The FIRE movement: Your path to a self-determined life

The FIRE movement, with its dream of a self-determined life, has been on everyone’s lips for some time now. But how much wealth do you need to be able to retire early? And what will your total pension look like if you paid little, an average amount or a lot into the pension system during your working years? We address these and other questions in today’s article and shed light on whether the goal of financial independence might already be within your reach or whether you need to be more disciplined with your investments.

The FIRE movement: What’s behind it?

The dream of financial freedom; we’ve all probably wondered at some point what our lives would be like if we had it. What if we could build up a passive income and no longer had to work for a living?

Then we could focus exclusively on the things that interest us, such as hobbies, family, personal projects and so on. After all, money brings happiness if you use it wisely.

The FIRE movement promises exactly that: the financial freedom to retire early, for example at the age of 40. The acronym FIRE stands for ‘Financial Independence, Retire Early’.

Whilst the FIRE movement remains a dream for some, for others it represents an ambitious goal that they are determined to achieve. And it certainly takes determination to do so – in the form of disciplined saving.

Whilst the basic principle of financial independence became established as early as the 1990s, the FIRE movement is relatively recent. The 2008 stock market crash, in particular, gave the FIRE approach a significant boost. Since then, it has become increasingly popular on platforms such as finance blogs and online communities, where people not only seek information but also motivate one another.

The popularity of the FIRE movement can be attributed to various factors:

• The quest for freedom and self-determination: Many people want to break free from the traditional rat race. They are unhappy with their 9-to-5 job and want to live life on their own terms.
• A challenging economic climate: Pension systems in many countries are coming under increasing pressure. For young people in particular, the future is becoming increasingly uncertain. Confidence in the state is waning.
• Availability of information and FIRE communities: The internet makes information about FIRE more accessible than ever. Forums, YouTube videos, blogs and podcasts present the topic in an accessible way, allowing everyone to find their own way into it.
• A focus on mindful consumption and sustainable values: Many followers of the FIRE movement share a similar set of values, characterised by minimalism and mindful consumption. They view the consumer society we live in today with a critical eye.
• A sense of control and empowerment: Especially in times of upheaval and change, people increasingly seek points of stability in their lives. The FIRE movement gives them the feeling that they can actively shape their own future, rather than passively waiting for it to unfold.

So, as you can see, there are plenty of reasons why the FIRE movement is so popular. Let’s now take a look at the figures. How much wealth do you need to be able to retire early?

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3 types of the FIRE movement: Lean, Barista, Fat

The FIRE movement isn’t tied to a specific target figure, but rather exists along a spectrum. There are three distinct approaches that may appeal to different investment and lifestyle preferences.

The three strands of the FIRE movement:

• Lean FIRE: The most frugal form of the FIRE movement. The aim is to achieve financial independence through a very minimalist lifestyle. Expenditure is kept to a minimum and often covers only basic needs. Lean FIRE requires the smallest amount of capital of all the variants.
• Barista FIRE: This can be seen as a kind of ‘hybrid’ approach. Under this model, people give up their full-time job to take on a relaxed part-time role (e.g. as a barista, hence the name) that covers their living expenses. Barista FIRE requires a moderate amount of capital.
• Fat FIRE: This approach aims to achieve financial independence without having to give up your current comfortable lifestyle. Annual expenditure remains high (e.g. hobbies, travel, eating out), which is why the capital requirement is greatest here.

The magic number: How much of your wealth can you withdraw each year?

One of the most important questions we need to ask ourselves when investing is: How much money can I withdraw each year in the future without depleting my savings prematurely? You want to make sure, therefore, that you don’t withdraw too much of your money and thus risk ending up in poverty in old age.

In the following calculations, we assume that you intend to live off your investment portfolio for at least 30 years. To this end, we assume a risk-free withdrawal rate of 4.70% per year; until recently, this rate was slightly higher, at 4.0%.

The graph below shows that the probability of a successful withdrawal at a rate of 4.0% over 30 years is almost 100%.

In our calculations, we present both scenarios: one based on 4.0% and the other on the current rate of 4.70%.

