In a previous article we talked about what Financial Independence is and how that can empower you to take control of your life, your future, and your employment. Today I want to talk about a few terms that might be confusing if you start doing additional research into the topic of FIRE (Financial Independence Retire Early).

The previous article discussed the proportional relationship between budget size and portfolio size. Today, we’ll cover some nuance on these variations. LeanFIRE, FatFIRE, CoastFIRE, and BaristaFIRE.

Yeah, most of those sound pretty dumb, and I think for the most part they get a little bit in the weeds sometimes. “Original” FIRE is usually tied very heavily to LeanFIRE. LeanFIRE is the idea that you minimize your expenses with the goal of reaching independence faster with a smaller portfolio. In the minds of most people who discovered FIRE through the Mr. Money Mustache era, this is what FIRE has always been about.

FatFIRE is the idea that your goal number needs to be able to cover the expenses you are accustomed to; therefore, people aim to replace their annual income with either Dividends or the 4% Rule.

BaristaFIRE has a more unique idea, where you plan to work a more laid-back job in “retirement” in order to cover health insurance or extra spending money. This one is pretty interesting, as it doesn’t treat working as an option it’s a baked-in requirement. I guess the idea is that you have the big stuff covered, but your petty cash and fun purchases utilize the income from continuing to work.

CoastFIRE is actually the one I find the most unique. The idea is that you calculate your retirement target number — say, one or two million dollars — and then you use average market return calculators to find out how much you need to invest in your 20s to reach that number by your retirement age, which could be 55 or 60. Then once you reach that number you just stop worrying about retirement, keep working and enjoy the money you’re making.

I’m sure the Coast method can be used to still early retire, but I’m not sure it would work well for retiring in your 30s. What I find fascinating about this ideology is the idea to be frugal and a saver when you’re young to reach the number as quickly as possible and then let yourself spend. These seem to be contradictory mentalities, but the reason I say that is because you are likely to increase your spending as income rises once you’ve stopped thinking about saving. Maybe people like it because it mentally unloads any stress they might have about retirement.

For me, I prefer the idea of a LeanFIRE lifestyle with a FatFIRE bank account. I want freedom of my time, but with the ability to buy land and have some animals. I’d really enjoy being able to work on carpentry skills and drop anything I’m doing to go spend time with my kids when they ask.

This is part of the educational series because I feel that the power of FIRE, in any context, is what financial literacy is all about. Even if you choose to work a high powered career until you’re 70 or older, the habits and mentality of Financial Independence are the key to exiting the rat race. LeanFIRE proves that low-income earners who invest, save, and are frugal can retire early and have comfortable lives. Habits and time in the market are what make the difference. Be disciplined and never stop learning.

~~Miniwing~~
Investor, Parent, Stoic

Term	Definition
FIRE (Financial Independence, Retire Early)	A lifestyle and financial movement where people aim to save and invest aggressively (often 50%+ of income) to achieve financial independence and retire much earlier than traditional ages (e.g., in their 30s, 40s, or 50s). The goal is to build enough assets to cover living expenses without needing a job.
LeanFIRE	A version of FIRE where someone achieves financial independence with a very frugal lifestyle and low annual spending (often under $40,000). Because expenses are kept minimal, a smaller investment portfolio is needed to retire early.
FatFIRE	A version of FIRE focused on achieving financial independence while supporting a higher-spending or more luxurious lifestyle. It requires a significantly larger portfolio so that annual withdrawals can comfortably cover elevated living costs.
BaristaFIRE	A semi-retired approach where investment income covers a large portion of living expenses, allowing someone to work part-time (often in a job that provides health insurance or other benefits) instead of fully retiring.
CoastFIRE	The point at which your existing investments are large enough that, if left to grow without further contributions, they should support a traditional retirement age lifestyle. After reaching CoastFIRE, aggressive saving is no longer required and you can work less or take lower-stress jobs.