The idea of working until you’re 66 or later doesn’t sit well with everyone. The impending new retirement age to 68 and subsequently 71 doesn’t sit well with everyone. More and more people are questioning the traditional path of “work, save, retire” and asking: is there a better way?
That’s where FIRE comes in. Short for Financial Independence, Retire Early, the FIRE movement is all about building financial security earlier in life so you have more choice and freedom as you age; whether that means retiring at 50, switching to part-time work, or simply not stressing about money.
It’s a popular idea and it’s catching on fast. In fact, according to a YouGov survey, only 3% of British adults aged 25 – 34 expect to retire before the age of 50, while nearly half (48%) anticipate retiring between 61 and 70.
But FIRE isn’t just about retiring early. It’s about being financially independent from any early age and gaining control over your financial future. Whether you’re just starting to think about your future or you’re already saving for it, this guide is designed to give you a clear, realistic starting point for achieving your FIRE Goals.
What Is Financial Planning and Where Does FIRE Fit In?
Financial planning is about aligning your money with your life goals. It’s not just about numbers on a spreadsheet; it’s about priorities, goals and peace of mind.
The FIRE movement is aligned with this idea. Instead of working for 40 years and hoping for a comfortable retirement, people who follow FIRE work towards becoming financially independent much earlier. That means they save aggressively, invest wisely, and spend mindfully, so they can stop relying on a salary sooner.
There are different types of FIRE, depending on your lifestyle goals:
- LeanFIRE: Aiming to retire early on a minimalist, frugal budget.
- FatFIRE: Building enough wealth to retire early with a more comfortable, even luxurious lifestyle.
- BaristaFIRE: Reaching financial independence but still working part-time for flexibility or benefits.
- CoastFIRE: Saving enough early on so that you can coast to retirement without needing to contribute more.
So, where does financial planning fit in? Everywhere. Without a plan, FIRE is just a nice idea. With a plan, it becomes a goal you can work towards step by step.
Setting Goals That Actually Work
FIRE isn’t a one-size-fits-all. Everyone’s vision of financial freedom is different.
For some, it might mean retiring in their 40s to travel the world. For others, it’s about spending more time with family or starting a passion project without worrying about income. Your version of FIRE should reflect your values and lifestyle.
A good starting point is setting clear, realistic goals. These might include:
- Paying off your mortgage
- Saving for a comfortable retirement by 55
- Building enough income from investments to reduce work to three days a week
- Creating a financial safety net so you don’t feel trapped in a job
- Saving enough to pursue new careers, hobbies or life goals
The key is to be specific. Goals like “retire early” are too vague. Goals like “have £800,000 saved by 50” or “generate £2,500/month in passive income” are measurable and motivating. Once you have your goals defined, you can start budgeting for your FIRE plan.
Saving and Budgeting
Every FIRE journey begins with mastering your budget. Why? Because without control over your spending, it’s impossible to accelerate your savings or invest more.
The 50/30/20 rule is a great starting point:
- 50% for essentials like rent, bills, groceries.
- 30% for wants such as holidays, takeaways, and subscriptions.
- 20% for savings or debt repayment.
But if you’re aiming for FIRE, you may want to adjust this ratio. Many people aim to save 30%, 40%, even 50% of their income when possible. That sounds ambitious, but small tweaks add up: a cheaper phone plan, fewer impulse purchases or a staycation instead of flying abroad.
In our article The Psychology of Financial Independence, we explain how setting smaller milestones keeps you motivated and prevents burnout. FIRE isn’t about extreme frugality or cutting out joy—it’s about spending intentionally and saving with purpose.
Apps like Snoop or Emma can help you visualise where your money goes and automate your progress.
How to Calculate Your FIRE Number
Your FIRE number is the amount of money you need to have saved or invested to retire early and live comfortably. It’s calculated based on your income, lifestyle, expenses, investments and future plans.
The most common method is the 25x rule. You multiply your annual expenses by 25 which equates to your FIRE number. This is based on the 4% rule, which suggests you can safely withdraw 4% of your investments each year without running out of money.
For example:
- If you need £30,000 per year to live:
£30,000 × 25 = £750,000 FIRE number - If you spend £50,000 per year:
FIRE number = £1.25 million
This method assumes your money is invested and growing, typically at a rate of around 7–8% annually. It’s wise to factor in inflation – UK annual inflation has averaged around 2.8% over recent decades, with the current rate at approximately 3.4% (CPI for May 2025).
Don’t forget to adjust your number for major expenses like healthcare, home repairs or supporting family members.
For a more detailed estimate, you can use a tool like this FIRE calculator.
LeanFIRE vs FatFIRE: Which One Is Right?
Now that you’ve got an idea of your FIRE number, it’s time to think about your lifestyle. Do you picture a simple, minimalist, frugal retirement or one with more flexibility and luxury?
