How to retire early with the FIRE formula, according to a millionaire


Many people dream of retiring early and living a life of financial freedom, but few know how to achieve it. However, there is a simple formula that can help anyone calculate their path to financial independence, according to a millionaire who retired at 30.

What is FIRE and how to calculate it?

FIRE stands for Financial Independence, Retire Early, and it is a movement that advocates saving and investing aggressively to achieve financial independence and retire at a young age. The idea is to have enough passive income from your investments to cover your living expenses for the rest of your life, without relying on a job or pension.

The key to FIRE is knowing your FIRE number, which is the amount of money you need to have in your portfolio to sustain your desired lifestyle. According to Grant Sabatier, the founder of the financial site Millennial Money and author of “Financial Freedom”, you can calculate your FIRE number by multiplying your expected annual expenses by 25.

How to retire early with the FIRE formula, according to a millionaire
How to retire early with the FIRE formula, according to a millionaire

For example, if your yearly expenses amount to $40,000, then multiplying this by 25 results in a million dollars, which represents your financial independence nest egg. This million-dollar sum signifies the threshold for financial independence, enabling you to live off the interest or returns generated for the rest of your life.

This calculation is based on the “4% rule”, which states that you can safely withdraw 4% of your portfolio annually, adjusted for inflation, without depleting your funds. However, this rule may vary depending on your personal situation and market conditions, so some experts suggest aiming for a lower withdrawal rate, especially for longer retirements.

How to achieve FIRE faster?

Achieving FIRE may seem daunting or impossible for many people, but Sabatier claims that anyone can do it with the right mindset and strategy. He himself went from having $2.26 in his bank account at 24 to becoming a millionaire at 30 by following these principles:

  • Increase your income: Sabatier advises finding ways to earn more money, such as starting a side hustle, negotiating a raise, or switching careers. He also recommends diversifying your income streams and creating passive income sources.
  • Save more: Sabatier suggests saving at least 50% of your income and investing it in low-cost index funds or other assets that generate returns. He also advises cutting down on unnecessary expenses and living below your means.
  • Track your progress: Sabatier recommends tracking your net worth and expenses regularly and setting milestones along the way. He also encourages celebrating your achievements and staying motivated by visualizing your goals.
  • Enjoy the journey: Sabatier reminds that FIRE is not only about reaching a number, but also about finding happiness and fulfillment in life. He urges people to pursue their passions, hobbies, and interests, and to enjoy the freedom and flexibility that FIRE provides.

What are the benefits and challenges of FIRE?

FIRE can offer many benefits for those who achieve it, such as:

  • Having more time and energy for yourself, your family, and your friends
  • Being able to travel, learn new skills, or pursue new opportunities
  • Having more control over your life and decisions
  • Reducing stress and improving your health and well-being
  • Making a positive impact on the world and society

However, FIRE also comes with some challenges and risks, such as:

  • Facing social pressure or criticism from others who may not understand or support your choice
  • Dealing with boredom, loneliness, or lack of purpose after leaving work
  • Adjusting to a different lifestyle and budget
  • Managing your portfolio and taxes in an uncertain market
  • Planning for unexpected expenses or emergencies

Therefore, before embarking on the FIRE journey, it is important to weigh the pros and cons carefully and prepare yourself mentally and financially for the changes ahead.


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