The Financial Independence, Retire Early (FIRE) movement has skyrocketed in popularity over the last few decades. The basic idea is to save aggressively while you're young -- usually 50% or more of your annual income -- so that you can retire far earlier than normal. Many retire in their 50s, though some retire in their 40s or even sooner.
The core of FIRE remains the same across all branches of the movement, but there are now several subtypes, each with its own objectives. We'll look at three of the most popular -- FAT FIRE, Coast FIRE, and Barista FIRE -- to help you figure out which one is right for you.
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FAT FIRE
Some of the most aggressive savers adopt a FAT FIRE strategy. This involves saving most of your annual income for retirement and possibly taking on more risk with your investments. The goal is to fund a luxurious lifestyle that allows for a high rate of annual spending in retirement. It's the opposite of lean FIRE, which promotes retiring early but living frugally on a modest income after leaving the workforce.
FAT FIRE could be suitable for those with high incomes who are comfortable making a lot of sacrifices in the present. Some of its followers work side hustles in addition to their regular jobs, so they're able to save even more. This can lead to burnout in some people.
Since FIRE numbers -- usually calculated as 25 times your estimated annual retirement expenses -- are usually much higher among FAT FIRE participants, you may find that you need to remain in the workforce for longer with this approach to give yourself time to save enough. Some FAT FIRE participants could need $3 million or more to cover their retirement expenses.
Coast FIRE
Coast FIRE takes a more moderate approach. It still requires a high savings rate, but the goal isn't to fund a high-rolling retirement lifestyle. Most Coast FIRE participants aim for an average retirement income. They try to reach the point where their existing investments will grow to their FIRE number by the time they reach their chosen retirement age without further contributions.
When this happens, Coast FIRE participants may decide to scale back their hours. They only work enough to cover their present living expenses without worrying about saving any more for the future. Then, they may fully transition into retirement when they reach their predetermined retirement age.
This could be a better option than FAT FIRE for those who want the benefits of retiring early without as much sacrifice. Keep in mind that all FIRE strategies typically involve saving close to half your income, though.
Barista FIRE
Barista FIRE uses principles from the FIRE movement, but it doesn't aim to cover all your retirement costs. The idea here is that you save enough to cover the majority of your annual retirement costs. Those who subscribe to this approach plan to make up the remainder by working flexible, part-time jobs, like being a barista, in retirement rather than leaving the workforce altogether.
This strategy could get you to your FIRE number the fastest, since you won't have to save as much. Most Barista FIRE participants don't plan to spend extravagantly in retirement like FAT FIRE participants, either. However, this approach leaves you tied to the workforce for much longer than other FIRE subtypes.
It ultimately comes down to personal preference and what you can afford to do. Start by figuring out how much you're able to save today and go from there. You can always change your approach down the road if you find your current strategy isn't working.
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