The Variations of FIRE

While the Financial Independence, Retire Early (FIRE) movement may seem homogenous initially, it encompasses a broad spectrum of financial goals, lifestyle choices, and retirement strategies. In essence, the FIRE community is diverse and varied. 

Today, we'll explore three notable subcategories within the movement: LeanFIRE, FatFIRE, and BaristaFIRE.

LeanFIRE

LeanFIRE adherents seek financial independence by living frugally before and after retirement. They believe in stretching their dollars and keeping their living expenses as low as possible. This approach often involves extreme cost-cutting measures and minimalistic living. For a LeanFIRE practitioner, the goal isn't necessarily a life of luxury but rather one of simplicity and freedom from financial worry.

LeanFIRE proponents are extreme savers, often saving over half of their incomes. They strive to reduce their living expenses, both pre and post-retirement, significantly. This lifestyle focuses on essentialism and simplicity, cutting out non-necessities to lower costs.

Unlike traditional retirement planning, which often assumes a retirement income of 70-80% of one's pre-retirement income, LeanFIRE aims for much less. The precise amount varies, but it may be under $40,000 a year for a household. However, this can vary based on personal circumstances and geographical location.

Despite this lean lifestyle's challenges, many practitioners find immense satisfaction in their minimalist approach to life. It's not just about scrimping and saving; it's about finding value and happiness in non-materialistic aspects of life. 

FatFIRE

At the other end of the spectrum is FatFIRE. This version of FIRE is the choice of individuals who wish to maintain or elevate their standard of living in retirement, frequently aiming for a retirement income that equals or surpasses their current income. Individuals who pursue FatFIRE are willing to work longer or take on higher-risk investments to build a larger nest egg. Their goal is to retire early but maintain a higher standard of living, which necessitates a larger retirement portfolio.

FatFIRE adherents are often high earners who enjoy their work and the lifestyle it affords them. They're not looking to give up their current lifestyle; instead, they want the freedom to maintain it without being tied to a job.

A precise FatFIRE number varies depending on individual circumstances. Still, it's generally seen as having a retirement income of $100,000 per year or more and retirement savings of between $2.5 and $5 million. This income allows for travel, dining out, luxury items, and other non-essentials that might be cut out in a LeanFIRE plan.

BaristaFIRE

Somewhere between LeanFIRE and FatFIRE lies BaristaFIRE. This strategy involves saving aggressively to retire early from a traditional high-stress career and then taking on part-time or low-stress work to cover living expenses while allowing their investment portfolio to grow. The name "Barista" comes from the idea that one could work as a barista or in a similar part-time role to supplement their income. At the same time, their investments continue to grow towards full retirement.

The philosophy behind BaristaFIRE centers around building a lifestyle that prioritizes work-life balance. BaristaFIRE practitioners claim to enjoy the best of both worlds: they can leave high-stress jobs or careers they're not passionate about while still engaging in work that provides social interaction, a sense of purpose, and enough income to cover expenses without drawing down their retirement savings. For them, the overarching goal is balancing earning income, growing their retirement investments, and enjoying life before reaching the traditional retirement age.

The Takeaway

These variations reflect the diverse paths that individuals can take toward financial independence and early retirement. There's no one-size-fits-all approach to FIRE; it's a personal journey that each individual or family must tailor to their income, lifestyle preferences, and long-term financial goals. 

As with any financial strategy, it's crucial to consider your goals, financial situation, and personal preferences when deciding if any version of FIRE aligns with your retirement plan. Working with a financial advisor is always recommended to ensure you're on the right track to achieving your financial goals.