Retiring at 40 in France: the FIRE movement guide
Updated on 27 July 2026
The FIRE movement (Financial Independence, Retire Early) aims for financial independence and early retirement through a very high savings rate and long-term investing. This guide explains its principles, the 4% rule, the useful French tax wrappers (the PEA, a tax-advantaged equity savings account, and life insurance) and the limits of an approach that carries significant risks.
- The 4% rule assumes you hold around 25 times your annual expenses before living on withdrawals of 4% a year.
- The most cautious consider that rate optimistic and target a 2.5% withdrawal, meaning 40 times their annual expenses.
- FIRE followers often save 50% to 75% of their income, against around 10% for a typical household.
- The PEA exempts gains from income tax after 5 years and life insurance after 8 years, but social security contributions remain due.
- A FIRE strategy relies on heavy exposure to equities, and therefore on a risk of capital loss.
What is the FIRE movement?
The FIRE movement, which stands for Financial Independence, Retire Early, is a philosophy of life that encourages aggressive saving and investing in order to reach financial independence as early as possible. Followers of the movement seek to save and invest a large share of their income, often 50% or more, so they can retire early, sometimes even before 40.
Origins of the FIRE movement
The FIRE movement emerged in the 1990s, following the publication of the book "Your Money or Your Life" by Vicki Robin and Joe Dominguez. It has grown considerably over the past 10 years, becoming a genuine movement with followers all over the world. FIRE followers all share one goal: to become financially independent so they can retire as early as possible, some of them managing it at 30.
The principles of the FIRE movement
The FIRE movement rests on four core principles:
Frugality: this means cutting spending to the strict minimum. That can include renting a small flat instead of buying, avoiding non-essential purchases such as cars and jewellery, using a bicycle to get around, and repairing rather than replacing broken items.
Earn more: to go FIRE, you need to generate substantial income. Below 50K a year, it will be very difficult.
Save: FIRE followers aim to save the majority of their monthly income (after tax). Where an average person would put 10% aside, a FIRE follower would target 50%, or even 75%.
Invest: all the savings are invested in a 100% equity ETF allocation (the highest risk profile) in order to generate the largest returns (average historical returns, not guaranteed; past performance is not a reliable indicator of future performance). Buy-to-let property is another option. Wrappers such as the PEA or life insurance can offer a favourable tax framework depending on your situation.
The philosophy behind the FIRE movement
Seeking freedom rather than wealth
At the heart of the FIRE movement lies the idea that financial freedom matters more than material wealth. Instead of accumulating possessions, FIRE followers seek the freedom to spend their time as they wish. That can mean the ability to travel, to spend more time with family and friends, to pursue hobbies or passions, or simply to enjoy life without financial stress.
The importance of quality of life and free time
The FIRE movement also puts the emphasis on quality of life and free time. Rather than working long hours to earn more money, FIRE followers prefer to work less and have more free time. That can mean working part time, volunteering, or retiring early.
Goals
How do you reach financial independence? The 4% rule
The 4% rule, also known as the safe withdrawal rate (SWR), is a key concept of the FIRE movement. It states that if you have 25 years of annual expenses set aside and you spend 4% of it a year, you will never run dry. The rule is based on the Trinity Study, an academic study published in 1998 that analyses US market returns (equities and bonds) over the 1926-1995 period. According to that study (Cooley, Hubbard and Walz), a portfolio made up of 50% equities and 50% bonds survived 95% of the 30-year periods analysed with a 4% withdrawal rate.
| % of salary invested | Retirement age |
| 10% | 65 |
| 25% | 65 |
| 50% | 50 |
| 75% | 33 |
| 80% and above | 30 |
If you want to run precise simulations, this wealth simulator will help.
What are the steps towards financial independence?
Reaching financial independence takes four steps: setting a budget and tracking your spending, factoring in inflation, saving and investing the surplus, then planning your retirement in concrete terms.
Set a budget and track your spending
The first step towards financial independence is to set a budget and track your spending. This lets you see where your money goes and find ways to spend less. Victor, for instance, used an online tool to track his net worth and his spending in real time. We offer a budget calculator that can help you do exactly that. And we have also reviewed the best budgeting apps.
