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What does it take to retire early in the UK? The ultimate guide to the FIRE Movement

Desperate to ditch the working world in favour of an early retirement? You’re not the only one. We explore if the FIRE Movement could be your ticket to getting there sooner.
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Ever found yourself wondering about how you could retire earlier? Many of us dream of retiring as soon as possible so we have more time to do the things that bring us joy – whether that’s travelling the wonders of the world, pursuing personal hobbies, or simply taking some time out to relax with our loved ones.

However, with the State Pension age in the UK gradually increasing as time goes on, and it being set to reach 67 by 20281, it should come as no surprise that the FIRE Movement is quickly gaining traction. For those who haven’t heard of it, FIRE promotes the idea of living frugally while you’re young to reap the rewards of being able to retire sooner.

So, what will it take to make your dreams of early retirement a reality, and could embracing the FIRE Retirement Movement help get you there? We outline everything you might want to consider.

What is the FIRE Movement?

The ‘FIRE’ in ‘FIRE Movement’ stands for ‘Financial Independence, Retire Early’ – which is pretty self-explanatory, really. Basically, if you dream of leaving your 9 to 5 and achieving financial freedom as young as possible, then you’ll want to listen up.

In fact, the aim of the FIRE Retirement Movement is to retire as early as your 40s (or even your late 30s), which will give you plenty of time to pack your suitcase and explore the world without the worry of a limited annual leave allowance.

Yet despite becoming a buzzword in recent years, this movement has been around since the 1990s. It works off the basis of formulas that will calculate exactly how much capital you need to amass to support yourself through retirement. It also requires cutting your expenses and scrimping and saving as much as possible throughout your (hopefully short) working life.

These formulas are based on a range of assumptions that have been formed from the historic performance of the stock market.2

What is the ‘safe withdrawal rate’?

One of the most popular principles of FIRE is the ‘4% rule’ (or the ‘25 times’ rule as it’s also referred to), which is a little something to help give you your ‘safe withdrawal rate’. In simpler terms, this is the amount you can comfortably withdraw from your retirement savings each year without putting yourself at risk of running out of money. This figure can be calculated by figuring out how much you spend each year and multiplying this by 25.

Why is 4% considered the safe withdrawal rate, you ask? It goes back to the Trinity Study which was published back in 1998 and tested simulations for up to 30 years of retirement. However, the study was updated in 2020 with more recent data and longer retirement simulations – and as of then, it appeared that the 4% withdrawal rate still held up pretty well over a 20-year retirement.3 

This is obviously good news if you plan to retire later in life, but it may not be the best calculation to use if you’re hoping to leave the working world in your 30s or 40s. Plus, costs for basic goods and services have increased considerably since 2020.

In fact, having analysed the results of the updated study that same year, Brain Preston from the Money Guy Show recommended that a prudent retiree may want to decrease their withdrawal rate to 3.5% or even a touch less than that to be on the safe side.

It’s also important to note that this figure also works off the assumption that an investment portfolio will grow by an average of 7% a year. And although past performance can help to assist your calculations, it’s not a reliable indicator of any future results.

How to embrace the FIRE lifestyle

Now that you can work out your safe withdrawal rate, it’s time to put the wheels in motion. How exactly are you going to amass enough capital to retire long before the average retirement age of your mid-60s? FIRE proposes that you reach your early retirement goal by: 

Cutting your expenses

This is basically what it says on the tin. The less you spend while you’re preparing to retire, the more you can put into savings – so, you’re going to have to be as frugal as you can – which means there’s very little room to buy a takeaway coffee or go out for fancy brunches 5 days a week.

There are many ways to cut your expenses such as downsizing your living space, choosing cheaper brands when doing your weekly supermarket shop, avoiding buying large value items (such as cars) brand new – whether outright or on finance – and avoiding going on expensive holidays and meals out. You know the drill.

Some hardcore savers are even renting out their spare bedrooms, swapping living alone for house shares, or moving back in with their parents in a bid to save even more – though we realise that some of these solutions aren’t an option for everyone.

For example, you may not have an extra room to rent out in the first place, or you may be unable to move into a shared house because you already have a family of your own. In fact, how you embrace FIRE will be dependent on your age, lifestyle, and other personal circumstances – meaning it isn’t a ‘one size fits all’ approach.

Increasing your savings

Everyone in the UK who was born on or after 6th April 1951 (if you are a man) or after 6th April 1953 (if you are a woman) will be able to claim the new State Pension if they have paid National Insurance for at least 10 years (or were getting National Insurance credits due to illness).4 However, as we’ve already explained, most of us won’t be able to use our State Pensions until we reach our mid-to-late-60s.

Many of us will also have a number of workplace pensions lying around ready for when the time to retire comes.

