There are also many paths to FIRE, and that’s a good thing! By reading this article, you too may find a type of FIRE strategy suitable for your life and circumstances.
So, what are the different types of FIRE? Let’s take a closer look.
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Table of Contents
Traditional FIRE / Regular FIRE
The traditional FIRE movement is about saving as much money as possible and investing it in a diversified portfolio of stocks and bonds. The goal is to reach a point where your investment or nest egg returns are enough to cover your living expenses, so you can “retire” from paid work (although you may still choose to work part-time or volunteer).
This approach is often called the “4% rule” because it’s based on the idea that you can safely withdraw 4% of your portfolio each year, adjusted for inflation.
So, if you have a $1 million portfolio, you could theoretically withdraw $40,000 per year ($1 million x 0.04) and never run out of money.
Of course, there’s no guarantee that the markets will always cooperate, and you may have to adjust your spending if there’s a major market downturn. But over the long run, this approach is quite successful.
The best thing about traditional FIRE is that it’s relatively simple to understand and implement. And, if you start early enough, you can reach this type of FIRE with a fairly modest savings rate.
If interested, you can read this article I wrote sharing strategies on How to Retire Early Using the FIRE Method.
Lean FIRE
Lean FIRE is similar to traditional FIRE but with a twist. The goal is still to save as much money as possible and invest it in a diversified portfolio. But instead of aiming for the same amount of expenses, the goal is to retire with a lower lifestyle than you have today.
This could mean retiring to a smaller house, driving an older car, or giving up some of your hobbies and travel. The idea is to reduce your costs to reach FIRE with a smaller nest egg.
Lean FIRE is an excellent option for people willing to make some lifestyle changes to retire early. And it can also be a good choice for people who are risk-averse and don’t want to rely entirely on investment returns to fund their retirement.
Fat FIRE
Fat FIRE is the opposite of Lean FIRE. Instead of retiring on a leaner lifestyle, the goal is to retire with the same (or even a better) lifestyle as you have today. To do this, you’ll need to save a lot of money and invest it in a way that generates high returns. This could mean investing in growth stocks, real estate, or other assets that can generate a high return on investment.
Fat FIRE is a good option for people willing to take on more risk to retire with a better lifestyle. It’s also a good choice for people who want the flexibility to retire early and then go back to work if they want to.
Let’s be honest the average person isn’t going to be able to save enough to retire on a fat FIRE lifestyle. But, if you have a high income and are willing to take a few gambles, it’s possible.
Obese FIRE
Obese FIRE is similar to Fat FIRE, but with one key difference. Instead of retiring with the same lifestyle as today, the goal is to retire with an even better lifestyle.
Some of you might be thinking, “Isn’t that just called rich?” And, well, yes. But the term “Obese FIRE” is usually used to describe people who are retiring with a lifestyle that is far above their current lifestyle.
This could mean retiring to a private island, buying a yacht, or just living in a mansion. But, basically, it’s any lifestyle that most people would consider to be unobtainable.
Obese FIRE is only an option for a very small number of people. But if you have the income and the investment returns to make it happen, more power to you!
Everyone dreams of retiring early and living a life of luxury. It may be your goal; however, it’s essential to know that if it isn’t your reality, that’s okay too!
It’s perfectly fine to live your life in the clouds as long as your feet are firmly placed in reality. So, if you’re planning to achieve obese FIRE, make sure you have a solid plan in place and that you’re prepared for the possibility that it may not work out.
Coast FIRE
Coast FIRE is a strategy for financial independence that involves saving as much money as possible over a short amount of years, then living off the interest once you reach your goal. With Coast FIRE, you save until you reach a predetermined amount by a specific age, at which point you stop saving and let compound interest “coast” you to your desired retirement nest pile.
You could quit your preparatory work and instead take on a part-time job or establish passive income streams to live off of after reaching your financial independence goal, perhaps 80% there. This would allow you to meet life’s essential expenses.
Coast FIRE is a great way to get off to a fast start with active saving and investing, and it can help you achieve financial independence sooner than you might think.
My wife and I hit Coast FIRE which allowed us to retire abroad. For more on this story, you can read this article I wrote – 14 Reasons We Decided to Semi-Retire in China.
Flamingo FIRE
Flamingo FIRE is a new concept that is quickly gaining popularity. The name comes from the Money Flamingo blog, which discusses various ways to achieve financial independence.
