What is the FIRE Movement anyway?
The FIRE (standing for Financial Independence Retire Early) movement gained a lot of traction in the recent bull market. Though it appears to be quieter in the Post-COVID market downturns, it remains strong. Most of this is because of the broad appeal of its message: With strategy and life changes, you can retire from the 9-5 grind before age 67. It’s your life, so no need to wait for some drone in Congress to tell you when you’re allowed to escape the rat race. Take control of your life!
There is a misconception that it’s all a bunch of engineers and “tech bros” living in shoe boxes and eating beans out of a can, and working 70 hour weeks to retire by 33. Like most stereotypes, that’s not true.! There are several types of FIRE that work for different people.
The general end goal is to achieve the “4% rule” based on the Trinity study. There’s a lot of detail but the gist is that after 25 times your estimated living expenses, if well invested, can produce the income needed to pay your living for the rest of your life.
Types of Financial Independence
Regular FIRE- the standard “vanilla” of the FIRE movement. Basically, get to 25x your expenses and work becomes optional as your living expenses are taken care of.
Lean/Skinny FIRE- The minimalists of this minimalist movement; the Lean FIRE folks focus on further reducing their “post retirement” expenses to get out of the rat race before 25x expenses. They also may calculate their FIRE number on the barest of expenses (basic food, basic shelter). They may have a small paid off home/apartment, grow a lot of their own food, ride bikes or otherwise live small.
Fat FIRE- The maximalists who want to retire in style. Maybe they want a nice home with a pool or to drive a Cadillac. They want to make few sacrifices but will have to save significantly more than their regular or Lean FIRE brethren.
Slow FIRE- The laid back group. Those who will put their extra cash to work and get to financial independence whenever. Like your Cousin Jerry who's always late to dinner, they are not constrained by an internal clock, they’ll get there when they get there. 45? 55? 65?, It’s all good.
Coast FIRE- The group that doesn’t mind working until the traditional retirement age. Commonly seen maxing out their 401k/IRA/HSA/stock accounts in their 20s; Coat FIRE folks can let their accounts grow, confident that the compound growth will net them a nice return by their 60s. Some can even stop contributing in their 40s/50s (conveniently when the kids' college years or their own parents may need some assistance) and let the funds grow on their own.
Barista FIRE- Folks here focus on getting pretty close to their FIRE level, but don’t completely retire. Named for the members who may, for example, take a part time job at a coffee shop for extra cash, health insurance, structure and purpose or to ride out the volatility in the stock market. You may see them making a few bucks on their personal hobby (dive instructors or city tour guides), part time at the Church/Mosque/Synagogue/Temple, or a paid dog walker at the animal clinic. It’s also common for people who are burned out of the regular high stress (and likely lucrative) profession who just don’t feel like
Contra FIRE- My personal style is something of a mix of the Slow FIRE and Barista FIRE with a mix of Paula Pant’s idea of Mini Retirements. CF works best for those with primary jobs that operate on a contract or per assignment basis with a defined end point. The idea is to work a contract or two, save and invest proceeds, take time off in between, do another contract, etc, take more time off, maybe do a side hustle or experiment, do another contract, all while saving and investing. Also, it’s helpful to reduce the effects of burnout.