LeanFIRE is ideal if:
- You want to retire as early as possible
- You’re comfortable living simply
- You can live on a modest annual budget
FatFIRE is better if:
- You want more freedom and comfort
- You enjoy travel, hobbies or dining out
- You’re aiming for a larger nest egg
LeanFIRE offers speed and simplicity, but requires strict budgeting. FatFIRE takes longer but allows for more lifestyle choices. Neither is better or worse – it depends on what you want your life to look like. If you’re torn between the two, our LeanFIRE vs FatFIRE article helps clarify what each really involves.
Building a FIRE Plan with an Advisor
You don’t have to figure this all out by yourself. The truth is, while FIRE can feel like a huge financial goal, it becomes much more manageable when you’ve got a plan and a professional guiding you through it.
A financial advisor can help you build a specific, measurable and achievable FIRE plan. Here’s what they do:
- Track your spending and set a budget: A financial advisor can help you create a budget, help cut out unnecessary spending and create a practical FIRE plan.
- Calculate your FIRE number and timeline: They’ll help you work out how much you really need to retire comfortably and when you can realistically get there.
- Recommend investment strategies: Based on your income, risk tolerance and goals, you’ll get investment strategies and portfolios tailored to your situation.
- Adjust the plan as life changes: If your circumstances change, financial advisors can help you adapt your plans accordingly.
- Keep you on track: Sometimes, you just need a nudge or a reminder of why you started. That’s part of the job too.
If you aren’t feeling confident about managing your personal finances on your own, you are not alone. Only 4 out of 10 adults in the UK feel confident about managing their finances. Financial advisors help build portfolios, set goals with the 50/30/20 rule and keep your plan flexible when life throws curveballs.
Investing for the Long Term
Saving is essential but to reach FIRE, your money needs to work harder than a standard savings account allows. That’s where investing comes in.
Long-term investing allows your savings to grow through compound interest. It’s simple, but powerful: your returns generate returns, and over time, that growth accelerates. The earlier you start, the higher your returns.
Some of the most popular investments in the UK for FIRE-focused individuals include:
- Stocks & Shares ISAs: tax-free growth on your investments up to £20,000 per year.
- Workplace pensions: with employer contributions and tax relief, they’re one of the most effective ways to grow wealth.
- Index funds and ETFs: low-cost, diversified, and easy to manage.
- Property investments: not essential, but can be a solid income source if done wisely.
You don’t have to be a finance expert. You just need a sensible plan and a consistent approach. The key is not to chase quick wins but to invest consistently and ride out the ups and downs with confidence.
Protecting What You’ve Built
Achieving Financial independence is a lot of work and feels great until life throws a curveball. Being prepared for life’s curveballs is an essential step in this journey.
Here are some steps you can take:
- Life insurance: If you have a partner or dependents, this ensures they’re financially secure if something happens to you.
- Income protection: Covers your expenses if illness or injury stops you from working.
- A will and estate planning: Ensures your wishes are honoured and your assets are passed on smoothly.
- Emergency fund: Ideally 3–6 months’ worth of expenses, separate from your investments, ready to cover unexpected costs like car repairs or a boiler breakdown.
Think of this as the foundation under your FIRE plan. Without it, things can wobble fast.
Common Pitfalls to Avoid
The FIRE path can be empowering for some, but it’s not a straight road. Many people get discouraged because they hit avoidable roadblocks. Watch out for:
- Unrealistic expectations: Trying to save half your income overnight can lead to burnout.
- Ignoring inflation: Your FIRE number should account for rising costs over time.
- Neglecting tax planning: Poor planning could eat into your investment returns.
- Comparison traps: Someone else’s FIRE timeline is not your benchmark.
- Cutting too deep: Extreme frugality isn’t sustainable for most people. Balance matters.
FIRE planning is not about perfection, it’s about direction. You can still enjoy your life today while planning for the freedom you want tomorrow.
Some Tools to Help You Get Started
You don’t need a big windfall or a six-figure salary to begin. What you need is a small step and then another to get started.
- Track your spending for a month.
- Use a FIRE calculator to estimate your goal.
- Set a savings rate you can manage (and increase it slowly).
- Open or review your pension and ISA accounts.
- Book a financial planning session to get professional guidance.
- Watch this video for brief guide on FIRE
The earlier you start, the more flexibility you’ll have later. But it’s never too late to begin.
Conclusion: A Simpler Path to Freedom
FIRE isn’t just about retiring early. It’s about giving yourself more time, more choice, more space to breathe.
You don’t have to be perfect. You don’t have to do it alone. You just need a plan that works for your life and the confidence to stick with it even when things get tough.
At Circadian Capital, we help people build that plan. We believe financial freedom shouldn’t be reserved for the few; it should be accessible, flexible and personal.
We’ll help you chart your FIRE journey – one smart step at a time.