What Is the Difference Between FIREs: Lean, Fat, Semi, Seasonal [+ 3 More Alternative Retirement Strategies]

In case you're new to the early retirement movement: F.I.R.E stands for Financial Independence, Retire Early. You can read more about it here. It became so popular for a lot of reasons which we'll look at in this post. Then I'll break down the five different types of FIRE's plus 3 alternative retirement strategies for achieving financial independence so you can retire early in a way that is realistic and sustainable for you.

Millennials and Gen Z need to be thinking about retirement in a way Americans never have before which is why Lexington Law sponsored this post and  series on retirement. I've been sharing everything from what the FIRE movement is to steps to achieve FIRE, and today we are looking at other financial independence strategies to help you achieve early retirement without feeling deprived.

In this post I'm not going to cover retirement accounts you can set up; instead this post focuses on retirement strategies. If you are looking to learn more about retirement accounts you can utilize with these strategies, click here. And if you'd like an alternative to those, Lexington Law has a helpful blog post on their site about 5 alternatives to 401(k)s to save for retirement.

Why did F.I.R.E gain such popularity and why should we care about retirement at all in our 20s and 30s?

The median household income in the U.S. hasn't really grown in roughly the last two decades. We've seen the same rise and fall between the mid $50,000 and low $60,000 annual income. While the average household income has remained relatively stagnant over the last couple of decades, the average home prices in America have increased by nearly 50% in the last two decades with that bump going up roughly 30% in the last decade alone!

In short: Housing rates are climbing while income remains stagnant.

Plus it's no secret that healthcare costs have been out of control. People are being bogged down by student loans too; which are only getting worse. Annual tuition at a 4 year public college has increased by 55% in the past decade! And I won't even get into the rising cost of child care! Seriously, I have a friend who pays what I did in college tuition to send his kids to PRESCHOOL! Lastly, we all know there's a clock on social security benefits as the reserves drain and Americans are living longer too.

In other words, today's youth, understands the importance more than ever about planning for retirement. They're inheriting some of the worst financial conditions our country has ever seen.

The FIRE movement quickly rose in popularity, not because people want to quit their jobs and become Instagram famous for traveling the globe, but because younger generations truly need to think about retirement.

Loads of forecasts have come out recently that millennials will likely be the first generation to do worse financially compared to their parents. It's not because millennials are “lazy and entitled” as people used to label us either. In fact, millennial households are earning more money than ever before. The problem lies in the wealth gap. According to a report from Pew, the average paycheck today has the same purchasing power it did 40 years ago!

One of the first things you need to keep in mind in your early retirement journey is a strong financial foundation. That means getting debt free and repairing your credit score. Lexington Law are leaders in credit repair and are here to help you with inaccurate negative items on your credit profile. They're offering free credit report consultations too. Click here to receive yours today!

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What Is the Difference Between FIREs: Lean vs FAT vs Semi vs Seasonal [+ 3 More Alternative Retirement Strategies]

Retirement Strategy: Lean F.I.R.E.

What is Lean F.I.R.E.?

Lean F.I.R.E is basically FIRE, but with way less wiggle room. People opting for Lean FIRE have their annual expenses capped at $40,000; but really below that number since that number is considered standard FIRE. Meaning these people would need less than $1,000,000 saved in order to hit retirement early.

Lean FIRE requires even more diligence on cutting spending and clarity on where your money is going. You tend to see people on the younger end of the FIRE movement spectrum doing this; mostly because they know they'll keep working even though they don't have too.

Retirement Strategy: Fat F.I.R.E.

What is Fat F.I.R.E.?

Fat F.I.R.E. is FIRE but on a larger budget. So instead of capping your annual expenses at $40,000 a year, you'd cap it around what is realistic for your lifestyle or what you'd like your lifestyle to be. In a Reddit thread, many seemed to put that number around $150,000 a year. According to Physician on Fire, it's around $100,000 a year based off the 2018 stat that the average American household spends between $50,000-60,000 annually.

With that said, Fat FIRE is totally personal, and really depends on YOU. It actually gives you room to take into account a family, the cost of living in your area, and other lifestyle factors. However, instead of needing $1,000,000 saved to retire; you'd need $2,500,000 (based off $100,000 a year) or $3,750,000 (based off $150,000 a year).

