originated in the US and guidance may be aimed at different audiences. He says FIRE can deliver real freedom but relies on strong earnings, careful planning and navigating risks such as inflation, market volatility and longevity.
L&G's Decades Ahead research estimates around nine million people aged 25-54 are currently not on track for an adequate retirement. Photiou says starting early and taking small steps beyond the minimum has a greater impact than saving huge amounts, noting that a 27-year-old putting in an extra £30 a month could have an additional £100,000 at state pension age.