Introduction
Hey guys! I'm Aaron, and welcome back to the channel. When people hear the term "FIRE" (Financial Independence, Retire Early), they often picture someone in their 30s retiring and living off ramen noodles for the rest of their lives. While that can be one version, the concept has evolved into six primary styles. Each style comes with its own lifestyle, savings rate, and withdrawal strategies. In this article, we'll walk through each of these styles with clear examples, discuss how much it might take to reach each one, and which one might fit your life best. We'll also talk about how social security plays into each FIRE type and compare it to a more traditional retirement approach.
LeanFire
What is LeanFire?
LeanFire is the most minimalist path and the one that kicked off the entire FIRE movement. It's all about retiring on a modest budget and doing it fast. This style is ideal for people in their 20s or 30s who are comfortable with frugality.
Lifestyle and Savings
LeanFire involves living on an income of $25,000 to $40,000 a year. This could mean sharing expenses, living in a low-cost area, or moving abroad to stretch your budget further. To support this lifestyle, you might need a portfolio of $600,000 to $1 million. You could reach this in 10 to 20 years, depending on your cost of living and savings rate.
Withdrawal Strategy
When it comes to withdrawal rates, those following the LeanFire approach tend to be more conservative. They often use a withdrawal rate of 3% to 3.5% to protect against market downturns and unexpected expenses.
Ideal Accounts
The best accounts for LeanFire are a traditional taxable brokerage account, a Roth IRA, and an HSA (if available). A taxable brokerage account has no limits on contributions or restrictions on withdrawals. A Roth IRA offers tax-free growth and flexibility, and an HSA provides triple tax advantages for medical expenses.
Social Security
Since LeanFire retirees often retire long before they're eligible for Social Security and have only contributed modest amounts, they typically receive a greatly reduced benefit. For this reason, many LeanFire followers consider social security a bonus rather than a reliable income source.
FatFire
What is FatFire?
FatFire is the luxury version of financial independence. It allows you to walk away from your job while maintaining a comfortable and flexible lifestyle, perhaps with a Tesla or two. This path is suitable for high-income earners in their 30s to 50s who want to retire without sacrificing their lifestyle.
Lifestyle and Savings
To support a FatFire lifestyle, you're looking at annual spending of $150,000 or more in retirement. This means you would need a portfolio of $2.5 million to $5 million. It might take 15 to 25 years to reach this goal, depending on how aggressively you save and invest.
Withdrawal Strategy
Those following the FatFire approach tend to be a bit more conservative with their withdrawal rates, often using around 3%. They may rely on dividend income, real estate cash flows, or partial annuities to create guaranteed income streams and protect against sequence of returns risk.
Ideal Accounts
Some of the best accounts for FatFire are traditional 401ks, Roth accounts, a traditional brokerage account, and an HSA. Traditional 401ks offer tax-free growth, Roth accounts provide tax-free withdrawals, a brokerage account offers flexibility, and an HSA is great for medical expenses.
Social Security
FatFire individuals often qualify for near-max social security benefits due to their higher lifetime earnings. However, most still consider it a bonus rather than a core part of their plan. When it kicks in, it can help reduce portfolio withdrawals or fund additional travel.
Barista Fire
What is Barista Fire?
Barista Fire is where your investments cover part of your lifestyle, and you work a low-stress part-time job to fill the rest. It's ideal for people in their 30s to 50s who want more work-life balance and don't want to wait until they reach full FIRE.
Lifestyle and Savings
In Barista Fire, your annual spending might be $40,000 to $75,000 a year. Your portfolio would cover half of your expenses, with the other half coming from part-time work. You might need a portfolio of $500,000 to $1.5 million, and it could take 10 to 20 years to achieve.
Withdrawal Strategy
When withdrawing from your portfolio, the withdrawal rate is quite low, around 2%. Once you fully retire (which could be decades later or never), the rate may increase to 4% or 5%.
Ideal Accounts
The ideal accounts for Barista Fire are a traditional taxable brokerage account, a Roth IRA or Roth 401k, and an HSA. A brokerage account offers flexibility, Roth accounts provide tax-free growth and withdrawals, and an HSA is beneficial for medical expenses.