Factor in the impact of inflation
Inflation is an important factor to take into account when planning your retirement. It can erode the value of your savings and reduce your purchasing power over time.
It is therefore important to factor inflation in when working out how much money you need to retire. That can mean saving more, or investing in assets that deliver a real return after inflation.
Save and invest
The third step is to save as much as possible and invest your savings. That can mean investing in low-cost index funds, individual stocks, bonds, property, parking spaces or other types of investment. The goal is to generate passive income that can cover your living expenses.
Plan for retirement
The fourth step is to plan for retirement. That can mean working out how much money you will need to live comfortably in retirement, deciding how much you need to save and invest every year to reach that target, and setting out a plan to get there.
Which investment strategies help you reach financial independence?
Reaching financial independence calls for a multi-faceted approach to investing. Victor, for instance, used a combination of stock market, property and business investments to reach his target.
Investing in property
Property investment is another important component of the FIRE strategy. Victor started by buying a flat in Paris, which he then rented out to generate passive income. He also used a property strategy known as "nue-propriété" (bare ownership), which let him separate the income from the property from the ownership of the walls, and so increased his borrowing capacity.
Investing in the stock market
Stock market investing is a key component of the FIRE strategy. Victor recommends opening low-tax accounts and investing regularly in low-cost index funds such as ETFs (Exchange Traded Funds). These funds replicate the performance of a specific stock market index, such as the S&P 500, or the CAC 40, and generally carry very low management fees.
Here is a sample comparison table of the ETFs Victor recommends:
| ETF | Provider | Asset class |
|---|---|---|
| Amundi MSCI World UCITS ETF (CW8) | Amundi | Global equities |
| Amundi MSCI World UCITS ETF (ex-Lyxor) | Amundi | Global equities |
Starting businesses
On top of stock market and property investing, Victor also started several businesses to generate passive income. Those businesses were automated as far as possible, which let him keep generating income without having to devote much time to them.
The importance of diversification
Broad diversification is a key strategy for minimising risk and maximising returns. It means investing in a variety of assets, including equities, bonds, property and other types of investment. Victor, for instance, spread his investments across property, equities and bonds.
Optimising taxation for retirement
The tax reduction schemes available on investment income are another important factor to take into account when planning your retirement. In France, investment income is subject to income tax and to social security contributions.
It is therefore important to weigh the impact of taxation on your investment income when planning your retirement. That can mean choosing investments that benefit from favourable tax treatment, such as life insurance or the PEA (Plan d'Épargne en Actions).
Life insurance
Life insurance is a popular investment tool in France because of its tax advantages. Gains made inside a life insurance policy are generally exempt from income tax after eight years, provided withdrawals stay below a certain amount.
For example, if you hold a life insurance policy with 150,000 euros of capital and you withdraw 4% a year (that is 6,000 euros), after 8 years you benefit from an annual tax allowance (€4,600 single / €9,200 couple) on the gains; social security contributions remain due.
The PEA (Plan d'Épargne en Actions)
The PEA is another investment tool that offers tax advantages. Gains made inside a PEA are exempt from income tax after 5 years (social security contributions remain due); a life annuity is not a condition.
For example, if you hold a PEA with 150,000 euros of capital and you withdraw 4% a year (that is 6,000 euros), you will be exempt from income tax on the gains portion, subject to social security contributions.
Investing in property directly
Investing in property directly can also offer tax advantages, through certain French schemes (Malraux, déficit foncier and so on); the Pinel scheme ended on 31 December 2024. These schemes cut income tax in exchange for investing in buy-to-let property.
The challenges and criticisms of the FIRE movement
Frugality rather than FIRE?
The FIRE movement is a fine lesson in philosophy: better to focus on what matters and strip the superficial out of your life. Goodbye Tesla and endless restaurants, hello bicycle (electric, let us not overdo it) and home cooking. It is also an important reminder about investing (and about how compound interest works): invest early and invest regularly. French regulated savings accounts pay limited interest but keep the capital safe; their place depends on your profile and your goals.