As a second key factor, we assume that you will eventually receive a state pension. The state pension remains the most important form of retirement provision for most european citizens, but it is certainly not the best investment for pensioners.

Only 6% make use of private pension provision, which includes a portfolio with a traditional 70-30 allocation.

Let’s take a look at how much your pension would be if, in addition to receiving the state pension, you had also built up a private investment portfolio during your working years.

Pension and contribution points: This is how much you currently receive from the state

Pensions in Germany are determined by what are known as “contribution points”, which are also commonly referred to as “pension points”.

An earnings-related point is calculated based on the ratio between your income and the average income of all contributors in Germany. The table below shows how many earnings-related points you receive depending on your income bracket (low – average – high).

Contribution points by income bracket (as of 2026)

If you had earned an average income for 40 years, you would have exactly 40 pension points. As one pension point is currently worth €40.79, you would receive a state pension of €1,632 – gross. Social security contributions and, where applicable, income tax would be deducted from this amount. Your net pension would therefore be €1,410.

The table below shows how much your pension would be with a lower contribution and with a higher contribution.

Gross/net pension by pension category (as of 2026)

Let’s now look at how much your pension would be if you had additional private pension provision. To do this, we’ll consider three different pension scenarios: a small, average and higher pension, as well as different investment portfolio sizes, starting at €250,000.

FIRE Movement Scenario 1: A small pension

In Scenario 1, you will receive a small net state pension of €1,072. The table below shows the additional amount you would receive for different portfolio sizes. We have based our calculations on withdrawal rates of 4.70% and 4.0%, and have taken tax into account in each case.

Rentenplus for small pensions with different portfolio sizes

and withdrawal rates

So you can see that even with a small state pension, you can significantly boost your total pension. Even with the smallest investment portfolio of €250,000 and a 4.0% withdrawal rate, you would achieve an additional pension of 59%.

Next up is Scenario 2 in the FIRE movement: the total pension based on an average state pension.

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FIRE Movement Scenario 2: Average pension

In FIRE Scenario 2, we take the average pension you currently receive in Germany and calculate how much higher it would be if you had a private pension plan. To do this, we’ll take another look at the table below, which shows how your assets would look if you had 40 contribution points.

Most Germans will probably receive an average pension. That is why this table is particularly relevant.

Pension increase relative to the average pension for different portfolio sizes

and withdrawal rates

A portfolio of €250,000 might sound like a lot at first. However, if you start investing early enough, you can actually build up a much larger sum with a moderate interest rate of 7%.

The chart below shows that if you save €500 a month for 35 years, you will have accumulated nearly €600,000 – after tax. Even if you only invest for 15 years, you will end up with around €140,000.

You can see, however, just how important it is to start investing early. After all, the earlier you start, the longer you can benefit from the power of compound interest.

Let’s move on to our final scenario within the FIRE movement: a higher pension.

FIRE Movement Scenario 3: A higher pension

In Scenario 3 of the FIRE movement, we look at the total pension resulting from a higher state pension combined with private provision. In this scenario, pensioners receive 55 pension points.

Rentenplus: the higher pension for different portfolio sizes

and withdrawal rates

Note: Black 4.70%, Blue 4.0% withdrawal rate

The table of top earners quickly shows us just how high the total pension can be with additional private provision. In the best-case scenario, with a portfolio worth 1 million, this amounts to a full €4,800 net per month. That is certainly an amount that would allow you to live very comfortably.

At the same time, it is important to bear in mind that €4,800 in 2026 will not have the same purchasing power as it will at a later date. It is therefore important to factor inflation into calculations made at a later date.

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Conclusion: The FIRE movement makes you independent of the state

The FIRE movement has gained considerable popularity, particularly in recent years. It enables people to take control of their financial future and live life on their own terms. As we have shown in today’s article, it makes a huge difference whether you rely solely on the state pension or make additional private provisions for your retirement.

ETFs are a popular way to save for the future. But you can also use P2P lending to build up a sustainable nest egg that will give you greater security and peace of mind later on. I’ve already gained plenty of experience with P2P lending. Gain further insight into investing by comparing ETFs and mutual funds.

FAQ: Is the FIRE movement something to aim for?