FIRE is ultimately about being set for life. You build a portfolio big enough to cover your expenses, and then your one job is to not blow it up.
But here's the tension worth talking more about. The moment you give up your paycheck, you also give up your single biggest wealth-building engine: active income. And most of us, even after we hit financial independence, still want to make more money. We just don't want to crawl back into a cubicle to do it.
The Dumbbell FIRE investing method solves this. You structure the core of your portfolio to be safe, boring, and bulletproof. Then you take every dollar above that line and bet on growth. Safe on one end, aggressive on the other, and nothing mushy in the middle.
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How Much You Actually Need To FIRE
The minimum level of investments to be considered financially independent is 20X your annual expenses in investments. This is the inverse of Bill Bengen's updated 5% safe withdrawal rate, up from 4%, which would mean 25X annual expenses.
But I've been writing about FIRE since 2009, and nobody, absolutely nobody, retires with only 20X to 25X their annual expenses. Part of the reason is that the 4% and 5% Rules were built for traditional retirees age 60 and up. The withdrawal rate was designed to last 30 years, which traditionally meant until you died.
If you FIRE at 34 like my wife and I did, that math feels way too tight. The odds are good that we'll both live past 64, so we'd be nervous not to keep earning something.
Even people who FIRE at 50 or 55 rarely leave with less than 25X their annual expenses. So I've proposed an alternative: aim for 20X your average annual gross income instead. This way it's harder to cheat by slashing costs, and it forces you to save and invest more as your income grows. Or just shoot for 40X to 50X your expenses and call it a day.
The Realization Almost Every Retiree Has
If you finally do retire, I'm pretty sure you'll eventually realize you didn't need to wait so long or save so much before taking the leap. The newfound freedom and the drop in daily stress more than make up for the lost paycheck. And you'll naturally adjust your expenses to fit a comfortable withdrawal rate.
For most retirees, this realization is one of the biggest tragedies in life, because you can't go back in time. So please take heed. If you've had a gnawing desire to do something new for a while, listen to it.
The catch is that the earlier you FIRE, the greater the risk of running out of money. So the standard advice is to pick up a side hustle for supplemental income. That income lowers your withdrawal rate, or lets you avoid touching your principal at all. Many folks do this because they find something fulfilling that also happens to pay. Financial Samurai is exhibit A.
But what if you have zero desire to start a side hustle and still want to build more wealth? That's where the dumbbell comes in.
The Dumbbell FIRE Structure
The framework is simple:
First, invest enough of your capital to generate the passive income that covers your desired living expenses. This usually means lower-volatility, lower-growth holdings: bonds, CDs, money markets, utilities, telecom, large-cap dividend stocks, private real estate, REITs, and physical real estate.
Second, once you've carved out enough to cover your expenses forever, invest everything that's left into higher-growth assets. Think tech startups, private growth companies, the NASDAQ index, and even the S&P 500, given how much weight now sits in the Mag 7. These can be public or private.
Your Stable Investments Are Your Rich And Supportive Spouse
Most people would love a rich spouse who either brings home the bacon or comes from money with no strings attached. Being taken care of is nice.
So think of your passive income investments as your loving spouse. Always there, always providing, taking care of you forever, right up until you make some ill-advised decision that blows up your freedom. Treat them well and they'll treat you well.
Your Growth Investments Are Your Mercurial Self
Once that security is built, you can pour every remaining dollar into growth assets given your desire for more. These give you the best shot at outpacing the typical passive index holder. Growth companies plow their retained earnings back into the business instead of paying dividends, because they see a higher return on CAPEX than on cutting you a check.
I've argued since 2009 that growth stocks are the way to go in your 20s, 30s, and 40s. You want to build your capital base as fast as possible so you can break free as fast as possible. Once you've got at least 25X your annual living expenses invested, you can gradually start converting some of it into income-paying assets. Just keep good records of any losses along the way, because your tax bill on the conversions might be brutal.
When you buy dividend stocks, you're buying companies that have no better use for their cash than handing it to you. They're mature, cash-rich, with defensible moats and fat margins. Compare that to startups and high-growth companies that lose money today in hopes of enormous profits tomorrow. SpaceX is one of those. Amazon was another for over a decade.
How Big Should Your Growth Bucket Be?