Why I like Fat FIRE:

It actually takes into account living comfortably. The problem (in my opinion) with the other FIRE methods, is that it assumes you'll want to live off of $40,000 a year forever (we'll address this in a minute).

Recap on the basic FIRES:

  • Lean FIRE: Less than $40,000 annual spending (needs <$1,000,000 to achieve)
  • FIRE: At or around $40,000 annual spending (needs around $1,000,000-1,250,000 to achieve)
  • Fat FIRE: Annual spending around above $80,000 (needs $2,000,000+ to achieve)

Retirement Strategy: Semi F.I.R.E

What is Semi F.I.R.E?

Semi FIRE is where most people actually land. It's when you achieve FIRE but still make money from actively working. This is sort of the realist approach to FIRE. The likelihood that you can really retire at 35 on $1,000,000 is pretty slim and would require pristine conditions. Meaning it doesn't take into account a family, health crises, and other unexpected problems. Continuing to work despite having the ability to retire, can give you peace of mind. Which is why FIRE gained such popularity to begin with.

The benefits of Semi FIRE really are where it's at:

  • Maintain a routine and sense of purpose. My FIL recently retired, and while he loved the first year, he's begun to fall into a bit of a funk. This happens with many retirees. People can feel directionless when they no longer have work driving you to get up and get dressed each morning.
  • Increase social connections & health. Lack of purpose aside, work provides a huge social component for many. Gone are the interactions with colleagues and clients/patients/customers and hello are countless hours in your head alone. Studies have shown that regular face to face contact with others improves health and fights depression.
  • Less stress. Since you technically don't “have to” work having achieved FIRE, you can truly show up to work everyday because you want to. Meaning you're less susceptible to the regular stressors most employees face. You can truly clock out of work and leave it behind versus staying glued to your phone out of fear that you'll drop the ball and end up missing a promotion or raise (or worse, get fired!). Without fear of losing your job, stress levels go down. Furthermore, since you've reached FIRE, you don't need to “climb the ladder” to reach some sort of financial goal you've deemed as “making it.” Giving you more time for work-life balance.
  • You can still receive benefits. Despite most people working 50+ hours a week, the reality is most employers consider “full time” around 30 hours a week. Once you've hit your employers “full time” hours you qualify for benefits. You can work shorter days, or few days each week and still qualify for healthcare, employer sponsored retirement savings plans, and life and disability insurances.
  • Greater peace of mind while making money. Again, FIRE became such a big thing because people want peace of mind through this economy. We really have no idea where things are going on both the large scale and personal. FIRE has some flaws in that it requires pristine conditions and doesn't take into account family, health issues, and other unexpectedly expensive things.

Retirement Strategy: Seasonal F.I.R.E

What is Seasonal F.I.R.E?

Seasonal FIRE is when you work seasonally, while enjoying your retirement the rest of the year. Personally, I could see myself doing this with waitressing during our “season” since I've always enjoyed it and it's only a few months of the year.

Non-FIRE Alternative Retirement Strategies

Retirement Strategy: Don't Retire

GASP! I know, you're here to read about retirement strategies and I'm telling you not to retire! Hear me out though!

When I mentioned the pain that many retirees face earlier (lack of purpose, depression), I wasn't exaggerating. One of the best ways to stay young is to stay engaged in life. Instead of focusing so much on the state of despair in the U.S. and feeling like you need to get as much of the pie as quickly as possible, what if you did a major mindset shift and said: I'm not retiring. 

Instead, you build a life you don't need to retire from. You could cut back on your hours at work while raising your children so you can be present with them, instead of feeling burnt out. When you start feeling like a job is stale, you reinvent your career. And if you're sitting here saying, “but I want to travel!” Guess what, you can travel and work! Visit new cities and waitress, tend to gardens and crops, or make yarn hangings or pasta! Really whatever you want to do! All you have to do is ask… and maybe beg a little to get the job. 

Seriously, if you're willing to work and show a strong desire too through persistence and humility, I've found that most people ultimately cave and give you a job. I've begged for a job during the middle of off-season when the employer was firing people and he gave me one. It wasn't the job I wanted, but I said I was willing to do any job in the restaurant: bus tables, wash dishes, take out the trash; I just needed a foot in the door.

