Retire decades early like us: FIRE investors share ten strategies to set you free… no matter what you earn

Meet the FIRE investors – members of the ‘Financially Independent Retire Early’ movement.

They choose to live frugally so they can afford to give up work early and live freely.

They don’t belong to an official community – anyone can join – but they often encourage each other on social media platforms such as TikTok and Instagram. 

Their plan is to retire before they get old – hopefully by the age of 45.

Here, they share TEN strategies.

What’s financial freedom?

Most people save towards retirement without thinking too much about the goal – just hoping it will enable them to put their feet up.

But those in the FIRE movement are focused on saving so they can choose how they live their lives. Retiring in your 40s hopefully also enables you to enjoy that freedom while still healthy.

FIRE investor James Beckett, 34, of Hemel Hempstead, Hertfordshire, says: ‘Retirement need not be about putting your feet up – but having the freedom to do whatever you want and not to be tied to an office desk.’

The cyber security marketing manager adds: ‘Escaping the rat race while still doing fulfilling work, perhaps helping a charity, is my goal.

‘My suggestion for anyone considering FIRE is to take time out now to reflect on what you really want out of life.’

James brings home about £4,000 a month and tries to put at least half of this income towards his FIRE goal. This includes ploughing £1,000 a month into a Vanguard stocks and shares Isa and putting a similar amount into his company pension.

Despite his ambition of retirement at 45, James is not worried if it ends up taking longer. He believes having an exact retirement date or pension pot target only causes you to worry more about money. 

He just wants enough savings to provide the freedom to choose if he wants to stop work.

He began saving ten years ago, putting just £20 a month into a stocks and shares Isa. But it is only since he turned 30 that he has really ramped up saving and he has already built up a £150,000 investment pot.

James says he is fortunate his fiancée Amy has the same attitude. This means being happy not to throw money around on going out, fancy meals or far-flung holidays, but instead staying in to watch his money grow.

If the couple, who are getting married next year, choose to start a family, James admits their plans may take ‘a few more years’ to come to fruition. 

He says: ‘My job over the next few years is to put aside as much as possible in savings and investments.

‘Hopefully we can build up a war chest for if we decide to have kids. That would inevitably delay retirement, perhaps pushing it from mid-40s into our early 50s.’

Pick a ‘lean’ or ‘fat’ retirement

The typical FIRE goal is to save and invest aggressively so you can retire early and live off your investments. This typically means putting 50 per cent of your income into savings, index-linked investment funds, pensions and property.

The amount you put in varies depending on what kind of investor you are and your willpower and income.

FIRE investors often use labels that originated in America.

Amanda Taylor, 38, from Oxford, says: ‘Lean FIRE is for those willing to live frugally and retire on less money. While fat is for those wanting a luxurious lifestyle as they get older – so is harder to achieve.

‘The key to any approach is to grow your investments until they cover living expenses.’

A lean FIRE investor might be happy with a modest lifestyle and put a fifth of their income aside, while a fat investor, who wants holidays and to eat out, must put as much as three-quarters of their inc-ome aside.

Both ideally start no later than their mid-20s.

Other types of FIRE investor include coast for those whose goal is not necessarily early retirement, but to coast through life after 45, knowing work is an option.

Baristas expect to continue working after early retirement – but perhaps in a lesser paid job, such as a part-time barista. For these people, putting aside from 10 pc of income might be fine.

Amanda says she is more of a barista-style investor – wanting to choose what she does when older without having to be a salary slave. It means putting aside at least 20 per cent of her earnings.

She is a chief commercial officer for investment events organisation Master Investor but also runs a life sciences business with her husband.

She says that having a son, now three, ‘may mean some changes to the plan’ but adds: ‘I actually found it refocused my intentions on my finances and also setting good financial foundations for my son.’

She calculates she will need to set aside ‘an additional £100–£200 a month over the next 15 to 18 years’ to cover ongoing costs and potential future needs like education.

She also says that ‘in an ideal world’, she would love to ‘max out’ contributions to her son’s Junior Isa each year — but she adds: ‘I’m very aware that £9,000 annually is a stretch.’

Cut the emotion out of purchases

go through bank statements taking note of outgoings and incomes to plan how you are going to achieve your budget goal.

Super-keen saver Samson Dada, 32, from Manchester, says: ‘I have saved more than £100,000 since I started putting money aside in my mid-20s. The secret is to cut costs, so you are able to save more.

‘Look out for what I call emotional depreciative assets – purchases that are driven by your feelings but tend to go down in value over time, such as a car or holiday. You want to cut these out. Do I really need it? If the answer is no, then cut it out.’

Samson, a public relations consultant, started learning about frugality while studying politics and international relations at university. He realised financial independence gave him a sense of pride. 

He does not drink, smoke, drive or eat takeaways and forgoes foreign holidays. From an income of £4,000 a month he spends about £1,500 on rent, groceries and other bills. 

He puts £750 into a pension and splits the remaining money between tax-free cash Isas, instant-access and fixed-term bond accounts.