Flamingo FIRE refers to the three stages of retirement: semi-retirement, early retirement, and standard retirement. In the first stage, you work full-time to develop a nest egg by saving and investing.
You enter semi-retirement when you reach half of your FIRE number. During those ten years, you don’t need to invest. You can retire if it doubles in 10 years. After that, you can work part-time or a less-paying job that makes you happy till then. Twenty-five times your estimated living expenditures is full FIRE, stage 3. This final stage is when you are truly retired and no longer working.
The Flamingo FIRE concept is an innovative way to think about retirement. It could be an excellent option for those looking for an alternative to the traditional retirement plan.
Barista FIRE
Barista FIRE is where you’re working part-time to pay for healthcare and whatever costs you encounter. For many people, healthcare is their largest expense in retirement.
Paying for healthcare is one of the biggest financial challenges that Americans face. In fact, healthcare costs are one of the main reasons why people say they can’t afford to retire.
One way to pay for healthcare in retirement is to work part-time. This is what’s known as Barista FIRE.
With Barista FIRE, you’re working part-time to cover your healthcare costs. Once your healthcare costs are covered, you can use the money you’re saving to retire early.
This strategy is becoming more popular as healthcare costs continue to rise. It’s a great way to ensure you have the coverage you need while also giving you the freedom to retire early.
Slow FIRE
Slow FIRE is where you’re working towards financial independence, but you’re not in a hurry to retire. The goal is to reach financial independence, but you’re not in a hurry to quit your job.
It’s a good option for people who want to achieve financial independence but don’t want to retire immediately. It’s also a good option for risk-averse people who want to take a slow and steady approach.
The key to making Slow FIRE work is to find a balance between saving for retirement and enjoying your life. You don’t want to sacrifice your lifestyle today in order to retire tomorrow.
But, if you can find a balance, Slow FIRE can be a great way to achieve financial independence and retire on your own terms.
Fart FIRE (or Fast FIRE)
Fart FIRE is where you’re working towards financial independence, but you’re in a hurry to retire. The goal is to reach financial independence as quickly as possible, so you can quit your job and enjoy your retirement.
If you’re the type who loves to throw caution to the wind, Fart FIRE may be the right approach for you. It’s risky, but it can also be very rewarding.
The key to making Fart FIRE work is having a solid plan. You need to know how much you need to save and how you will invest your money.
You also need to be comfortable with the idea of retiring early. If you’re not ready to retire, Fart FIRE may not be the right approach.
It’s important to remember that when you’re trying to speed up the FIRE process, it’s possible to make mistakes. If you’re not careful, you could end up losing everything you’ve worked so hard for.
So, if you’re going for Fart FIRE, make sure you know what you’re doing.
Which type of FIRE is right for you?
Well, the first thing to do is accept that FIRE is a spectrum. There’s no right or wrong answer. You need to find the best approach for you and your family.
If you’re not sure which approach is right for you, ask yourself the following questions:
- What are your goals?
- How much risk are you willing to take?
- How much time do you have to save?
- What’s your lifestyle like?
- Do you want to retire early or on your own terms?
Once you answer these questions, you should have a good idea of which type of FIRE is right for you.
If you want to retire early, you’ll need to save more money and take on more risks. If you’re not willing to take on as much risk, you’ll need to save more money and plan for a longer retirement.
It’s important to remember that there’s no one-size-fits-all approach to FIRE. You need to find the approach that works best for you and your family.
Conclusion
Almost all of you reading this will want to go the route of traditional FIRE. It makes sense because it’s the most logical and gives you the most control. You can always adjust your lifestyle later on down the road if you want to, but it’s much harder to do the reverse.
Remember, you don’t have to choose just one type of FIRE. You can use a combination of different types of FIRE to achieve your financial goals.
For example, you could use a mix of traditional and barista FIRE to achieve your financial goals. It all depends on your health, age, and desired lifestyle. Whatever type of FIRE you choose, the important thing is to start working towards your financial goals today. The sooner you start, the sooner you’ll be able to retire on your own terms.
Disclaimer:
We hope the information in this article provides valuable insights to every reader but we, the Biesingers, are not financial advisors. When making your personal finance decisions, research multiple sources and/or receive advice from a licensed professional. As always, we wish you the best in your pursuit of financial independence!
