Which FIRE style works best for you?

There are different types of FIRE.

By that, of course, I mean the Financial Independence, Retire Early movement – not wildfires or bonfires. (Although I do like me a big ol’ bonfire.) If you’re brand new to the concept of FIRE, this Investopedia page is a pretty good introduction. In a nutshell, FIRE is a relatively modern invention, a metaphorical middle-finger salute to the notion that one must work until 65 before finally leaving the rat race. According to a recent survey, 18% of elderly Americans plan to continue working even after they’re 70. There’s a possibility that they all love their jobs and can’t bear to part with their life’s calling, but somehow I doubt that. Personally, I view that as a tragedy and a failure of the overall system: everyone deserves the opportunity to walk away and start enjoying their life, especially if they reached such an advanced age. It is my hope that somehow, someway, my blog will help enough people to retire earlier than they would have otherwise.

But I digress: let’s explore different types of FIRE. Each one of the types I list below has its die-hard supporters, detractors, and online communities (mostly on Reddit) where folks share their expertise. You don’t have to pledge your allegiance to any particular type of FIRE but look around, see what they’ve got to offer, and hopefully it’ll help make your own retirement goals a bit clearer.

Ready? Set? Let’s go!

Traditional FIRE:

What: this is the most typical kind of early retirement, where somebody leaves the rat race early without changing their middle-class lifestyle all that much. You still get to enjoy the life in the suburbs, your house, a car or two, etc.

How: Squirrel away a million or two (or 5-10 million, according to Suze Orman – I always laugh when I think of that), and if you withdraw just 4% per year, that’ll be $40K-$80K of low-taxed long-term capital gains, which will help bankroll your perfectly normal and average lifestyle.

Pros: enjoy the American dream and all the sleep you can get, without ever downgrading your lifestyle!

Cons: it typically takes a long time to squirrel away a few million dollars (or even just the one). In my anecdotal experience, most middle-class folks get to that point in their 40s or 50s, definitely not in their 20s or 30s. (Unless, of course, they’re a highly paid programmer or do some house-flipping on the side. Mr Money Mustache did both.)

Want to learn more? Regular, run-of-the-mill FIRE is the most common variety, and most FIRE-related communities are aimed at plain old FIRE fans. You can start with the r/Fire Reddit community, which has 149,000 members as of this writing.

 

Fat-FIRE:

What: Sports cars, mansions, yachts, and private jets! Fat-FIRE is the exuberant and rich kind of retirement, one where you enjoy all the material comforts of civilization and can afford any luxury your mind can think of. Tropical vacations, flying off to Paris for the weekend, giant pleasure boats – you name it.

How: You’d need a lot of cash to pull that off. Start with $10 million and work your way up from there. (At 4% annual withdrawal rate, that’d be $400K a year.) Unless you manage to find the next Tesla stock early on (or get lucky when gambling with crypto or NFTs), or start your own business, chances are you’ll never get to join that club.

Pros: Never worry about money ever again (though there seems to be a lot of anxiety about taxes on their subreddit) while you party it up on your private island. Buy any politician you want (they’re remarkably cheap) and hang out with celebrities while also enjoying all the cool new gadgets and the best medical treatment.

Cons: Money doesn’t buy happiness – there are as many miserable lottery winners as there are happy ones. Also, watch out for drug overdoses.

Want to learn more? r/fatFIRE is a big Reddit community with 199,000 members as of this writing. It’s simultaneously a place to brag about your riches, a support group, and also the playground of random trolls who like to prank folks with their stories and questions.

 

Lean-FIRE:

What: this is the opposite of fat-FIRE. Lean-FIRE emphasizes living frugally and within your own means. That means you need just a few hundred thousand dollars, not millions, to escape the rat race. I’m biased because that’s my personal favourite, and also because even my fellow lean-FIRE fans think I might be too radical with my lifestyle. To quote Kurt Vonnegut, “So it goes.”