Despite such frugality – and unwillingness to risk putting money into stocks and shares – Samson knows he might miss the retirement target of 45. 

But by 58 he hopes to have built a £500,000 nest egg that will enable him to stop work, buy a modest retirement cottage and go on cruises.

Amanda warns it is hard to avoid weakening as you earn more or compare your humble lifestyle with others. ‘It is tempting to buy luxuries as your income grows, but keeping a lid on expenses is key to success,’ she says.

Compound interest can add a little magic

The secret to success for FIRE enthusiasts is putting aside money every month – even if it is as little as £100 – and starting the savings habits as early as possible.

FIRE investors typically put aside at least 20 per cent of their income, but it can be 70 per cent.

James says: ‘It is about compound interest, which works like magic. This is the mathematical phenomenon where investment returns start earning their own returns over time, causing money to snowball into potentially huge amounts.

‘Compounding takes time. The trick is to start putting money aside as soon as possible.’

For example, if you earn 4 per cent yearly interest on your money and put aside £100,000 then, at the end of the year, it will be worth £104,000. 

In the second year this £104,000 earns the same 4 per cent interest and grows to £108,000. This carries on every year until after a decade that initial £100,000 is worth £149,000.

Avoid high fees on investments

Stocks and shares outpace cash savings over time – but it is important to invest your money wisely.

James is a fan of so-called ETFs (exchange traded funds) that plot the performance of stock markets. These tracker funds don’t have the hefty fees of actively managed funds.

He says: ‘Passive ETFs are simple, boring and cheap – but have helped me since I began putting investment money aside a decade ago. I now have more than £150,000 in this pot.

‘You can pay management fees from 0.12 per cent a year with global tracking funds. A fund manager looking after your cash can charge 1 per cent and do worse.

‘The impact of such fees soon adds up. For example, if you have £100,000 under management, the fee is £120 if charged at 0.12 per cent but £1,000 if it is 1 per cent.

‘Not only are you almost £900 worse off but you deplete a savings pot that might otherwise grow.’

Platforms such as AJ Bell and Interactive Investor can be used for trading and have details of tracker options, says Amanda.

‘Focus on obtaining returns of 4 per cent to 6 per cent a year each year rather than be tempted by get-rich-quick opportunities that might fail.’

Use tax-free opportunities

Individual Savings Accounts (Isas) allow up to £20,000 to be invested a year and earn interest tax-free, while escaping income and capital gains.

FIRE investors tend to go for stocks and shares Isa options as the returns expected are higher – typically at least 6 per cent a year – compared with savings where you might earn 4 per cent or even less.

Tracker Isas, such as a Vanguard global stocks and shares, are favoured by James. Most of us rely on drawing a pension when we stop working but current rules mean you can only access this pot from the age of 55 – though the limit will rise to 57 in three years.

This means FIRE enthusiasts must ensure their Isas are on track to provide an income they can live off for at least a decade if they retire at 45.

Boost pension contributions 

‘The “half your age rule” means paying half your age into your pension every month – so a 30-year-old might expect to put 15 per cent of their income into a pension,’ says Samson.

For him, earning £36,000 a year – £3,000 a month – means putting £450 a month into a retirement plan.

James believes, as an investment, retirement plans are better value than Isas because if you have an employee pension, they should also put money into the pot.

He says: ‘I enjoy take-home pay of £4,000 a month and put aside 9 per cent of my salary into my workplace pension – but my employer helps to bring this contribution up to 15 per cent.’

Get yourself a side hustle

Not having to work in later life means working harder now. Amanda says: ‘Create multiple income streams – not just by working on your career but looking at other opportunities.’

She has written books in her spare time, including Inspirational Investing, as a side hustle – making money out of what she has learned as a FIRE enthusiast.

She says: ‘Everyone can get involved in a side-hustle. Just look around the home for items – everything from clothing to furniture – that you do not use and consider selling them on trading websites such as eBay and Vinted.’

James also has side hustles. He offers personal finance coaching as Money Stocker on social media such as Instagram and TikTok.

Stay in to watch TV… with a dog

‘You cannot be the kind of person who feels they might be missing out – otherwise you will not succeed. I am content at home watching EastEnders,’ says Samson.

But James believes such frugality can only be possible with the occasional treat or fun expense. He and his fiancée Amy own a pug dog called Winnie.

James says: ‘We love our pet and although he costs us money, including £100 a month in vet insurance, he is a key pleasure. Of course, he is not only great company. Walking a dog is great free exercise.’

Improve your cooking skills

Keeping a tight rein on grocery shopping is key to saving money. There should be no popping into a supermarket on a whim.

Samson says: ‘I can cook delicious meals at home – and this means there is no need to waste money in a restaurant.

I rarely eat takeaways and have loyalty cards with shops and supermarkets including Boots, Sainsbury’s and Tesco. Sticking to my shopping list means no waste. I make a mental weekly meal plan.’

This includes oats for breakfast – which cost less than £1 a kilogram.

Frugal forward thinking is also useful for other expenses such as clothing. Charity shop bargain hunting might save you hundreds of pounds a year.