How to Achieve FIRE on Less Than a Six-figure Salary

Years ago, early retirement meant exiting the workforce in your late 50s or early 60s. But the financial independence, retire early (FIRE) movement is changing that, giving hope to those seeking to escape the nine-to-five grind long before their 60s. While many success stories highlight high-earners who retire in their 30s, the truth is you don’t need a six-figure salary to achieve FIRE.

With discipline and a long-term plan, even modest-income earners can be on a path to financial independence.

Determine Your FIRE Number

Your FIRE number is the amount you need to retire early and live off your investments. To calculate your FIRE number, multiply your annual living expenses by 25. This assumes a 4% safe withdrawal rate.

For example, if you spend $30,000 per year, your FIRE number is $750,000. Knowing this goal helps you set clear goals and track your progress toward financial independence.

Shift Your Mindset

If FIRE is the goal, you have to shift your mindset. It starts with the belief that your income doesn’t define your future. What matters more is how you manage your number.

“The amount of money you need to be financially independent is based on how much you spend, not how much you make. I think that can be motivating for lower earners,” said Madison Sharick, chartered financial analyst, CFP, and founder of Madi Manages Money.

Live Below Your Means

In the United States, the average annual salary is $66,662, which is enough to successfully reach FIRE. However, in order to do so, you’ll typically need to live well below your means. The goal is to create a wide gap between what you earn and what you spend, and then invest that gap. This can be done by living frugally, but that doesn’t necessarily mean sacrificing the things you love.

For example, if you love travel, prioritize that, but compromise by eating out less and cooking at home, or biking and taking public transportation instead of driving. Even buying secondhand can save you an average of $1,760 per year. This could also mean taking more drastic steps and relocating to a low-cost of living area to stretch your dollars even further.

“Moving to a lower cost-of-living area makes FIRE more feasible for lower earners. This is an unpopular opinion, but in today’s economic reality in the U.S., it is virtually impossible to FIRE with a low income in high-cost-of-living areas,” Sharick said.

If moving to a low-cost area isn’t an option, consider renting out a spare room in your home or living with roommates to reduce your living costs and boost your saving rate, or the percentage of income you consistently set aside.

Save Aggressively

While higher earners have more advantages when it comes to participating in FIRE, even those making modest incomes can employ strategies to increase their savings rate.

“Save rate math shows that the timeline until we reach FIRE is proportional to the amount of your income that you save,” Sharick said. “The person who earns $1 million a year but spends $500,000 of it will get to financial freedom as fast as someone earning $50,000 who spends $25,000. Honing in on your save rate and working to dial it up is how you accelerate progress.”

Start by tracking every dollar for a few months to identify unnecessary spending. Once you’ve cut these expenses, automate your savings.

Invest Wisely

Many feel intimidated by investing because they don’t earn six figures and assume it’s only for the wealthy. However, investing is more about consistency and smart choices. Retirement accounts like Roth IRAs are a great tool to grow your savings tax-free.

“If you have a limited income, it may be a great time to contribute to a Roth IRA,” Sharick says. “Investors can contribute up to $7,000 per year into a Roth IRA. On the inside, most investors are best served by buying low-cost index funds, setting them and forgetting them.”

Also, you don’t want to overlook how valuable workplace benefits—like your 401(k) plan or Health Savings Account (HSA)—can be when building long-term financial security. If you’re not sure what’s offered, inquire with your employer.

“At a bare minimum, always contribute enough to get your full 401(k) match. It’s not exciting or fancy, but it works,” says Sharick.

Pick Up a Side Hustle

If your earnings fall short, don’t feel defeated. Today, side hustles are more accessible than ever. Consider driving for rideshare apps, doing laundry, or tutoring. Even $300 to $500 extra per month can accelerate your FIRE journey when invested.

“If you’re aiming to accelerate how much you can invest per month and are a lower earner, chances are good you don’t have much you can trim from an already frugal budget. Increasing the amount you make per month is the most effective variable you can flex,” said Sharick.

The Bottom Line

FIRE isn’t just for the ultra-wealthy or high earners. With intentional saving, smart investing, financial independence can be within reach, even on a modest income.

“When you’re earning less, you have to get creative. Be prepared to do things that your friends might view as unconventional. Expect this to feel like an all-consuming goal, at least for a season of your life. Remember that as you’re hustling on this adventure, you’re creating memories that you might even look back on fondly,” said Sharick.