This is the question that actually matters, and it depends on how much upside you want versus how well you sleep at night.
| Your appetite | Growth bucket (% of net worth) | Minimum amount necessary to FIRE | The trade-off |
|---|---|---|---|
| More safety (Traditional FIRE) | 0% – 20% | ~25X – 30X annual expenses | Peace of mind, less upside, and real inflation risk over a 40+ year retirement |
| Balanced (my recommendation) | 21% – 40% | ~31X – 40X annual expenses | Lifestyle fully covered, plus a real shot at building serious wealth |
| Aggressive | 41% – 60% | 41X – 50X expenses or higher, or strong ongoing side income | Big swings in both directions. Best if you also have supplemental income from fulfilling part-time work |
If you FIRE with 25X to 30X your annual expenses, you're technically financially independent. But you likely won't feel 100% secure, unless you invest 80% – 100% into lower risk investments.
The only people who should consider a 100% growth allocation are those with a lifetime pension covering 100% of their living expenses. Their downside is already protected.
Most retirees don't have pensions. So the main way to feel more secure is to grow your investments to a higher multiple of annual expenses. The higher the multiple, the more you can carve out for growth if you so choose.
The Dumbbell FIRE Method In Action
Let's say you're a family of three living in a medium-expensive city like Denver. Your annual budget is $120,000 after taxes, which means you need about $160,000 a year in gross passive income to FIRE, assuming a 25% effective tax rate.
You invest up to the point where your portfolio comfortably throws off that $160,000, and then you invest the rest for growth. Here's how it looks.
The passive income investments (cover their lifestyle forever)
| Investment | Yearly passive income | Growth potential |
|---|---|---|
| $120K in money markets at 3.5% | $4,200 | Low |
| $500K in Treasury bonds at 4.3% | $21,504 | Low |
| $1M in the Dividend Aristocrat ETF (NOBL) at 2.2% | $21,996 | Low-medium |
| $500K in the S&P 500 index at 1.2% | $6,000 | Medium |
| $600K rental condo (no mortgage) | $28,800 | Low |
| $1.3M rental house 1 (no mortgage) | $50,400 | Medium |
| $700K rental house 2 (no mortgage) | $30,200 | Medium |
| Total ($4,720,000 in assets) | $163,100 | — |
The growth investments (pure upside)
| Investment | Growth potential |
|---|---|
| $750K in individual tech stocks | High |
| $500K in venture capital | High |
| $100K in angel investing | High |
| $250K in venture debt | Medium-High |
| Total | $1,600,000 in assets |
Grand total net worth: $6,320,000. The growth bucket is $1,600,000, or about 25% of total assets. That puts this family squarely in the balanced zone from the table above.
Protected, with real upside
As you can see, the family's lifestyle is completely covered. The passive income bucket generates about $163,100 a year in gross passive to semi-passive income to pay for $120,000 a year in after-tax expenses.
The only meaningful equity-crash exposure on the safe side is the $500,000 in the S&P 500 and the $1 million in a dividend ETF. Say the market tanks 50% in a brutal year. On paper, those positions halve to $750,000 combined, which stings.
However, even in the 2008 to 2009 crash, S&P dividends fell only about 20% while prices fell by half. So their combined $28,000 in dividends might dip to around $22,400, so not that big of a dip. Dividend yields simply go higher.
Now of course, the rental properties could tank as well. However, for the vast majority of landlords through the corrections and bear markets, tenants generally stay put and keep paying their same rent. The average bear market duration is only about 9.5 months with a 35% average drawdown.
Growth investments can collapse and they'll still remain FIRE
With their lifestyle covered, the family can afford to put $1,600,000 into riskier higher-growth assets. This also kills investing FOMO as their still-working friends keep building wealth. These growth investments can be locked up for years, like venture capital, and the family doesn't care because it has cash flow and cash on hand.
Even if the entire growth bucket collapses 50%, the family is fine. But if it 6.5X's to $10.4 million over 10 years, they've built an extraordinary amount of wealth.
6.5X might sound aggressive, but that's exactly how much the NASDAQ index grew from 2015 through 2025. That's a 20.6% compound annual return.