Social Security
Social Security can play a major role in Barista Fire later in life. If you work full-time and then transition to part-time work in your mid-career and continue working part-time through your 50s and 60s, you'll build up your Social Security benefits, which can be a meaningful portion of your retirement income.
Coast Fire
What is Coast Fire?
Coast Fire is for people who want to save hard early and then let time and compound interest do the rest. It's a unique FIRE approach where you continue to work a full career and retire around the traditional retirement age.
Lifestyle and Savings
Once you hit your Coast Fire number (which could be $200,000 or $300,000 invested) as early as your late 20s or early 30s, you technically don't need to invest for your future. However, most people who start as disciplined savers tend to keep saving, just at a more balanced pace.
Withdrawal Strategy
Since Coast Fire retirees work a traditional career, there's no early withdrawal strategy. Once they retire, they might use a 4% or 5% withdrawal rate or a dynamic withdrawal strategy.
Ideal Accounts
The ideal accounts for Coast Fire are traditional retirement accounts and Roth accounts. These accounts are suitable for a more traditional retirement age, allowing you to access your money without penalties. A taxable brokerage account can also be useful if you want to retire a bit earlier.
Social Security
Contrary to some assumptions, Coast Fire doesn't necessarily result in a lower Social Security benefit. Most Coast Fire individuals still work full careers, so their earnings count towards their benefits calculation. Social Security will still be a meaningful portion of their retirement income.
Slow Fire
What is Slow Fire?
Slow Fire is similar to traditional retirement planning but with more intention, strategy, and freedom. Instead of retiring super early, the goal is to hit financial independence by the late 50s or early 60s and enjoy life along the way.
Lifestyle and Savings
This path is great for people in their 30s to 50s earning $60,000 to $150,000 a year. They aim to save 20% to 35% of their income and reach a net worth of $1.5 million to $2.5 million.
Withdrawal Strategy
The withdrawal strategy for Slow Fire is similar to traditional retirement, using a 4% or 5% withdrawal rate or a guardrail approach to adjust withdrawals based on portfolio performance.
Ideal Accounts
You can use a variety of account types for Slow Fire, including traditional 401ks, IRAs, Roth 401ks, and HSAs. A brokerage account can also be part of the portfolio for flexibility, especially if you retire in your early or mid-50s.
Social Security
Since Slow Fire individuals work well into their 50s or 60s, they build a strong earnings history. Social Security will play a big role in their retirement income, and it's important to be strategic about when to claim benefits.
Flamingo Fire
What is Flamingo Fire?
Flamingo Fire is for people who don't want to grind until they hit full FIRE. They aim to have 50% of their full FIRE number invested and then enter a state of semi-retirement, doing part-time work or passion-based income.
Lifestyle and Savings
For example, if your full FIRE number is $1.5 million, you would work until you have $750,000 invested and then step back. A couple might save $800,000 by age 38, move to Spain, and each freelance 10 to 15 hours a week while their portfolio grows.
Withdrawal Strategy
In the early years of Flamingo Fire, there are no withdrawals from the portfolio. You live on part-time income and let the portfolio grow. By the time you fully retire, you might use a traditional retirement withdrawal rate like 4% or 5%.
Ideal Accounts
The ideal mix of accounts for Flamingo Fire includes a traditional brokerage account, a Roth or traditional IRA (or a mixture), and an HSA. A brokerage account provides flexibility during the semi-retirement phase.
Social Security
How Social Security plays a role in Flamingo Fire depends on your situation. If you work part-time abroad, your benefit could be reduced. But if you work in the US, you'll still pay into the system, and Social Security could be a substantial part of your retirement income.
Comparing the FIRE Styles
It's easy to confuse Flamingo Fire, Barista Fire, and Coast Fire, but they have distinct differences in timing, mindset, and money strategy. Barista Fire is a bridge to full FIRE, Flamingo Fire is a glide into a lower-stress lifestyle, and Coast Fire is a cruise where your portfolio still has time to grow while you work full-time.
Conclusion
There are six different FIRE styles, each with its own characteristics and suitability. Whether you're all in on LeanFire, aiming for FatFire, or prefer one of the other styles, it's important to choose the path that fits your lifestyle and financial goals. Let me know your thoughts in the comments below. And don't forget to like, subscribe, and share if you found this article helpful. See you soon!