How: Figure out what you actually want in life (see this earlier blog post), then do some math to calculate how much that would cost per year. Multiply by 25 if you aim for 4% annual withdrawals, or by 14.3 if you aim for 7% withdrawals and have a solid safety net. (Real estate, etc.) That’s how much – or how little – you’ll need for the frugal lean-FIRE retirement. Money doesn’t buy happiness: it’s quite relative, really. All over the world, there are people living perfectly happy lives on a tiny fraction of median US income. Do you really need all this stuff and all these gadgets?..

Pros: This is one of the fastest ways to achieve FIRE. Squirrel away a few hundred thousand dollars (ideally with some backup in your retirement accounts, eligible for withdrawal when you turn 59.5), figure out how much you need to be content, move someplace cheap (or get roommates to help with your mortgage), and boom – you’re set. I’ve made quite a few mistakes on my own FIRE journey, but even so, I managed to escape the rat race at the ripe old age of 34. I described my ~$1,000/month lifestyle over here.

Cons: I’m not going to sugarcoat it: giving up consumerism can be hard. Lean-FIRE means adjusting to a life without a car – or at least without buying shiny new cars. It means going without all the shiny new gadgets that get released every year. (A friend of mine actually said “but it comes in pink!” when I pointed out that the latest iPhone isn’t actually all that different. Heh.) It means you won’t be able to spontaneously fly to a destination wedding in Hawaii if your budget doesn’t allow for it. Lean-FIRE isn’t for everyone, and that’s okay.

Want to learn more? The r/leanfire subreddit has 217,000 members as of this writing, and it generally contains good advice. (I’m still pretty amused that I shocked most of them when I posted my $1K/month plan a couple of years ago.) There’s also the famous and groundbreaking blog, Early Retirement Extreme, which goes deep into the want-vs-need question and advocates incredibly simple and cheap lifestyle. (That blog’s emphasis on beans and rice is the reason the FIRE community has a meme about eating lentils.) There’s also a great message board with giant archives, as well as a nifty book. (Disclaimer: this is an affiliate link: Amazon will give me a few pennies, which will help run this blog.)

 

Barista FIRE:

What: Barista-FIRE (aka coast-FIRE) is a hybrid model for the people who want more freedom but also can’t afford to leave the rat race altogether. For some people, this means seasonal work. For others, this involves some part-time work or tutoring for a few hours a week. If you earn just enough money to cover the rent/mortgage and utilities, life is still easier than working 40 hours a week, 52 weeks a year.

How: As the name suggests, you can always become a barista or find some other occupation that’s always in demand and doesn’t require a degree. This excellent book (full disclaimer: this is also an affiliate link) is one man’s love letter to the art of washing dishes – possibly the least glamorous job that’s always in high demand and easy to find. Conversely, some snowbirds spend six months working random jobs and enjoy the other six months in fun and cheap tropical countries. There are lots of ways to pull this off.

Pros: Freedom and mobility. If you adjust your spending and find a job with interesting perks (such as free meals before/during/after your shift if you work in a casino), then you don’t need a huge bank account. Working just 10-16 hours a week could help you enjoy the other 152-158 hours, and that’s a pretty good deal.

Cons: It’s hard to develop a career when you work part-time. The kinds of jobs you’ll end up with will probably be either manual or in the service industry. On the other hand, this is a great incentive to upgrade your skills and see if you can make money through photography, graphic design, transcription services, or other such gigs you can do on your computer, in the comfort of your own home.

Want to learn more? The r/baristafire subreddit has only 2,700 members. r/coastfire is a little bigger, with 21,200 members as of this writing. Despite their small size, both can provide you some good ideas and inspiration – and do check out that dishwasher book I mentioned!

Which FIRE level will you choose?

There are different types of FIRE. Do any of them strike your fancy? Will you go all in on one of them, the way I did with lean-FIRE, or will you come up with your own hybrid model? That’s entirely up to you! Whatever you decide on, I hope you’ll share your story – if not in the comments section (wink wink, nudge nudge), then on Reddit or one of the many FIRE forums. Good luck out there, eh.

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