A traditional FIRE (Financial Independence, Retire Early) plan involves working a job, often a higher-paying job, and retiring early after achieving financial independence. While some differ based on what they consider safe withdrawal rates, financial independence is generally reached by saving 25x your annual expenses. This typically requires a savings rate of at least 25%, with higher savings rates allowing folks to hit financial independence earlier in life.
But most of us do not have linear life paths, and our FIRE paths are no different! While someone will end up with precisely a 50% savings rate, retire in precisely 15 years, truly never work a day in their life after retiring, and withdraw precisely 4% each year for the remainder of their life, most of us will experience slightly different realities. That is great news because it means you can both retire early and live your life in a way that fits your priorities and makes you happy!
Most of the early FIRE bloggers were straight white cis-men working high-income tech jobs and retiring as quickly as possible with savings rates consistently above 75%. While I am happy that they could retire in five years, often just barely before hitting burnout, that path to achieving financial independence is not necessarily relatable for most of us. It also is just plain unhealthy, often hindering the individuals following that path from building fulfilling lives outside of their jobs. Why retire if you do not have anything fun to retire to in the first place? Fortunately, as more people have experimented with their own pursuits of financial independence, we have learned about alternatives that allow us to live a fulfilling life while pursuing ambitious financial goals.
Standard FIRE Variations
A few general FIRE variations developed as folks built their personalized FIRE paths to work with their lifestyles. While these still do not have the intricacies that your individual journey may have, they tend to be ideal starting points to pinpoint your own priorities, including why you want to retire early.
Lean FIRE: Folks working towards Lean FIRE live frugally. Lean FIRE usually means choosing a lifestyle where household expenses are less than $40,000/year, meaning folks can retire with less than $1 million saved. There are generally two types of retirees that pursue Lean FIRE. First, Lean FIRE is accessible if you have a low income. If you never make more than $30,000 but can keep your annual expenses to $20,000, you can retire early pretty easily. Second, Lean FIRE is often pursued by folks who work in a high cost of living area with a high salary but want to achieve FIRE as quickly as possible. They may spend five years working in an expensive city with a high salary and then use geoarbitrage to retire to a much lower cost of living area.
Lean FIRE is more accessible to everyone and allows some folks to accelerate retirement timelines. The tradeoff is that it provides a bit less flexibility in terms of lifestyle and requires folks to commit to a frugal existence in perpetuity. You may hate your job and decide retiring as quickly as possible is the solution, but you might find yourself wishing you could live a less frugal lifestyle ten years down the road. While going back to work is always an option, there is less flexibility around reducing expenses to avoid the workplace in Lean FIRE because a Lean FIRE retiree is already living their lean existence.
Barista FIRE: Barista FIRE is a potential alternative for the folks that hate holding a stressful 9-to-5 job but do not want to live as frugally as Lean FIRE requires. Reaching Barista FIRE means you are close to financial independence and can cover most but not all of your living expenses. Since you can cover most of your expenses, you do not need to maintain a full-time job. But you need a part-time job (like working 20 hours a week as a barista) or some small source of income to cover your expenses. In the United States, folks often also need this part-time employment to keep their health insurance, a huge barrier to early retirement for any Americans. (The namesake of Barista FIRE is partly due to this need for health insurance because Starbucks is well known for offering part-time employees health insurance.)
Folks who pursue Barista FIRE often feel stressed at their full-time jobs but enjoy the social aspect of working a part-time, lower-stress job. They want to maintain a lifestyle without the extreme frugality of a Lean FIRE retiree, but they do not feel the push to leave any form of work entirely. Barista FIRE is also a great choice for folks with seasonal hobbies that can become sources of income, like the ski instructor or the guide leading summer kayaking tours. Folks with seasonal obligations can also maintain a small source of income while having stretches of free time outside of that season to allow world travel or the pursuit of other fun adventures. Barista FIRE balances the freedom of FIRE with the reality that having an income can make existing easier, particularly if you want to retain some costly priorities.
