Which Type of FIRE Is Right For You?

“Financial Independence” has a nice ring to it, doesn’t it?

In the old days, financial independence was defined as retirement at 65 along with a nice pension from the company you worked 30+ loyal years for on top of the social security payments you spent a lifetime accumulating.

Today, retirement is much different. Pensions have become passe’ and virtually no longer exist. A person is totally responsible for the management of their retirement accounts.


Loyalty to a company for more than 10 years? All but gone. People started to realize that to get ahead in their career, it was faster to move companies than to fight for promotions. Pensions used to hold people back. Without it, opportunities opened up for people.

Working 80 hours a week for a 7% raise? Pretty much gone too. While their parents and grandparents toiled away for years for “the good of the company”, they missed out on a lot of family events, vacations, and special time with loved ones.

Today, people want work / life balance. They don’t mind working hard so long as they get to balance it with their families, hobbies, and interests. Working until 11PM can be ok so long as you can make your child’s birthday party, help them with their homework every day after school, and taking an occasional art class.

Other countries have had this work/life balance mentality for decades. For example, I have friends who live in England. Guess what their average work week is? 32 hours!

Yes, they work less and enjoy the little moments in life more….. and he is an executive with his company!

Years ago, he left the U.S. with his now wife because, as he stated, “Americans work too damn much”.

Want further proof? My company has offices in Germany. The engineers there are unionized and are literally forced to leave every day at 5PM. There literally is a person who walks around and kicks out all the engineers who stay a minute past 5PM every day… and Germany is the “hardest working” of the European countries!

Imagine THAT happening in the U.S……… NOT!

A few decades ago, a financial revolution started that has really gained traction in the last 10 years. It’s called the Financial Independence Retire Early (FIRE) movement.

Where Did The FIRE Movement Come From?

The beginnings of the FIRE movement can be traced back to a 1992 book called, “Your Money or Your Life”. It was written by 2 authors who were leading financial voices, Vicki Robin and Joe Dominguez.

In it, the authors make the point that your expenses translate into hours of your life spent at work to pay for those things you desire. Remember the luxury cars, expensive vacations, 2nd homes, and private tutors for your kids all cost money. It must come from somewhere!

In other words, how much of your life are you willing to give up paying for those material possessions?

People joining the FIRE movement have an answer to that question…. It’s NOT worth it!

Why People Are Joining the FIRE Movement

In the past 20 years, people in the U.S. and Canada have wised up and realized that life is too short to spend it constantly working and missing out on enjoying life.

Once company loyalty went out the window and people had to fend for themselves, they started to realize why should they work their collective ass off for someone who does not appreciate them.

Instead of working to death for a large corporation, people realized it was better to take care of themselves. This is where the FIRE movement has come into play.

The FIRE movement is a trend that has gained significant traction in recent years. This traction is the result of the movement’s broad-brush appeal to the masses who want to prioritize flexibility and develop a work-life balance (like me! 😊).


This concept is especially attractive to those who don’t want to be tied to a corporate desk for their entire career. FIRE has become a lifestyle choice for those people looking to make serious changes in their finances and overall way of life.

At the heart of the FIRE movement is the mainstream idea of living within one’s means while saving for the future. This doesn’t mean sacrificing all comforts. It does mean prioritizing and making smart choices about what, when, and how to spend, save, and invest.

The concept isn’t all unicorns and rainbows; it is based on a structured, mathematically based savings strategy. The FIRE rule of thumb (aka the 25X Rule) is that you must save at least 25 times your annual expenses to retire early with financial independence.

To save such a huge lump sum, FIRE devotees build up their nest egg as quickly as possible by saving anywhere between 40 – 70% of their annual income while living well below their means. Most people do not dedicate such a high level of savings because of lifestyle choices, life circumstances, or current income levels….. but FIRE devotees find a way.

The general purpose of FIRE is to allow you to become work-optional years, sometimes decades, ahead of the traditional retirement age of 65.

There are almost as many different approaches to FIRE as there are people. You may even find yourself changing your FIRE style as you progress on your financial journey.

Let’s look at a few of the more common types of FIRE to get a feel for what might be right for you.

Different Types of FIRE

Regular FIRE

Regular FIRE is having enough income from investments that can cover all your living expenses. This style is synchronous with traditional retirement and is the most referenced type of financial independence (think how your grandparents retired).

FIRE caption

Basically, this type of FIRE means you have enough income from assets to be able to quit your job (i.e., “retire”) and enjoy the same level of spending that occurs today. This spending not only includes basic living expenses (i.e., food, housing, car, etc.) AND discretionary expenses (i.e., vacations, entertainment, hobbies, etc.)


