FIRE or Financial Independence Retire Early is essentially a lifestyle movement to achieve financial independence and make enough money for a sustainable retirement when you are much younger by following an extreme form of money-saving and investing techniques.
The ideology behind FIRE originated in the USA and some of its concepts were first published in 1992 in the book “Your Money or Your Life” co-written by Vicki Robin and Jon Dominguez, who propagated the idea of living frugally and deriving income from investments to achieve financial independence early on in life.
The FIRE concept has two elements of financial planning Financial Independence (FI) and Retire Early (RE). Financial Independence is viewed differently by everyone but more or less it means financial freedom without having to worry about money as you now do not have to work for additional money. It could be freedom from debt or creating a passive source of income.
Early retirement simply means that you no longer have to work for money and you have created enough money for it to work itself for you. Normally, when you talk about retirement and retirement planning, your reference point for age is 60 and above. You work around your financial plan in such a way that you have repaid all your debts and have created enough wealth to suffice you in your retirement.
FIRE movement adheres to the traditional principles of achieving financial freedom and creating a retirement corpus but retiring much earlier in life, possibly in their 40s or 30s, which is a decade before the actual retirement age. Apart from the early retirement aspect, FIRE ideology differs from conventional practices in more than one way. For example, usually, when you think of financial planning you are always looking to upgrade your current lifestyle but FIRE ideology would require you to live a frugal lifestyle even after retirement to just cover your monthly expenses in most cases.
How has it taken off in the recent past?