Coast FIRE: Coast FIRE is a comparable financial position to Barista FIRE but with a different lifestyle approach. Folks who pursue Coast FIRE contribute to their retirement investments aggressively early in their careers so they know their eventual retirement is taken care of from an early age. Then, for the years between reaching Coast FIRE and their eventual retirement, they have many lifestyle options. They can continue working and enjoy a luxurious lifestyle by spending the entirety of their salary rather than saving any (or much) for retirement. They can pair Coast FIRE with Barista FIRE and work a part-time job or seasonal job that allows them more freedom. They can also opt to continue contributing some money to retirement while enjoying a bit of lifestyle inflation, an approach that slowly pulls back their potential retirement date while still allowing them to practice a bit less frugality.
Coast FIRE is a great approach for folks who feel peace of mind with a high level of financial security but who do not necessarily feel the need to leave their jobs as quickly as possible. Additionally, Coast FIRE is a sliding scale: I technically am Coast FIRE if I retire at normal retirement age. Actually, I have hit Coast FIRE assuming that I retire at age 51 or later. Despite this, I am still maximizing my contributions to my 401(k) (and enjoying the fact that my employer match is now >$10K for the year!), Roth IRA, and HSA for the year. And still contributing a bit more. Contributing at my current level will mean that in one year, I will hit Coast FIRE if I wanted to retire at age 48. I can shorten my retirement timeline by three years with one year of contributions, and that feels like a good deal for me since I enjoy my job and lifestyle. If that ever changes, I have the freedom of knowing I have already reached Coast FIRE if I need to take a lower-paying job to maintain happiness.
Fat FIRE: Folks pursuing Fat FIRE want to retire early without compromising the luxuries of life. This type of FIRE generally demands a high income for at least some period of time. While precise thresholds may vary, Fat FIRE is often defined as folks who plan to live off of at least $100,000 annually (in today’s dollars), meaning they need to save at least $2.5M for their early retirement. (This has been the threshold for Fat FIRE for years, so one could argue that it should shift up slightly based on recent inflation.)
A clear negative of Fat FIRE is that it is not accessible to everyone or requires great sacrifice. Retiring early and funding a $100,000 lifestyle in perpetuity is not possible for folks with low incomes throughout their careers. (Fun fact: You actually can do this without ever having a $100,000 income, but it gets significantly more difficult the lower you go, requiring higher savings rates.) That said, for folks in high cost of living areas, it is still pretty achievable in a reasonable amount of time. Fat FIRE is certainly easier for either single high earners or dual-income households. Its main positive is that the extreme frugality typically associated with retiring early is not required. Fat FIRE also provides additional flexibilities that the other types of FIRE do not have because having a higher net worth comes with more options. In an economic downturn, you could return to work to pay for your lifestyle. But you also could just not travel to the Mediterranean for three months in the summer and adopt a standard FIRE lifestyle for a short period of time until the economy improves.
Let Your FIRE Plan Change
While the main FIRE variations offer insights into the different approaches for early retirees, you do not have to pick one variation and stick to it religiously. Originally, Patrick and I thought we would both work our regular full-time jobs until our early retirement date. I was actually more eager than him to escape the 9-to-5. Now, he has already left his full-time job for entrepreneurship while I continue to work at my regular full-time job. How does this happen?
The act of going to the office was burning me out by 2019. Many people would say that I was actually feeling burnout because I was doing too much by creating a brand new rugby team, spending 13 consecutive weekends in different locations that summer, and brainstorming ideas for additional sources of income. But I do all those things (or similar things since I do not create new rugby teams annually, thankfully) and more now while maintaining a full-time job and feeling quite relaxed and fulfilled. The only difference is that I do not go to an office for my full-time job most of the time.
By early 2020, all my plans were to escape the workforce as quickly as possible. Then, a global pandemic allowed me to take commuting out of my days. It also gave me more creative alone time. I started developing process improvements for my job, becoming an indispensable employee, and eventually securing a promotion because of all the success I was having once I finally had the environment to support my ideas. Importantly, my team also continues to let me operate to maximize my effectiveness, which means working from home most of the time. The new reality made me a better employee and showed me that I actually liked my work. I just did not have my ideal work environment before March 2020.
