February 8, 2023

Fire Movement UK: The Financial Independence, Retire Early Movement

What is FIRE?

FIRE stands for Financial Independence, Retire Early.

It's a movement that is gaining in popularity all over the world, and the UK is no exception. People who are part of the FIRE movement are working to make their financial lives self-sustaining, so that they can stop working or reduce their hours as early as possible. This is not an encouragement to abstain from work or anything like that, but more about empowering people to take control of their situation.

There have been a huge number of individuals who have implemented FIRE techniques and ended up reaching financial independence after as little as 10 years - this movement has been labeled as 'the ultimate life hack', and has helped some retire decades early.

There are a number of different ways to go about financial independence, and in this blog post we will explore some of them. We will also discuss why the FIRE movement is growing in popularity, and look at some of the benefits of retiring early.

In fact, the FIRE movement should not be a goal at all. It is a means to an end: freeing up your time should allow you to do more of the things you love rather than aiming for a life of unfulfilling nothing-ness.

It should also be noted that the 'FI' and 'RE' of this movement can be separated into two distinctly different things. To achieve financial independence is a common goal shared by many, and to become even mostly financially independent is a huge achievement. Early retirement can be slightly controversial - a lot of FIRE followers focus more on the financial independence aspect, and prefer to retire 'to' something- a preferred job or hobby, as opposed to retiring 'from' a job.

What is financial independence?

Being financially independent simply means that you are in a position where you no longer have to work for money.

Becoming independent from, and no longer relying on, an employer is what many people aim towards, and the FIRE movement has been helping a lot of individuals who implement it to achieve this much earlier than the average retirement age.

Financial independence is high on the priority list of those who value free time, and especially those who have an increasing investment portfolio. The assets that are being accumulated will eventually start to diminish, which tends to make people more aware of how limited their time is.

Realistically, achieving financial independence requires having enough assets saved to cover future living expenses. A general starting point for savings goals should bear in mind the 4% withdrawal rule. This works out that you should have about 25 times your annual spending requirements saved. Establishing an emergency fund is a foundational step towards achieving financial independence, ensuring you have a safety net to cover three to six months of expenses.

Who doesn't want more free time - however you choose to spend it.

Wether you would prefer to spend time with your family, or on a hobby you have always wanted to pursue, or have dreams of traveling and seeing the world, implementing FIRE with Strabo is a great way to achieve an early retirement and these goals.

What is FIRE and why is it growing in popularity in the UK?

FIRE stands for Financial Independence, Retire Early. It's a movement that has been growing rapidly in popularity, largely due to the gradual shift to the mainstream of certain personal finance subreddits, including r/FIRE.

It's gained something of a cult following, largely due to the strict principles upheld by the reddit community, many of which centre around aggressive expense-cutting and passive, low-cost investing, the combination of which yields strong wealth creation results in 10-20 years.

Of course, there are two parts to FIRE, in the UK or otherwise: the financial independence part, and the retire early part.

How do people achieve "financial independence retire early"?

The very simple answer is to save more than you spend, and put that money to work: simple. If you take nothing else away from this post, make it that.

Considering the benefits of a 'personal pension' can significantly enhance your retirement planning strategy. By contributing to a personal pension, you not only supplement any workplace pension you might have but also benefit from a 25% tax relief top-up on your contributions, courtesy of the government. This tax relief is a powerful incentive, effectively boosting the amount saved towards retirement. Furthermore, understanding the tax advantages of individual savings accounts (ISAs) can optimize your savings, as ISAs offer tax-efficient growth without the burden of capital gains tax or income tax on returns. Together, these strategies can be pivotal in achieving financial independence and retiring early, allowing you to access your personal pension from your 50s and navigate your retirement years with confidence and security.


Vicky Robin's "Your Money or Your Life" is a great introductory guide for those who are skeptical or need a little more detail (or inspiration!). It's focused around maintaining balance, although is perhaps a little skewed towards higher income earners. Which begs the question - to do this, how much *exactly* do I need to be saving. Well, let's break it down.

As discussed, the only real factor that matters is your savings rate, as a percentage of your take-home pay. This is determined by two primary factors: how much you take home each year, and how much you can live on. The first corollary of this is that naturally, if you are spending 100% of your income, you will never be ready to retire. If you are spending 0% of your income, and maintain this, you can retire almost right away.

We also like Finance Strategists' Retirement Planning Guide which is a super quick overview of how to think about retirement planning.

Your current position

Between these two somewhere is (hopefully) where you are now. But as soon as you start saving and investing, your money will start earning and compounding by itself. By starting early enough, or investing a high enough % of your income, your savings can quickly become an exponential snowball.

With this income adding to your take-home each year, suddenly you increase the rate at which you're saving, and reduce the years to retirement.

We wrote a comprehensive guide on the steps to take for that process here.

But still, how much is enough?

As a rule of thumb, many are saying that saving and investing a significant portion of your income, specifically aiming for a high savings rate of 50-70%, combined with a minimalistic lifestyle and low-cost investments, is crucial for accumulating more money necessary for a comfortable retirement. This approach highlights the importance of having extra funds to not only cover basic living expenses but also to accommodate any extravagant luxuries or unforeseen costs in retirement. In general, proponents of the movement tend to aim for anywhere between 20 and 60% of take-home pay to be invested. Now, this is a luxury few can afford, but many live incredibly frugally to make this even remotely viable.

