The Many Types of FI/RE - Which One Is Best For You?
FIRE comes in may styles or colors
Table of Contents (Jump Links…)
On our website and social media in general there is a lot of talk about ‘FIRE” or Financially Independent Retire Early. I attempted to give a high level view of FIRE and the 3 pillars you must master in my post What Is FIRE?. Which explains the core concepts and how people are able to reach these ambious goals.
If you’ve gone down the rabbit hole you’ve probably heard terms like “Coast FIRE” or “Fat FIRE” But what does that even mean? Personal finance is… well personal and just like every person is unique there are many different styles of FIRE that suit people’s different needs, ambitions, and goals. In this article I’ve attempted to explain the common styles and a couple that I frequently see that aren’t “Formally” adopted by the community yet.
Sometimes just rolling along gives you the security you need
First up is Coast FIRE, this is when you have enough money saved up that if you never added any new money into your investments it would eventually grow into a comfortable nest egg you could retire on later in life. You’re not quite at your full FIRE number yet, but you’re comfortably on your way and if life throws a few curve balls at you you’ll be ok as long as you don’t withdraw from you investment accounts.
Many young professionals are turning to this style when they start families and want to spend more time with their children raising them, they might take less demanding jobs, or one parent may quit work entirely reducing the household income. Coast FIRE gives them the confidence their retirement is secure and can enjoy life a little more on their own terms.
This is different from the normal retire at 65 method because they aren’t stressed about if they have saved enough or how they’ll afford the golden years, the money is already stached away and quietly working for them as they go about their lives.
Simple living keeps your cost down making things easier
Lean FIRE is when you’re a master of the frugal lifestyle. You’ve chosen not to live the average American consumerism life and have enough saved up that you never have to work again. Often people who Lean FIRE may have roommates, live in a tiny home, may choose a nomadic van or boat life, walk places instead of driving, cook meals at home, and utilize other ways to keep costs down. Their investment pile may not be enough for the average person to retire on but it works for them.
One word of cation about Lean FIRE is to make sure you don’t underestimate your costs later in life such as medical or other large unexpected financial burdens. Since the amount of money saved is smaller a big hit is more damaging than with other forms of FIRE where you have additional funds to cushion the blow.
What if you could quit work and your life would be the same?
This is what most people think of when you talk about retiring early. You can quit work with little to no change in your lifestyle, sounds pretty nice right!! You probably take 1 or 2 trips a year. Pick up a few hobbies or spending more time with your kids while they are young. The biggest change when you quit work is how you spend your time. Not how much money you spend.
you can enjoy some of the finer things in life!
This is the FIRE style many people strive for, maybe you had a high paying job, or your investments did well, or you chose to work until your early 40’s to make sure you could retire with some extra comforts. You take multiple vacations a year, you might live in a higher end area of town, oh and if you want a hot tub? Sure why the hell not! You don’t worry too much about how much things cost you just live the life you want to. If you’re disciplined enough to reach “Regular FIRE” a few extra years can normally let you retire in style!
Realistically your probably enjoying the things you held off on while you were focused on super charging your saving as much as possible early in your career and now that your retired well YOLO let’s have a little fun. You planned ahead and now you get to reap the benefits! Congrats!!
This is that lucky bastard who played professional sports or the nerdy geek who burned down his parents shed with 50 Bitcoin miners back in 2010. Thru truly special talent or sheer luck you’re set for life 10 times over!
Now you still need to manage your money, even the wealthiest of wealthy can go broke, but you’d have to be pretty dumb at this point. You can afford just about everything you could ever want. Even if it’s 2 or 3 homes and a lambo.
Sometimes the trick is hands off income.
Income FIRE
This last style is one I don’t see talked about very often but I think its worth mentioning because it’s how I was able to retire at age 32, If your interested in the details checkout my article on it. With Income FIRE you don’t necessarily have millions in the bank but you’ve been able to secure at least one long term source of income that pays you enough to comfortably live off of. This might be in the form of
Rental properties
A business you own
Royalties
Patent rights income
insurance annuity etc.
Regardless of the source you have enough regular passive income you don’t have to work anymore just go about living life and collect the checks. Not a bad deal!
Me personally I fall into the Income FIRE Category and I’m saving toward regular FIRE where I wouldn’t truly need the income to continue my current lifestyle just in case the passive income I have goes away in the future. If it doesn’t then I’ll be Hot Tub FIRE!!
So there you have it these are the common types of FIRE you’ll frequently hear about in the community, let us know what style you’d like to reach in the comments below!
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