How Gen Z Can Retire by 40 on the FIRE (Realistic Steps)

How Gen Z Can Retire by 40 on the FIRE (Realistic Steps)

Gen Z is changing how retirement works—by using FIRE to gain freedom decades earlier than previous generations.

Imagine this: You're 39, sunbathing on a beach or working on a hobby business—not because you won the lottery, but because you planned in your 20s. This is not a fantasy for just lottery winners or tech entrepreneurs. More and more Gen Zers are planning to retire early on a strategy known as FIRE—Financial Independence, Retire Early.

While previous generations took decades to chip away at classic retirement age 65, Gen Z is turning the tables. With the right attitude, sensible planning, and some changes to your lifestyle, retiring at 40 isn't merely achievable—it's feasible.

Let's take a closer look at what FIRE entails, how it functions, and what you can do to begin your own early retirement journey.

What FIRE Really Means

FIRE stands for Financial Independence, Retire Early. It's not about never working again—it's about reaching a point where working becomes a choice, not a necessity. Once your savings and investments generate enough income to cover your living expenses, you're financially free.

Rather than concentrating on job titles, FIRE concentrates on freedom. The idea picked up steam during the 2010s and has since gone viral across platforms such as Reddit, YouTube, and now TikTok. For Gen Z, it's a movement, not just a fad—it's a mindset change.

Why FIRE Speaks to Gen Z

Gen Z came of age in uncertain times—economic downturns, global pandemics, and increasing living expenses. They have witnessed how conventional job security does not necessarily mean financial security. Freedom, purpose, and flexibility matter more to this generation than ladder climbing in corporations.

With side hustles, investing apps, and online financial education at their fingertips, Gen Z is in a position to take FIRE seriously like no other generation before. They don't shy away from challenging old norms, and they're not waiting until age 60 to live.

Step One: Know Your FIRE Number

If you're going to get early retirement, you first need to know how much money you'll actually require. This is your FIRE number.

Here’s a simple formula: multiply your expected annual expenses by 25.

Let’s say you plan to live on $40,000 a year. Multiply that by 25, and your FIRE number is $1 million. That may sound overwhelming at first, but remember—you don’t have to save all of that. You invest, and your money grows over time through compound interest.

The more you reduce your expected expenses, the lower your FIRE number becomes. It's not about living cheaply forever—it’s about living intentionally.

Living Below Your Means (Without Hating It)

No, FIRE doesn’t require you to give up coffee or live in a cabin. But it does mean spending with purpose.

Perhaps the strongest aspect of FIRE is developing the skill of distinguishing between wants and needs. Rather than splurging on an annual new phone or leasing a high-end vehicle, many FIRE enthusiasts seek value rather than status. They find means of living in enjoyment without high prices—such as eating in more frequently, splitting rent, or discovering free pursuits rather than expensive nights out.

It's not deprivation. It's knowing your priorities and eliminating the nonsense that doesn't serve you.

Boosting Income the Smart Way

There is only so much you can slash from your expenses. That's why increasing your income is just as vital.

Gen Z is killing it. Whether online freelancing, side hustling, learning to code, or creating content on sites like TikTok and YouTube, youth are discovering ways to make more money. Some freelance as a gig worker such as a rideshare driver or food delivery person to make extra money on the side.

It is all about taking that additional money and investing it—not just spending it.

Investing Is Non-Negotiable

Putting money in a bank account will not lead you to early retirement. Your money needs to work for you, and that requires investing.

The majority of FIRE enthusiasts adhere to long-term approaches such as investing in index funds, Roth IRAs, 401(k)s, and low-fee ETFs. You don't have to be an expert in finances. Websites such as Fidelity, Vanguard, Robinhood, and Betterment provide a simple way to automate investments.

Begin small—$100 per month even is a difference in the long run. The sooner you begin, the more compounding interest has your back. Consider your money a little worker who never sleeps and always makes more.

Avoiding Lifestyle Creep

When you get a raise, it's hard not to spend more. That's lifestyle inflation, and it's one of the greatest enemies of your journey to FIRE.

Rather than spending more each time you receive a raise, try to keep your lifestyle consistent and invest the disparity. That's how many early retirees accumulated wealth quickly—by keeping their budget constant while expanding their income.

Keep in mind, every dollar you don't use today purchases freedom tomorrow.

Flexibility Is Your Friend

The best thing about FIRE? It's not all-or-nothing.

You may set your sights on Lean FIRE—simple living and early retirement with fewer expenses. Or perhaps Fat FIRE—retirement with a greater level of living. Or Barista FIRE, where you achieve partial financial independence and work part-time at something you love. And Coast FIRE—where you invest aggressively early in life, then let the money grow while you work less.

Your FIRE strategy can—and should—change as your life does.

Building a Support System

Early retirement is simpler when you don't have to do it solo. Connect with online FIRE  groups on Reddit, YouTube, or TikTok. Subscribe to creators who simplify complicated concepts into down-to-earth advice. Take cues from others who began with debt or low salaries but remained committed.

Listening to other individuals' success stories—and failures—may keep you grounded and inspired.

Real-Life Example: It's Already Happening

Consider Kayla, a 28-year-old who started her FIRE adventure post-college with $30K in debt. She relocated to a less expensive city, secured a remote marketing job, and started saving more than 50% of her income. By age 32, she reached her Coast FIRE target. Today, she works part-time as a freelancer writer—and she's enjoying the ride.

Stories such as hers aren't inspirational only. They're evidence that FIRE is not limited to the ultra-wealthy. It's for anyone who will prepare, remain resolute, and live on purpose.

Final Thoughts: Gen Z's Retirement Revolution

Retiring by age 40 isn't about never having to work—it's about deciding how you spend your time.

To Gen Z, FIRE is not just a trend—it's a roadmap to freedom. It's a means to break free from paycheck-to-paycheck anxiety, follow their passion, and live on their own terms.

You don't require a six-figure income to begin. What you need is clarity, self-control, and the willingness to think unconventionally. If you begin today—no matter how small—you'll be light-years ahead of those waiting until "someday."

Because where your future is concerned, later is too late.