Retiring early is an idea that an entire community of people across the United States is putting into action. It even has an official name - Financial Independence Retire Early, or FIRE. Read on to find out how it works. And who knows – maybe you or someone you know may want to try it!

How it started

The origins of FIRE started in the early 1990s when a former Wall Street analyst, Joe Dominguez, shared his story in the book Your Money or Your Life about retiring at age 31, never to work again, and have total financial independence. The ideas presented in the book became popular during the 2008 financial crisis when younger people started re-evaluating the historical practice of working a 9-to-5 job until age 65 or older. Many people identified with what Dominguez discussed in his book, especially doing things when they're younger rather than waiting for the golden years of retirement.

How it works

The FIRE concept is built on extreme saving and frugality in your early years so you can comfortably live with enough money well before the traditional retirement age of 65. Here are some of the basic rules:

• Spend as little as possible. Refrain from activities such as eating out, going on vacation, and purchasing brand name clothing. Focus on activities such as bunking with friends and riding your bike to work. You adopt (almost) anything you can to cut expenses.
• Save as much as possible. Once you identify the minimum amount of money you need to live comfortably in the present, save everything else. The goal is saving 50% to 70% (!) of your income.
• Earn as much as possible. Whether it's quickly climbing the corporate ladder, adding a side hustle, or making smart investments, maximizing income is the name of the game. Income-producing activities are also prioritized in place of most of your hobbies. The more you make, the faster you can get to your goal of financial independence.
• Set a specific goal, then retire when you achieve it. The idea is to get to your goal as fast as possible so you can retire in your 30s and 40s. Even if you're in your 30s, 40s or 50s right now, you can do a modified form of FIRE to retire as quickly as you can.

FIRE can become COASTING

While retiring early and having total freedom sounds great in theory, some people struggle with boredom and overspending after achieving FIRE. One option to consider if you find yourself in this situation is called coasting. Instead of completely retiring in your 30s or 40s, coasters simply downshift to a less demanding or more enjoyable job to continue earning money while also enjoying the benefits of financial freedom without the stresses of maintaining a certain income level.

While the FIRE movement isn't for everyone, you can adopt your own variation by saving as much as you can while you're working so you can enjoy some level of financial independence as soon as you can.