Gen Zers hope to retire at age 54, earlier than any generation, according to Empower research — and they may be part of a larger trend. The FIRE movement (Financial Independence Retire Early) embraces an early exit, as its proponents strive to leave the workforce years, or even decades before the average retirement age (65 for men, 63 for women).

What is the FIRE movement?

While retirement looks different for every American, the notion of FIRE first sparked interest more than thirty years ago with the book, Your Money or Your Life, by Vicki Robin and Joe Dominguez — and ambitious savers have been catching on ever since. Simply put, the FIRE retirement model promotes achieving a level of financial independence early on by living frugally and maximizing savings, so you can afford to stop working sooner.

How do proponents of FIRE retire early?

Getting to early retirement requires adhering to some disciplined principles that can come at a hefty price:

✔️ Extreme savings. FIRE movement enthusiasts dedicate a significant portion of their annual income to savings, typically socking away 50% – 75% or more of earnings.¹ For some this may require drastic lifestyle changes.

✔️ Frugal living. Nearly half of Americans (48%) value an in-the-moment spending treat, according to Empower research, but FIRE followers commit to spending mindfully by prioritizing needs over wants. This means scrutinizing expenses and spending only on essentials, taking steps to minimize debt, and looking for other ways to save more.

✔️ Smart investing. Along with saving aggressively, those who subscribe to the FIRE movement seek capital appreciation through growth investing in a range of assets, including stocks, bonds, index funds, and real estate.²

✔️ 25x or 4%. FIRE movement devotees typically adhere to one of two calculations for reaching the financial independence target savings number. The 25x rule focuses on saving 25 times your annual expenses, while the 4% rule is based on the idea that you can withdraw 4% from savings annually to sustain your lifestyle for 30 years.³

Say when

Retiring by a certain age is the meaning of financial happiness for about 4 in 10 Americans (37%), according to Empower research. While there’s no magic number, people have some specific thoughts about when they see themselves leaving the workforce.

Source: Empower Financial Happiness study, 2023.

Empower research shows Americans currently anticipate retiring later than when they thought they would 12 months earlier. The expected age is 63 on average, with Gen Zers (age 54) and Millennials (age 60) planning several years earlier than Gen Xers (age 66) and Baby Boomers (age 71).

FIRE retirement is a work in progress

Even with strict adherence to FIRE principles, some uncontrollable circumstances may influence the ability to retire “early.” Economic factors from cost of living increases to market fluctuations have the potential to delay plans: Americans cite inflation and rising prices (45%), the state of the economy (37%), and access to a retirement plan (23%) as top factors influencing their ability to retire on time and securely.

Unanticipated life events from job loss to health issues may also affect timing. Empower research reveals nearly 2 in 5 (37%) Americans couldn’t afford an emergency expense over $400. Having to dip into savings to cover unexpected costs could impact budget — potentially delaying retirement or even necessitating re-entering the job market.

Playing with FIRE

The FIRE movement isn’t for everyone. For those who live paycheck to paycheck, it simply may not be realistic, and others may want to embrace only certain tenets of the model. Depending on your lifestyle, there are various adjustments you can make to the core FIRE principles to take a more balanced approach and keep moving toward financial independence.

Types of FIRE:

These categories can be used as a guide or blended into a hybrid that works for individual situations.

🔥 Lean FIRE. This approach embraces minimalist living to be able to save faster.

🔥 Fat FIRE. These individuals may want a more comfortable lifestyle in retirement and will need to save more than the average investor.

🔥 Barista FIRE. With this approach, people leave traditional 9 – 5 jobs but take on some form of part-time work, often in a social setting, for supplemental income to cover expenses.

🔥 Coast FIRE. This strategy refers to those who have already accumulated their retire-early target amount but continue to work to cover living expenses and coast toward retirement.

Hold the RE

Some who embrace FIRE movement strategies are focusing on the financial independence piece alone as the goal, with no plans for early retirement. Like Coast FIRE savers, they’ve reached their financial milestones. However, rather than coasting, they choose to “retire” from their current careers to start new ones — following their passions, finding joy in giving back to their communities, and working in lower-stress jobs.⁴ Empower research shows that over half (58%) of Americans are open to post-retirement employment, and 41% cite personal fulfillment as the top reason for working.

For many of these individuals whose circumstances enable them to adhere to FIRE principles, the lifestyle allows them to spend more of their lives doing things that matter most to them.