Unless you work for the government, NHS, or large corporations, though, it’s likely that you will have a basic workplace pension which you and your employer contribute the minimum amount into each month. And – as with the State Pension – there is a limit on when you can access your savings. Since April 2015 the earliest has been 55-years-old, though this will increase to 57 from 6th April 20285, and for most schemes you will need to be between 60 and 65.

So, what should you do with the savings you’ve amassed from living more frugally? Instead of letting them sit in your bank account where they’ll likely gain little interest over the years, another option could be to set up a personal pension or another type of investment account to supplement your workplace pension (depending on when you want to access your money). We’ll talk more about that later though.

How much do I need to retire?

So, although it is claimed that 4% is the baseline safe withdrawal rate, how much do you realistically need to retire? According to a Which? study, many people overestimate how much they’ll need to spend in retirement. This is because they forget that by that point in life, they may have already paid off their mortgage (or a nice chunk of it, at least), they won’t be bringing up children, and they won’t face the cost of commuting to work either.

Instead, they surveyed over 1,000 retirees in 2022 and discovered that that the average household with two people spends £2,340 a month.6

This figure includes some luxuries, such as European holidays, hobbies, and eating out. If you do want to add more extravagant luxuries into the mix, such as long-haul trips and a new car every five years, the amount a two-person household needs rises to £45,000 a year.

However, if you plan to retire younger, these factors may not come into play. You may not own your own home and still be renting, for example, or you may have only just acquired a mortgage and be nowhere near paying it off. If you are younger, you may also not know when you will have children – or even if you want to have them at all. This means if you are in your 20s, you may need to factor in more money than someone older who is looking to retire soon.

Unless you’re someone who is easily able to live a frugal lifestyle or has the advantage of earning a high salary from very early on in your career, the prospect of retiring in your late 30s or early 40s probably isn’t all that achievable.

But guess what? That’s okay. Instead, setting a goal to retire in your mid-50s will still enable you to knock around 10 years off your expected retirement age – and you can do a lot in 10 years.

Now, let’s go back to the topic of personal pensions. These can be a useful thing to have if you want to boost your retirement savings because you can pay into them alongside a pension you already have with your workplace, and you can choose how much you pay in.

With a Personal Pension from Wealthify, you will also get a 25% tax relief top-up on each contribution, up to a total limit of £48,000 (which becomes £60,000 with the £12,000 tax relief) or 100% of your earnings (whichever is lower). And this is automatically calculated and added to your investments. This means that every £800 invested in a pension is worth £1,000 for a basic rate taxpayer.7

How much you choose to pay into a personal pension each month will be dependent on your savings goal and how much of your salary you can afford to set aside. With that in mind, it’s important to remember that you won’t be able to access the money in your personal pension until you’re 55. This is the same as any workplace pensions you already have.

If you are younger, embracing frugality will be easier as it’s likely that you’ll have fewer commitments, such as children. With the ability to make bigger savings, you may be able to afford to put more into your Personal Pension – and as a result, you could gain more from your investments. If you’re closer to your 50s than your 20s, then you may already have enough saved to be able to contribute a lower amount each month while still being able to reach your goal.

Have a number of old workplace pensions lying around? One thing to consider is combining them into one pension to better keep track of how much you have saved already.

What if I want to access my money sooner?

If you want the option of accessing your savings earlier than 55 (or 57 as the minimum age will soon change to), then you may want to consider investing in a Stocks and Shares ISA. Though you won’t benefit from the tax relief-top up, you can invest up to £20,000 each year tax-free (thanks to the ISA allowance) and your money won’t be locked away – in fact, you can access it at any time you like.

No matter which of the above scenarios applies to you though, it’s worth assessing your current situation by seeing how much you have saved already before making any hard and fast decisions.

Whatever age you want to leave the working world and however you plan to spend your retirement, the advice is simple; ensure you’re prepared by making your money work harder now. Find out more about our Personal Pensions and Pension Transfer service and see how they could help you.

Are you ready to retire? Use our pension calculator to find out if your finances meet your expectations for your dream retirement!

The tax treatment depends on your individual circumstances and may be subject to change in the future.

Please remember the value of your investments can go down as well as up, and you could get back less than invested.

Wealthify does not provide financial advice. Seek financial advice if you're unsure about investing.


  1. https://www.gov.uk/government/news/state-pension-age-review-published
  2. https://www.schroders.com/en/insights/economics/chasing-financial-independence-retire-early-fire-is-it-possible/
  3. https://www.moneyguy.com/2020/11/what-is-the-safe-withdrawal-rate-for-fire/
  4. https://www.gov.uk/new-state-pension
  5. https://www.gov.uk/government/publications/increasing-normal-minimum-pension-age/increasing-normal-minimum-pension-age
  6. https://www.which.co.uk/money/pensions-and-retirement/planning-your-retirement/how-much-will-you-need-to-retire-aNmlv7V7sVe9
  7. https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief
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