The FIRE movement (Financial Independence, Retire Early) advocates for intense saving early in your career to accumulate wealth that generates enough interest to cover expenses, achieving freedom to retire decades earlier.
| Age | Year | Accumulated Deposits | Real Net Worth | Monthly Secure Income |
|---|
The FIRE concept originated in the US and is based on the idea of optimizing expenses and investments. The central benchmark is the safe withdrawal rate (usually based on the 1998 Trinity Study), which estimates that if you withdraw a fixed amount in the first year and adjust subsequent withdrawals for inflation, your wealth will last for at least 30 years.
The FIRE number is the total amount needed to be accumulated in investments to live solely on dividends and interest. The formula is:
FIRE Number = Annual Expenses / Withdrawal Rate %
For example: if your expenses are $8,000 per month ($96,000 per year) and your withdrawal rate is 4% per year, your FIRE number is $96,000 / 0.04 = $2,400,000.00.
They are branches of the movement based on lifestyle: Lean FIRE seeks early retirement with a minimalist standard of living; Fat FIRE seeks early retirement with a high standard of consumption; Coast FIRE is when you have already accumulated enough in your youth for compound interest to guarantee your retirement in the future, only needing to work to pay current expenses.
The Trinity Study used US data. In Brazil, although the nominal return rate is high, inflation and taxation are also high and unstable. Therefore, experts recommend more conservative withdrawal rates for the Brazilian scenario, such as 3.0% to 3.5% per year.