Patrick also loved the work-from-home environment, but he did not have the support to continue working from home after conditions became safe enough to regularly work from an office. This difference in supportive employers prompted him to leave his full-time job and become a full-time entrepreneur, despite this definitely not being our original plan.
But here is the great part about pursuing FIRE of any kind: The farther you get along your FIRE journey, the more flexibility you have to change course and adapt to whatever unpredictable life event comes your way. We were a dual-salary household, with even more streams of income, saving a bit more than half of our 9-to-5 salaries. When your savings rate is 50% and there are two salaries, taking one of them away is far less scary than when your lifestyle demands both salaries just to survive.
We also knew Phippen Tax & Financial Services would make some money, even if we did not know how much. We knew it would be enough for Patrick to cover half of the mortgage. Knowing Patrick could cover that one significant expense meant I could cover our other expenses with my salary while still maximizing all my retirement contributions. Pretty great considering we were eliminating a GS-15 salary from our total income.
Our path to FIRE changed significantly from what we assumed it would be before March 2020. Despite this diversion, we are both happier now on a path that we had yet to imagine a few years ago. The reason we were able to embrace this diversion was the progress we had made towards FIRE so far. High savings rates provide the flexibility to shift course to honor what currently makes you happy.
Your own path will follow different twists and turns, and only you can decide what ones will increase your happiness. My main caution is to avoid entrenching yourself in a particular FIRE path and assuming that it cannot and should not change. I never expected that working from home would be enough for me to enjoy my full-time job. But it is, and that is great. Let yourself learn about what gives you joy, and adjust your goals and path to embrace it fully.
Piece Together What Works For You
So which variation of FIRE do we follow now? All of them or none of them, depending on how you want to look at our situation! I guess I am still on a traditional FIRE path, saving around 50% with an approximate 15-year timeline from when I started working that should allow me to retire in my late 30s. However, I am on that path knowing I have hit Coast FIRE and could easily reduce my lifestyle costs if my happiness at my job declined. As much as I enjoy an annual $7k travel budget (yes, that is an individual number, not a Patrick-and-me number!), it could be reduced.
Patrick is much farther from his original path, and it is so fun and exciting! He gets to set his own schedule and has complete control over his earning potential. His freedom also adds freedom to my lifestyle: I go to the grocery store approximately 5% of the time that our household needs groceries because Patrick can (and does) go at 10:30 a.m. on a Tuesday when the grocery store is empty. The flexibility is great and improves both our lifestyles.
The existence of a significant stream of income that is completely under our control provides additional freedom. Phippen Tax & Financial Services did well enough in year one that it could support our lifestyles without my salary, assuming the lower tax rate we would experience in that scenario. Even with that travel budget! Having this safety net empowers me with my own employment choices. While I plan to continue working at my job because I get a good salary and benefits while finding my work interesting, knowing that we have a backup provides additional comfort.
Much of working towards FIRE really revolves around providing peace of mind and flexibility. I love calculating hypotheticals in spreadsheets, experimenting with safe withdrawal rates, and figuring out that I have already hit Coast FIRE if I retired at age 51 or later. The math provides comfort, but it only shows how life will work if we follow a direct path. Direct paths are unrealistic. We can do a reasonably accurate job predicting the next year, but five years down the line is quite murky. However, creating space between our spending and income creates flexibility. Building multiple streams of income makes losing one stream of income have a smaller impact on our lives.
The math of FIRE, and all the different types of FIRE, is fascinating. But the biggest opportunity I have enjoyed from following a twisting FIRE path is the flexibility to change course. I would recommend pursuing FIRE at a rate that still allows current happiness spending to anyone because the safety net built from a FIRE journey can catch you in an emergency and let you seize an opportunity. As I have followed my unique FIRE path, I have learned that the freedom of FIRE does not come from retirement. FIRE freedom is making a choice about which future path you want to take.
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