Another employer of mine I persisted 5 times over a year before I was hired. Even working for free as an intern for a month until they saw my value. Where there is a will, there is a way.

Retirement Strategy: Retire for life

Similarly to not retiring, a simple mindset shift could say you're actually retired for life. Again… here me out:

I waitressed from 17 to 25 years old. At 24, I landed what I thought was my “dream job” as a therapist at a great company. If you know the story of how I got fired twice in a month, you know that my dream job was actually my worst nightmare. I legit, looked forward to waitressing each week because it was a pleasant reprieve. After I got fired twice in a month, I knew I couldn't continue in the industry so I started my own business using my skills and filling a gap I saw. I basically cherry picked the best parts of my job and found a way to monetize them.

A year into that, I got bored and started this blog; which again built off the skills I had gained in the previous year. Over the course of these last 5 or so years I've been self employed. Friends have visited from NYC (where the hustle is real) and continuously told my husband and I how much they wish they could just move down here. How jealous they are that we go to the beach everyday, make our own schedules, and do what we want and love to do. We also joke, “we are living the South Florida retired life.”

And the reality is, we are. We are in the place that most people work their entire lives to get to. Those same friends are only down here visiting us because their parents retired here. It's sort of like the story of The Mexican Fisherman. You can skip the hustle, and go right to living the retired life when you are intentional with how you spend your time and make a living. What both my husband and I work on for our “careers” are things that give our life meaning – and because we want to. It's not that we aren't working; but that if we didn't have our jobs, our lives would be the exact same. There's a reason they say, “If you do what you love, you'll never work a day in your life!”

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How to apply this to your life: ask yourself what your life would look like retired, then reverse engineer it.

I'm not saying it will be easy; trust me we have had our fair share of problems. But like I said before, where there is a will, there is a way. We have been persistent about making this lifestyle work for us. Just how others may be persistent at making a job they hate work for them. It's all about perspective; where focus goes energy flows. If you focus on how much you hate your job or retiring for life isn't possible, that's what you are putting your energy into and you will 100% find that to be true. If you focus on retiring for life, even if that means waitressing or doing odd jobs, then that's where your energy goes will become your reality.

It's very possible for you to create that retired life you dream of today if you're willing to do some out of the box things and ignore the people who think you're crazy (because trust me, a lot of people think we can't rub two nickels together when we tell them what we do for a living, yet we are on track with achieving Lean F.I.R.E. in 8 years!).

Growing up my mom – who worked 50+ hours a week – would rarely let me miss school unless for a doctor's appointment. While we would be out in the middle of the day she would always say, “What are all these people doing? Don't they work?” I remember thinking as a little girl, that I'd be one of those people. Out in the world in the middle of the day… and I am. 

Retirement Strategy: Make inheritance last

In my first post on the FIRE movement, I mentioned the privilege that comes with being able to do it. I also talked in the opening of this post about millennials being the first generation to do worse financially then their predecessors.

Here's the thing: Baby boomers are the wealthiest generation to live and it's believed that over the next 30 years, an estimated $30 trillion of that wealth will transfer from them to Generation X and millennials.

Now that's a rough generalization and there's been a lot of debate about how much millennials stand to inherit (some say less than $30 trillion, others say closer to $60 trillion); either way, many stand to inherit something. If you are one of the lucky ones in line for an inheritance, you better know how to manage it.

You can follow the same steps for achieving FIRE to make that inheritance last and grow instead of blowing through it. It doesn't matter if you've technically already achieved FIRE. Remember, this is all about creating a sustainable retirement plan!

What if you are “behind” on retirement planning?

If you feel behind on your retirement planning, don't stress! My friends at Lexington Law share their tips on catching up on retirement contributions here! They've also put together a helpful guide on retirement planning for seniors (that honestly applies to us all!). And remember, you can contact them for a free credit repair consultation as an important step in your personal finance journey!

Stay tuned to the blog as I'll go a step deeper into what two of these strategies look like with real numbers too, so grab your free checklist for saving on a budget (which will subscribe you to my newsletter) so you don't miss a post in the series!

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