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FIRE: From CoastFIRE to FatFIRE EXPLAINED

Every type of financial independence retire early, explained.

So you may have heard about the financial independence retire early community.


You may have then have heard people describe it in various ways, such as "I'm really just looking to achieve baristaFIRE".


In which case, you were then lost again.


As a quick reminder: the mathematical achievement of "financial independence" is when your passive income is equal to your annual expenditures.


So, let's clear this up once and for all and explain what each FIRE-subset is all about.


CoastFIRE


This is one of the newest collectives within the FIRE community and is possibly the funniest strategy of the bunch.


The primary goal of CoastFIRE is to accumulate a massive nest egg by 30/40 years old (typically about $500,000-$600,000), invest it into a total market index fund, and then stop giving a fuck about working too hard/stressing about saving & retirement as the nest egg will grow to the large total needed to retire by the time you turn 50/60 years old.


Funny, right?


It does require extreme saving early on (like $30k-$40k/year depending on when you start) but it gives you an early end date to the pain.


It's pretty much the equivalent of living like a poor college student for 15 years after graduation (no matter how much money you are earning) and then getting to stop giving a fuck for the rest of your life.


Much respect to those that get in on this early.


The biggest con of the strategy is the lack of health coverage that exists when you get tired of coasting and want to fully RE - so likely from your late 40's up until you turn 65 (Medicare).


You could likely pay for coverage & incorporate this in your nest egg - but big medical occurrences can be a bitch.


That being said, a few other strategies could be combined with this one - like BaristaFIRE.


LeanFIRE


The primary goal for the LeanFire group is speed to RE.


This group is predicated on low-cost retire-early living with a maximum annual expenditure of $40,000/year.


Relocating to a LCOL (low cost of living) area in the United States is common (parts of TN & FL).


You will also see van-living (RVs too) in this group.


Part-time jobs are not uncommon for this bunch but are certainly not the goal of the majority (more as something to do as a hobby/beer money).


Total saving/investments needed to hit the $40,000 in passive earnings per year is $800,000 (based on an average 5% market return). Adjusted for drawdowns, this number can be closer to $700,000.


The extreme in this group are able to reduce annual living expenses closer to $20,000.


The biggest argument made against LeanFIRE is the exposure/cost of medical insurance. Most critics say it will destroy their nest egg either in premiums (if they pay for decent coverage) or large out-of-pocket costs (if they get weaker coverage).


It is possible that this happens. That's why some turn to BaristaFIRE instead (which provides slightly less freedom but far less risk).


BaristaFIRE


The primary goal for BaristaFIRE is speed to RE while maintaining health benefits.


The most notorious argument against RE is that when you leave your/a job, you lose the health care benefits associated with employment. As you will then have to pay for your own health care expenses out-of-pocket, many fear that they will have their nest egg destroyed when a medical emergency arises.


Thus, BaristaFIRE was born.


BaristaFIRE is predicated upon working a part-time job after you hit FIRE in order to keep the benefits.


This part-time job does not have to be as a barista but the term emerged due to many in this community leveraging Starbuck's amazing benefits plans.


Other individuals work part-time at various companies like Amazon.


The argument against BaristaFIRE has always been that it doesn't really give you freedom if you still have to work a crappy schedule (even if it's a few days a week).


The argument for it is that it allows you to get out of that job that you hate, maintain health benefits, and spend 4 days a week enjoying freedom (compared to 2).


The RE numbers are likely similar to LeanFIRE - about $750,000, but this strategy gives you an extra layer of protection when your health starts to go before Medicare kicks in.


FIRE


The primary goal of basic FIRE is to retire early and not have to worry about working again (unless you want to).


That means no serving coffee unless you damn well want to serve coffee.


That means the total nest egg includes a health expense buffer.


The health expense buffer, as I've written about in other articles, incorporates the rising cost of obtaining your own health insurance (no employer) and having sufficient funds to cover a long term care insurance policy (for your last few years).


Members typically target $1M - $2M in savings but the figure is very unique to the individual and their situation.


ChubbyFIRE


The primary goal of ChubbyFIRE is to retire early but have a large enough nest egg to live a bit more grandiose than traditional FIRE.


This group is similar to the traditional FIRE collective but is shooting for closer to a $3M - $4M nest egg before they call it quits.


This group wants to have at least $100k of passive income each year and typically defines their lifestyle status as "upper middle class".


The being said, this is still a frugal collective.


Most are adding in the buffer for a bit of extra fun but also far more peace of mind regarding potential health events & unexpected surprises (kids being a big one).


FatFIRE


The primary goal of FatFIRE is to retire early but have a massive pile of cash waiting to be spent on luxury travel/purchases during FIRE.


This group is by far the most extreme savers but also the most financially sophisticated/highest earners of the bunch - meaning they are exploiting every retirement/tax/estate/business opportunity possible to pick up savings/yield.


That is not meant to diminish the effort of other groups at all, rather, point out the fact that this group is willing to assume a bit more risk/reward.


This group is shooting for a nest egg of at least $5M.


Passive income goals are a lot closer to $200k (almost double that of ChubbyFIRE).


Obviously this type of FIRE allows you to live like a king for the rest of your days but is likely only achievable if you are earning $150k+/year, starting at a relatively young age.


The mindset and lifestyle of this group is frankly night & day compared to LeanFIRE and BaristaFIRE - as the pile of money unlocks a whole different world of opportunities (travel, multiple homes, luxury purchases, etc).

So there it is.


Pick your poison, make a plan, and get started.


Happy saving.

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