What Are The Different Versions of FIRE?
In this post I will be going through some of the different types of FIRE that can be taken in pursuit of obtaining the life you want through gaining financial independence.
There's No One Fire to rule them all?!
Long story short, no. There isn't only one way for everyone to live their life and I doubt everyone's retirement will look the same. Using this there are different types of FIRE that can be undertaken using your finances to enjoy the rest of your life.
Retirement Definition
The definition of retirement - the action of someone leaving a job and ceasing to work.
The definition of work - An activity that uses physical or mental effort, usually for money.
So work is usually for money, but it's more about the effort. By this definition, it means if once retired and no one did any sort of work, we'd all do our best Micky Flanagan impressions doing Proper F*ck all (great comedy sketch). Obviously this isn't the truth, so the definition of retirement is down to interpretation. In reality, people want to still put in effort, but just elsewhere.
In the example of a footballer, they might retire from their playing career in their 30s or even late 20's if injuries permit, but plenty of them still go into other fields after hanging up their boots, even if they have millions in the bank. Whilst some will enviably enjoy their riches, others will go into coaching, punditry roles, some create their own businesses and others might want to put more effort into their family lives (that's a lot of effort in Kyle Walker's case).
Types of Fire
Lean Fire
Lean fire is achieved through being frugal and retiring with a low expenditure, meaning your Fire Portfolio doesn't need to be as large. This means Fire can be achieved earlier, a way for people who have lower paying jobs to achieve fire. This is typically what the Average Joe would believe FIRE consists of, and typically not the end goal that most people looking for financial independence are pursuing.
This is suitable for people who are typically frugal and undertake activities that they enjoy requiring little expenditure and desire for minimalism. It is also possible to achieve this method using UK tax efficient wrappers only, such as an ISA and if all available, topping up with a pension at the access age (whenever that will be).
If you are someone who isn't attached to your current location, you could move to another area in the country where house pricing is lower than you currently are. Going further on this, if you live in a wealthy country, there is the possibility of looking to migrate to a country where there is a lower cost of living and achieve Fire earlier than if you stayed put.
The dangers of Lean Fire are that if their is a downturn in the markets early into retirement it could eat up a lot of your portfolio and you wouldn't be able to live off of this, as there are not many extra costs that can be cut out from your expenses.
Fat Fire
On the other end of the Fire spectrum, Fat Fire is when someone is able to create an extremely large portfolio, and the are able to live a lavish lifestyle once they leave their career. To be able to achieve this will require a high paying job, or a sizeable inheritance. Alternatively this can be achieved my putting in a few more years, but still retiring well before pension age.
Coast Fire
Coast Fire involves hitting a specified total prior to retirement and not contributing anymore to your Fire pot, leaving it to grow until you reach the age you want to start withdrawing from you pot (preservation age). All current expenses until preservation age would then be covered by your income coming in prior to this.
Once reaching Coast Fire, current outgoings would be reduced due to not making further investments. From there, you could earn the same money and upgrade your lifestyle if you really wanted to, go part time, or move into a different career.
The below link provides some good detail on this version of Fire.
https://walletburst.com/coast-fire-grid/
Barista Fire
Barista FIRE, your Fire Portfolio will not currently have enough to cover all of your expenditure using for 4 percent rule, but there difference between your spend and your portfolio income will be subsidised through topping up your income through part time or casual work whilst also drawing out from your Fire portfolio.
Mini Fire
With the other options (Lean, Coast and Barista) there can be the argument that at the time of going for early retirement, that you are at your highest stage of earning power in your career and you are leaving money on the table that could enhance your life.
One way to tackle this is to take mini retirements throughout your Fire journey and go back into your career at a later date. This will allow you to enjoy your Fire pot at an earlier stage and top this back up whilst you have stronger earning power. Looking at my scenario, this is an option I am seriously considering. The though of taking some time off to travel the world and supplement this at different times is suitable with where I am in my life.
There is the argument that with career breaks, employers will be put of but that's a gamble that sounds worth it. If going for a maternity leave role, why would the employer be worried about what you do after you have filled the role. Maybe there is one Fire to rule them all.....
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