More Upside For Those Who FIRE
Once you've set up your dumbbell, where you can't really lose and might make a lot more, you're 100% free to chase whatever gives you fulfillment. And fulfilling work often ends up making money. Every extra dollar can go straight into the growth bucket, because the safety bucket is already covered.
This is the path I've taken. Writing on Financial Samurai gives me fulfillment, which is why I've kept at it since July 2009. It also generates online income, which I've plowed mostly into growth investments since leaving my day job in 2012.
Back then, I had about $2.5 million in investments generating roughly $80,000 a year in passive income, plus another $500K of equity in my primary residence. I also had a severance package covering 100% of my living expenses for five to six years, and a wife three years younger who was willing to work three more years before FIREing herself.
With my downside covered, I went on offense at 34. I was done working 60+ hours a week for someone else, but I still wanted to grow my wealth in case I one day started a family.
My Dumbbell FIRE Investing plan from 2012 – Now:
- Invest 100% of my severance into the S&P 500 and DJIA via a structured note product.
- Invest 50%+ of any online income into public tech stocks, since I lived in San Francisco and couldn't participate through employment.
- Invest 50%+ of any online income into public and private venture capital, since I couldn't join private growth companies like Airbnb and Anthropic.
- Invest 50%+ of any online income, plus extra passive income and my wife's active income, into San Francisco real estate, the picks-and-shovels play.
The idea was to run this for 10 years, from 2009 to 2019, and see what happened. It was easy while I still had a day job, and not much harder after 2012, since 15 to 20 hours a week kept the site growing, until AI showed up.
Investing 50%-plus is impossible now. Our family expenses have gone up, and our passive income went down after we bought a home in 2023 we didn't need. Out of desire, I violated my own rule and touched my safer investment bucket. However, it's made the new challenge of rebuilding our passive income to 100% coverage a motivating challenge.
The Dumbbell FIRE Method Works Extremely Well
After 17 years of writing about FIRE, and more than 14 years without a day job, I can say without hesitation that the dumbbell FIRE investing method is worth adopting if you want to build more wealth after retirement.
It is not easy to give up your maximum earning potential, along with all the status and prestige that comes with a big job. Working one more year to get your investments above 30X normal annual expenses is worth it. But if you do leave work behind, congratulations. You're free to focus on what matters. And if you still want to build wealth, you can, with the dumbbell.
You might not grow your net worth as fast as your working peers. Hopefully that doesn't matter too much. The whole reason you could FIRE is that you built a portfolio covering your living expenses in the first place.
So building more wealth in FIRE is like playing with the house's money and winning even more. The key is to never lose to the house by overly risking your passive income investments. Protect those at all costs.
For those of you who have already retired, how do you deal with the itch to keep building wealth? What kind of FIRE investing method do you use so you're not missing out on too much future upside, especially if you've got kids who might need your financial help one day? And has your net worth actually grown since you retired, or has it mostly held flat?
Build Both Ends Of Your Dumbbell With Fundrise
Private real estate for steadier returns. Venture for the growth side.
The hardest part of the dumbbell method is access. Most people can't get steady private real estate income or a venture portfolio without a big checkbook and the right connections.
Fundrise helps with both ends. Their private real estate funds aim to generate passive income with less volatility than stocks, which is exactly what you want anchoring the safe side of your portfolio. And their venture strategy gives you exposure to private growth companies, the kind of thing most of us can't touch through a regular brokerage.
There may be more on the growth side soon. Fundrise has filed for a second venture fund. It isn't available yet, so there's nothing to buy today, but it's worth keeping on your radar if you want to add to the aggressive end of your dumbbell down the road.
I've invested with Fundrise for years because it lets me play both ends of the dumbbell from one account, starting small and adding over time.
Fundrise is a long-time sponsor of Financial Samurai, and I'm personally invested in their funds. That relationship helps keep this site free to read.
Hey Sam,
I have been an avid reader of Financial Samurai since the early days, and since we both overlapped at Goldman Sachs — I was in Tech — I felt that after all these years of reading, it was time I gave back a little and shared my own situation.
I FIRE’d last year after getting tired of the constant pressure in tech sales. My wife and I keep our finances separate and have a postnuptial agreement, which was requested by her family.
At the time, I had roughly $1.5 million in real estate equity across our primary residence and a rental property, $300,000 in my 401(k), $250,000 in a taxable savings account, and $100,000 in gold, for a total of about $2.15 million.
