Financial Independence Retire Early, FIRE, comes in many different forms. 

If you have the means to do so, financial independence is a worthy pursuit for the financial security and relief from worry and anxiety it provides. When you achieve any FIRE milestone, you are more resilient against the unexpected and unknowns, like stock market volatility. You can also make more deliberate choices of how you want to live your life since you aren’t tethered to a job.

When exploring the different types of FIRE to find which is best for you, it’s important to consider them not as siloed choices but different steps on the same path. You cannot achieve FIRE without passing through CoastFIRE and leanFIRE first. Understanding FIRE as a journey means you can celebrate every time you reach a new milestone before you achieve your ultimate goal.

Most FIRE calculations are based on The 4% Rule, which states you can safely withdraw 4% of your portfolio balance each year without ever running out of money. This is because a well designed stock portfolio should grow by 8% to 10% per year, so it will compound faster than a 4% withdrawal. This will allow you to draw more each year to keep up with expenses that are growing with inflation, without eroding your financial security. In order to be able to drawdown 4% of a portfolio each year, the balance must be equal to 25x your expenses.

New data suggests the 4% rule is too conservative. However, when it comes to financial planning it is better to err on the side of caution. You can always elect to spend more in retirement if you find your portfolio has grown too large!

Below are the different types of FIRE explained in detail.

CoastFIRE 

Retirement age: 65+

Portfolio required: $80,000 to $400,000

Strategy: front load your investments before age 45 so you can stop or reduce contributions and your accounts will grow to the amount you need by retirement, effectively letting you “coast” to retirement.

CoastFIRE is one of the most popular FIRE strategies because it is the most accessible while still offering a high degree of financial security. It is also the first step to achieving any subsequent FIRE milestone. You cannot build a million-dollar portfolio without first investing enough that will grow to a million dollars!

CoastFIRE is calculated as the liquid portfolio amount you need right now that will compound to the amount you need at age 65 for retirement. Gilded calculates your CoastFIRE number for you. Your dashboard graph will display a small flag icon over the year you achieve CoastFIRE.

Premium users can find the CoastFIRE icon on their dashboard graph. We automatically calculate this milestone for you!

BaristaFIRE

Retirement age: any, but usually 45+

Portfolio required: $500,000 to $1M

Strategy: building an investment portfolio that will generate enough income to allow you to accept a lower paid, lower stress job or go down to part-time hours. 

BaristaFIRE is an attractive FIRE strategy for high-earning individuals that work physically demanding or high-stress jobs they feel are not sustainable or are undesirable to do for their entire working lifetime. Instead, they save up an investment portfolio designed to generate a small income that is not enough to live on exclusively, but is enough to supplement a part-time income earned elsewhere. 

A BaristaFIRE portfolio of $500,000 will generate about $20,000 per year, whereas a portfolio of $1M will generate about $40,000 per year. These amounts may not be enough to live on alone, but they can be a very comfortable extra income for someone earning the same or more from work.\

LeanFI

Retirement age: any

Portfolio required $1M+

Strategy: building an investment portfolio that will generate a small income, usually $50,000 to $80,000 per year in income, allowing you to achieve financial independence so long as you commit to living the rest of your life on a very tight budget.

LeanFI is often the chosen retirement strategy for individuals who are comfortable with a very low expense lifestyle. It requires building up a large portfolio, which often requires a high income, but committing to living a low-cost life forever thereafter. LeanFI subscribers often choose to live in low cost of living cities or countries (a practice called geo-arbitrage), sometimes choose self-sustaining practices like growing their own fruit and vegetables, and are excellent at reducing their overall consumption.\

FIRE

Retirement age: any

Portfolio required: $2M to $5M

Strategy: building an investment portfolio that will generate $80,000 to $200,000 per year in income, allowing you to achieve financial independence while maintaining a middle class lifestyle.

FIRE, sometimes called tradFIRE, is traditional financial independence. It means you have built up a portfolio large enough to sustain a middle-class lifestyle without any aggressive budget cuts. Most people pursuing FIRE are doing so for financial security and freedom. They are not particularly motivated by a luxurious lifestyle, but do not want to feel overly-restricted or like they have to make sacrifices with their spending either.

FIRE is typically calculated as having a liquid portfolio of investments that is 25x your average annual expenses. This is the same calculation that yields the 4% Rule.

Inside of Gilded, we calculate FIRE automatically for premium users. Your dashboard graph will display a small flame icon over the year you achieve FIRE.

ChubbyFIRE

Retirement age: any

Portfolio required: $5M to $10M

Strategy: building an investment portfolio that will generate $200,000 to $400,000 per year in income, allowing you to achieve financial independence in a comfortable lifestyle with a mix of modest and luxury expenses. 

ChubbyFIRE is essentially FIRE with a bigger budget. These are high-earners who want to take the time to build a larger portfolio so they can enjoy more luxuries in retirement. A ChubbyFIRE portfolio will produce enough income to put you in the top 10% of income earners.\

FatFIRE

Retirement age: any

Portfolio required: $10M+

Strategy: building an investment portfolio that will generate $400,000+ per year in income, allowing you to achieve financial independence in a luxurious, often 1%, lifestyle. 

FatFIRE is the highest level of financial independence and often only accessible to inheritors of generational wealth, individuals who come into large unexpected windfalls such as a lottery win or sale of a business, and very, very high earners who are disciplined enough to invest a large portion of a multi- six- or seven-figure salary. A fatFIRE portfolio will produce enough income to put you in the top 2% of income earners.

Whatever FIRE journey you're on, Gilded will help you get there. You plan your rich life, and we'll do the math.