About FIRE Number

FIRE (Financial Independence Retire Early) approach is a financial tactic designed to attain financial freedom at the earliest opportunity so that you can retire early. This is accomplished by saving a substantial portion of your earnings and placing it into investments that yield passive income.

It is important because as per research, 67% of working professionals enter retirement without savings. Therefore, FIRE becomes an even more important concept which can help you not only retire early but also enjoy your retirement in peace.

There are 4 types of FIRE:

1. Lean FIRE: If you have achieved Lean FIRE, it means you can continue to work at a smaller income. To achieve this, adjust your yearly expense as per the inflation rate and then multiply it by 20.
2. FIRE or The 4% Rule Fire: This means that you can spend 4% of the total FIRE money you have accumulated every year. To achieve this, adjust your yearly expense as per the inflation rate and then multiply it by 25.
3. Fat FIRE: Here you multiply your inflation-adjusted yearly expense by 50 and then you reinvest it in such a way that you only take what is required and invest the rest of it. This way the cycle continues and you never run out of money.
4. Coast FIRE: Coast FIRE is the number at which your existing investments will compound to reach your FIRE number without any additional investments. For example: if you want to retire at 50 but stop making investments by 45, the amount you need by 45 is your Coast FIRE number. Your savings will then compound to your FIRE number before retirement.