My wife had roughly $4.1 million in a balanced portfolio yielding about 2.25%, $250,000 in home equity, and $100,000 in gold, for a total of about $4.45 million.
Together, we were sitting at roughly $6.6 million.
Given my prior success in real estate and our desire to reduce living expenses, we decided to sell our primary residence, take roughly $500,000 of gain tax-free, and buy another primary residence with the goal of fixing it up and selling it after two years to potentially maximize tax-free gains again.
We sold our home, realized the gain, and also got back roughly another $500,000 from our original down payment and capital improvements. I then found an estate sale property that I purchased for $900,000 with 50% down. The mortgage rate was 7.5%, much higher than I wanted, but given my plan to sell after two years, I viewed it as part of the cost of doing business.
Around the same time, I started researching where else to deploy capital. Before AI became fully mainstream, I developed a thesis that AI was a generational investment opportunity.
I was fortunate enough to put roughly $1 million into Anthropic, OpenAI, Cerebras, Lambda, Shield AI, Lightmatter, Glean, and Vectra. To do that, I cleaned out my 401(k) and paid the penalties, pulled money from my taxable accounts, and refinanced my rental property at a higher rate to access equity. That was obviously aggressive, but my years of building ROI models for customers and identifying technology trends gave me conviction in the opportunity.
Fast forward about 18 months, and that $1 million is now marked conservatively around $4.4 million. I have even received offers on my Anthropic position at about 2x the current valuation, which would value that position alone at roughly $6 million. If Anthropic goes public by the end of the year at anything close to current private-market indications, I could be near $10 million in AI holdings alone, not including roughly $500,000 in real estate equity and $100,000 in gold.
Conservatively, I estimate that I am around $5 million as of July 2026.
My wife’s portfolio is now around $4.4 million, with roughly $500,000 in real estate equity and $100,000 in gold. I tried to get her to invest $250,000 in Anthropic, but she felt it was too risky. She is also now around $5 million.
We plan to sell our primary residence next spring and move to a beautiful East Coast island, where we expect to buy our dream home from family friends who do not have children and treat us like their own. It is a modest home, but expensive because of the exclusivity of the area and the high cost of land and construction. The property is worth around $3 million, and we expect to acquire it at more than a $1 million discount. My goal is to carry at most a $300,000 to $500,000 mortgage.
The challenge now is that things are evolving very quickly. The barbell is getting much heavier on the growth side because of AI, and I am very reluctant to trim my core AI holdings. I believe we are still early in the cycle and that there is significant compounding ahead.
Based on my model and the growth trajectory for Anthropic, my AI fund could be close to $10 million by year-end. Over the next three years, I am forecasting the potential for $20 million or more in the AI fund alone, though I understand that private marks, liquidity, IPO timing, and valuation multiples can change quickly.
My strong belief is that AI is still in the early stages, and I am reluctant to sell my Anthropic and OpenAI positions until growth clearly starts to normalize.
We have a private banking relationship with Bank of America, and they have indicated that once the holdings are liquid, they may be willing to provide a pledged collateral loan at around 5%, with a 40% to 60% LTV. One option I am considering is borrowing roughly 5% per year against the portfolio, using 2.5% for living expenses and another 2.5% to gradually build an indexed portfolio. Another idea I am exploring is learning more about selling put options, though I do not want to accidentally compromise or sell my core positions.
I am still trying to figure out the right framework. What would you recommend if selling my Anthropic and OpenAI positions is essentially a non-starter until growth normalizes?
More broadly, where would you suggest I learn more about different liquidity, hedging, borrowing, tax, and portfolio-construction strategies for someone in this position? I want to build a disciplined plan now, before Anthropic and OpenAI become liquid or public, rather than react emotionally once liquidity is finally available.
Congrats! I think the biggest insight is actually that your wife had $4.4 million last year compared to your $2.2million. Having a partner with 2X more is huge and you need to protect and support her at all costs.
What does she do?
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I think it’s important not to count any private company gains until you get liquid. It’s hard to give you more thorough advice without knowing your full financial details and goals, but if you want some, you can check out my personal finance consulting page.
