The radical strategy that could allow you to retire at 40

3 months ago 16

Opinion

Updated November 10, 2025 — 2.06pm

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When it comes to making or saving money, by and large we all have a goal we’re working towards. Often these are explicit and carefully mapped out, like saving for a new house or paying off your car loan.

Other times they’re a bit more nebulous, like aiming to reach a certain level of savings where we feel secure, or putting money aside for a holiday, even if you haven’t decided where you’ll go or how much it’ll cost you.

An extreme saving strategy could allow you to retire earlier than expected.

Regardless, there are very few of us who sit at the lower end of the spectrum, not thinking about how we spend or save our money at all. And similarly, there’s not many of us at the opposite end, where every dollar is saved, and every decision meticulously planned out in dogged pursuit of a singular goal. But if that does sound like something you’d be interested in, you best make like a caveman, because it’s time to discover FIRE.

What’s the problem?

Standing for Financial Independence, Retire Early, FIRE isn’t a new movement, having first sprung up in the ’90s. However, it came to prominence around 2010 thanks to many online money bloggers who popularised it, and since then, has gained a range of devout followers across the globe, most of them Millennials.

At its core, FIRE focuses on extreme savings – up to 50-75 per cent of your income – which is then invested with the goal of being able to live off your investments and retire early, with the idyllic retirement age of 40 often touted by many FIRE fans.

What you can do about it

So what’s this movement all about? And is it at all realistic?

FIRE plan: As mentioned, FIRE is all about extreme saving and investment with the goal of having enough in savings or income-producing investments to retire earlier than the typical 60-ish. To achieve this, FIRE adherents come up with their “FIRE number”, which is the amount of money they need to live comfortably without relying on regular employment income. Generally, this is considered to be 25 times your annual expenses (though some opt for more or less), calculated with the assumption you can live off 3 to 4 per cent of your savings/investment income a year. Once this goal is set, the goal is to save as much of your income as possible and invest it wisely to hit that number ASAP. Cara Williams, founder and financial adviser at The Hazel Way, says it’s something she’s seen evolve over the years, becoming less about just stopping work, and moving more towards simply having freedom. “At its core, it’s not just a financial plan, it’s a lifestyle philosophy. It’s about focusing on what truly matters to you, cutting back on unnecessary spending, and using that surplus to invest in assets that grow over time,” she says.
Can anyone do it? FIRE fans will tell you it’s something that anyone, no matter their income or age, can achieve, messaging that helped the movement gain popularity in the 2010, post-GFC era. In reality, that’s not really the case. Renae Vercoe, financial adviser at MoneyMode, says FIRE lends itself to starting as early as possible, and for people who have incomes that allow a significant savings rate without it being too detrimental to their overall quality of life. “If your aim is to retire fully in your 30s or 40s, that’s a high bar. One of the biggest hurdles is simply time − not giving compounding long enough to deliver its full potential,” she says. Additionally, many FIRE adherents opt for extreme frugality as a way to save more of their income, making it impractical for low-income earners who may be frugal simply because they have to be. Finally, data shows very few people actually retire early, with just 1 per cent of Americans retiring by age 40.
How should you start? If you’re keen on getting FIRE-d up, your first port of call is to work out your FIRE number as mentioned above. Vercoe then recommends looking at your current position and seeing what you’ll need to change to start working towards those goals. What debt can you get rid of? How can you trim your spending further? Your investments should be consistent and sensible with the goal of getting strong, reliable annual returns, she says, with regular reviews to ensure they’re helping you achieve your goals.
Do you have to go all the way? Realistically, FIRE is a goal unreachable for many and something that requires a great deal of sacrifice to achieve. Also, Australia’s superannuation system means most of us will have good-sized nest eggs by the time we retire – something other countries lack, which then incentivises people to pursue the FIRE route. Williams says a more achievable goal is “flexible FIRE”, focusing on a broader goal of creating financial security and long-term freedom. “Financial independence in some form is still a valid and achievable goal, whether that means reducing work hours, changing careers, or building more flexibility into your life, without needing millions in the bank or waiting until 60 or beyond,” she says. “The focus has shifted from ‘retire early’ to ‘work on your terms’.”

Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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