Think of this as regular FIRE but on a strict budget. Lean FIRE is having enough income from investments to cover essential living expenses (i.e., housing, food, utilities, etc.). Visualize Lean FIRE as being able to provide a safety net only.

The people who pursue Lean FIRE are frugal and minimalist by nature. These people will have annual retirement expenditures of around $40,000 or less. The theory is if current expenses are low and not expected to increase during retirement, you need less to live on and therefore less savings is needed to thrive. This enables an overall smaller portfolio because their natural tendency is to spend less money.

For example, if a person plans to spend $40,000 annually and practiced the 4% Rule for withdrawals, they will need $1M to retire.

Here is another example of Lean FIRE. Suppose a person were to get laid off who practiced Lean FIRE, they would not have a problem with meeting basic budgetary needs. However, they would not have extra money leftover for discretionary expenses like vacations, entertainment, and hobbies.

Coast FIRE

Coast FIRE is investing up to a specific amount and then relying on compound interest to reach your financial independence (FI) number. With this strategy, after that specific amount is reached, there is no longer a need to continue investing.

The strategy is that by investing early and often, you will eventually hit a point where you will no longer need to save anymore in order to hit your FI number. You let compound interest’s magic do all the work.

Coast FIRE

Here’s an example:

Using calculator.net, John graduates at the age of 22 making $50,000 a year. Let’s assume he never gets a raise, maintains a savings rate of 20%, and gets a 7% annual rate of return. By the age of 35 he will have $225,504.88.

If John decided to not invest another penny, he would have $1,716,600.66 by the time he turns 65. In essence, he can “coast” to retirement.

This type of FIRE is great for:

  • People who are not in a rush to retire early but want to ensure they are financially set for retirement
  • People who want to easily track overall progress towards financial goals

This knowledge can allow for more flexibility later in life if a person decides to choose a less stressful job as they “coast” their way to retirement.


Fat FIRE is for people who want to reach retirement early but want to live off a much larger budget. Instead of living for under $40,000 like Lean FIRE individuals do, Fat FIRE individuals live on a budget of over $100,000.

This is FIRE for “ballers” meaning this is for people who want to live lavishly. People in this category are high earners (>$100K annually) with a lot of income at their disposal. In other words, this is FIRE on steroids. This person gets the best of both worlds, retire early AND live lavishly. You can do whatever you want, whenever you want.

Baller FIRE

We’re talking 1st class trips and no restrictions on luxury items and much more. People who Fat FIRE are more likely to:

  • Live in the most expensive cities in the world
  • Live in a comfortable house most of us would drool over
  • Have saved enough money to pay for all their children’s education.
  • Travel several weeks a year living in 5-star hotels
  • Have no need for their spouse to ever work again

On top of that, if you choose to earn supplemental income because it makes you happy and have a few more bucks in your pocket, it’s a great option!

This level of FIRE is the most difficult to achieve, but also the most lavish and fun-filled! 😊

Barista FIRE

Barista FIRE is about saving enough so that you only need to make a little bit of income each year from work. It’s like a hybrid between the working world and regular FIRE. Think of it as “part-time FIRE”.

This lifestyle eliminates the need to work 40+ hours per week to live your specific lifestyle. You can withdraw part of the income needed from your portfolio and use the income earned to supplement the rest.

For example, instead of working in corporate life, you can work a gig job or a lower stress job like working at a coffee shop and enjoy yourself.

I have a friend who plans to work part-time at a wine shop or vineyard when she retires so she can get her favorite bottles of wine firsthand and make a few bucks doing it. Personally, I thought about being an usher at a major sports venue so I can watch my favorite teams for free while getting paid to do it! 😊

The advantages of this are not working yourself to death to achieve FIRE, obtain at least a moderate level of independence faster, and even get some health care coverage to boot.

The key thing with this lifestyle is choice and freedom. It gives people the option to test out early retirement to see if they like it. Plus, you can explore your passions and interests along the way.

Which FIRE is Right For Me?

To choose the FIRE you want to achieve, you’ll need to analyze your current spending habits and the lifestyle you want in retirement. From this number, future expenditures will need to be predicted.


If it sounds a lot like the makings of a budget, that’s because it is! It’s ok. A budget is one the foundational pieces for the financial planning that you will do. If you want to learn more about how to set a retirement budget, check out the article I wrote about it here.

Personally, I’m a firm believer that FIRE can be for anyone regardless of income level and financial situation. It isn’t a matter of IF you can achieve it but HOW to do it. Given my financial situation, if I can achieve it, so can you….. You CAN do this!

Live the Life You Love, Want, and Deserve! 😊