Yes I like this strategy and am a major proponent. I don’t really care about 60/40 or 70/30 or 80/20. For me it is understanding what I spend and what I want to spend, then put enough in VTI/SPY etc, that the historical return of 8-10% produces equal to or more than I plan to spend each year. That is my growth engine and the rest I put in high yield savings and laddered treasuries, and municipal bond funds. Especially the 1-10 year laddered treasuries held to maturity ensures I will never have to suffer from sequence risk.
This is a smart strategy. I’d add two things for consideration.
1) pre FIRE, find a way to tap into leveraged pay. For example, I work in tech sales and could do a standard OTE (base + commission) but a long time ago I instead chose a job with 100% commission, no cap on upside. You may not work in sales but you should look for ways to better on yourself, there is no downside except for lost time, and the upside could more than make up for that risk.
2) closer to retirement, where I find myself now, would highly recommend not just cruising with standard buy and hold strategies for equities. You need risk management. What is that? It can be many things depending on your investor sophistication but ultimately it’s a hedge (options for example) or trend following. The idea is don’t get hurt by a big drawdown. These strategies allow you to take on more risk while still having a way to mitigate the downside.
Sam, thanks for all the posts over the years. I have two of your books and they’ve been incredibly helpful.
Quick question about a tension I noticed here. You mentioned nobody actually retires on just 20-25x expenses. But since most FIRE retirees end up with more money than they started with anyway, doesn’t pushing for 30x+ contradict your past warnings about “One More Year” syndrome and dying with too much?
How do you reconcile the psychological need for a massive safety net with the risk of working away your best years to over-fund a portfolio that will likely compound on its own?
Thanks for reading and for picking up both books. I really appreciate the support.
My concern is sequence of returns risk, unexpected expenses, inflation, and the reality that many people underestimate how much their spending will change over a 30-50 year retirement.
At the same time, I’m very aware of the danger of One More Year syndrome. I’ve written extensively about people who keep moving the goalposts and never give themselves permission to enjoy the freedom they’ve worked so hard to achieve.
The way I reconcile the two is by focusing on probability and flexibility. If someone hates their job, is burned out, and has 25X expenses with the willingness to adjust spending during downturns, I’d much rather see them retire than grind away another decade chasing a perfect number.
On the other hand, if someone enjoys what they do and can reasonably build a larger margin of safety without sacrificing their health, relationships, or happiness, then targeting 30X+ can make sense.
In my experience, the happiest FIRE practitioners aren’t necessarily the ones with the highest net worth. They’re the ones who have enough flexibility to stop doing things they don’t enjoy and enough purpose to keep doing things they do enjoy.
Ironically, many people discover after achieving financial independence that they don’t want to fully retire anyway. They simply want the freedom to work on their own terms.
In the short run, 25X doesn’t feel like enough. But after surviving off 25X for 3-5 years, the feeling of security increases as you’re more confident in not having active income, especially if your net worth continues to grow.
I do something like this but I don’t have a name for it. I have a pension that at the moment pays more than my living expenses. Even though it has a COLA, it’s not much and within twenty years surely won’t match my living expenses. What I’ve done is save 20% of the pension now and invest aggressively while I still have that margin. Then ten+ years from now, the invested money should cover the margin and then some. Barring the return of the 1970’s, it should work.
The best part is that my other investments are growing untouched in the background for when they are needed.
Good strategy. My wealth has more than doubled since I retired six years ago, which is crazy to me.
I have seen some people recommend putting $5 million into treasury bonds, or investing as much in treasury bonds to generate enough income to cover living expenses. But that seems unnecessary and way too aggressive given the 4% role is based off of 60/40 model portfolio.
I really like this way of thinking because it acknowledges that investing isn’t just about maximizing returns. It’s also about being able to sleep well at night! Having one side of your portfolio focused on stability while the other is positioned for growth feels like a practical middle ground, especially when markets feel uncertain.
I also appreciate the idea that staying invested is often more important than finding the “perfect” investment. This type of mindset has really helped me avoid sitting on the sidelines out of fear and I think it’s worth a lot in the long run. Thanks for sharing another thoughtful framework!
How tempted were you to write, “Your Growth Investments Are Your Mistress.”
Didn’t think about that parallel at all actually. Just our own mercurial selves who are always struggling with wanting to make more while also wanting freedom and not risking too much.
So much of achieving FIRE is a battle with ourselves.