The target is generally to live off a safe “withdrawal rate” after you do retire.

How can this be calculated? Well, if you work out roughly how much you need to live on, and estimate that your pot will return 5-8% after inflation, you can quickly work out what sort of pot you’ll need. For example if you need £50k a year to live, at a 5% growth rate you’ll need a pot of £1m to be able to live off the proceeds without drawing down on your capital.

The following chart shows you roughly how long it will take to become financially independent, based on the following assumptions:

  • You earn 5% return on your investment pot after inflation
  • You live off an averaged out 4% withdrawal rate from your pot
  • You live off the gains from your pot rather than drawing down on the principal, as mentioned

Lean Fire

Of course, the higher % of take home income you save, the lower your burn rate and the more you have in your retirement pot, so the sooner you can retire. What's interesting is the jump from 25% or so to 50 or 60% - with potential lifestyle or income changes and disciplined saving habits, you can literally buy back time in your own life. This FIRE plan is commonly known as 'lean FIRE'- there are three typical categories of the FIRE movement which are implemented into retirement plans.

Fat Fire

The opposite side of the FIRE spectrum is known as fat FIRE. Fat FIRE refers to the ability to retire early thanks to a large amount of saved or accumulated wealth. This would result in you not needing to have any concerns about living expenses after retirement. This would also mean that you would not have to worry about living a frugal lifestyle or about how much you are saving necessarily - you can essentially live your life in more luxury.

Barista Fire

Barista FIRE is somewhere in between these two; where you may continue to work a part time job, or receive support from a partner who is unretired or still working. The term 'Barista FIRE' is actually thanks to coffee shops, particularly Starbucks! This is because many people will get a coffee shop job as their preferred part time employment. With this approach to the FIRE movement you will have two income sources- the money from your part-time job as well as the passive income from your invested assets.

How can you get started on your own financial independence journey?

You have probably already started! If you’re even reading this post, it means that you are interested in reaching financial freedom and have probably started thinking about retirement savings and cutting living expenses. The question is more what to change. And this is an interesting one.

You can control how much you spend, and how much you earn. Of course, you want to earn as much as possible to give yourself the biggest cushion, and there is plenty of existing literature on that subject.

What’s more interesting, is the ramifications of cutting spending.

Cutting your spending is actually more powerful than increasing your income. This is because every drop in spending has two effects: it increases the amount you can invest, and it also decreases the amount you need to live on for the rest of your life. A double whammy! Consider this next time you think through whether you really need the next XYZ. Of course, if you have any outstanding debt, you’ll want to take care of that first in an ordered fashion. The fire lifestyle tends to encourage extreme frugality but it’s all about making the call on what level sits right with you, particularly if you have a family or dependents to worry about.

Understanding your National Insurance contributions is crucial for planning your journey towards financial independence, especially if you're considering early retirement. With 35 qualifying years of contributions required to receive the current new State Pension of £203.85 in the 2023/24 tax year, it's important to know where you stand. Additionally, the implications of the state pension age, set to reach 67 by 2028 in the UK, cannot be overlooked. This age threshold determines when you can access your pension funds, and retiring early could significantly impact your financial planning and independence.

Final thoughts on FIRE and whether or not it is right for you.

Look, this isn’t a binary decision. It’s unlikely that an aggressively frugal life will be the one you’re after, especially combined with the discipline to invest wisely for so long. The Pensions and Lifetime Savings Association (PLSA) offers crucial guidelines for retirement savings, highlighting the importance of adequate pension contributions for those considering the FIRE movement to ensure a comfortable retirement.

Plus, do you really want to retire early?

Everyone says yes, but do they truly mean it? Often people don't really realise that it isn't what they want until they've already done it, as with many things in life. Perhaps what you want is actually to just be able to choose whether to work or not. Which is more accurately described as financial freedom.

You should cultivate habits and hobbies that will make life post-work enjoyable, and the pursuit of a miserly lifestyle will likely not be conducive to that. That being said, there are certainly some interesting lessons to be learned from the FIRE movement.

It's also worth noting that financial independence is different from retirement, and one doesn't necessitate the other: you can be financially free while still working, and this might allow you to only do work that you find interesting or stimulating, perhaps on a part time basis.

The importance of cutting spending where unnecessary, of starting early, and of being aware of how much you'll likely need on retirement day to near enough guarantee a comfortable life at the standard of living you've become accustomed to.

The Strabo Dashboard

For that, we have the solution! The Strabo investment forecasting tool allows you to work out not only what that goal is, but to monitor your progress towards it in real time, automatically. This may be about achieving financial independence, or it may be about something else entirely, like cutting annual expenses, saving up for a rental property or mortgage payoff, or simply maximising investment returns in the stock market or elsewhere.

Whatever your goal, you can customise this and create your own retirement plan on the Strabo dashboard based on your own idiosyncratic needs. Sign up at the foot of the page to learn more, and let us know how you're currently tracking your progress along the FIRE movement! You will find information and shots of what the product looks like all over the site, and you can reach us on socials or by email at hello@strabo.app if you have any specific enquiries. We're here to help!

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