In practice, this extreme philosophy of life demands enormous discipline. Most of us have absolutely no desire to count every cent in order to stop working at 35.
At Finary, we think the most important thing to secure as quickly as possible is your independence. The quote "Do what you love and you will never work a day in your life" may be as corny as they come, but it is true. Retiring is not an end in itself; better to do what you love (and ideally be paid for it). FIRE has the merit of showing that nothing forces us to run all our lives to (finally) enjoy some freedom at 65 or later.
Minimalism rather than FIRE?
The FIRE movement is for purists. Putting it into practice is very complex and demands great discipline. But there are excellent ideas to take from this radical method:
- Take stock of your wealth: understanding your wealth helps you invest better.
- Holding a safety net can make sense: 6 months of expenses in a Livret A or a life insurance policy with 72-hour withdrawals.
- Invest: once your safety net is in place, invest everything you save through a tax-efficient wrapper (the PEA first, then life insurance).
- Take risk: a long investment horizon generally allows for greater exposure to risk, depending on each investor's profile, and therefore for investing in the stock market, mainly in equities.
- Managing your assets: remember that an asset that produces no income becomes a cost centre.
- Preparing for retirement: the French state pension system keeps deteriorating. Better to get ahead of it by looking for an activity that will let you become financially independent.
Is the FIRE movement for you?
Personal assessment and reflection
Pursuing financial independence is a personal decision that depends on your goals, your values and your risk tolerance. It is important to think about what you really want in life and about what you are prepared to sacrifice to get it.
The advantages and drawbacks of financial independence
Financial independence offers many advantages, in particular the freedom to spend your time as you wish, the option to retire early, and financial security. It also has drawbacks, however, in particular financial risk, the sacrifices involved, and uncertainty.
In the end, the FIRE movement is not for everyone. But for those prepared to make the necessary sacrifices, it holds out the promise of financial freedom and a better quality of life.
Frequently asked questions
How much do you need to be financially independent?
Under the 4% rule, you need around 25 times your annual expenses. For 30,000 euros of expenses a year, the target is therefore around 750,000 euros invested. Cautious profiles target 40 times their expenses, meaning a 2.5% withdrawal rate.
What savings rate do you need to reach FIRE?
There is no single threshold, but FIRE followers often save between 50% and 75% of their income, against around 10% for a typical household. The higher the savings rate, the sooner financial independence arrives.
Which tax wrappers should you favour in a FIRE strategy?
In France, the PEA and life insurance are often favoured. The PEA exempts gains from income tax after 5 years and life insurance offers an annual tax allowance after 8 years. In both cases, social security contributions remain due.
Do you need to invest in property to succeed at FIRE?
No, buy-to-let property is not compulsory. It is one way to generate passive income and use the leverage of credit, but a FIRE strategy can rest solely on diversified stock market investments such as equity ETFs.
Does the FIRE movement carry risks?
Yes. It assumes heavy exposure to equities, and therefore a risk of capital loss and high volatility. A lasting market fall, an excessive withdrawal or sustained inflation can exhaust the capital sooner than expected. Past performance is not a reliable indicator of future performance.
Sources
Service-public.gouv.fr, plan d'épargne en actions (PEA): taxation after 5 years
Wikipedia, Trinity study: the origin of the 4% rule
Regulatory disclaimers: Marketing communication. Investing carries a risk of partial or total capital loss. Past performance is not a reliable indicator of future performance. This article is provided for information and educational purposes only; it does not constitute personalised investment advice, a buy or sell recommendation, or tax advice. Before investing, read the Key Information Document (KID) and, where relevant, consult an authorised adviser. Finary SAS, an investment firm authorised by the ACPR under no. 19283, member of AMAFI. Insurance broker registered with ORIAS under no. 21001279, member of the CNCGP (association approved by the AMF). Crypto-Asset Service Provider (CASP, "PSCA" in French) authorised by the AMF under the MiCA regime, references no. A2026-026 and no. N2026-008.
