Lean, Fat, Coast and Barista FIRE: which kind of early retirement fits you?

FIRE, short for financial independence, retire early, is not one plan. Over the years the online community has coined names for different versions: Lean, Fat, Coast and Barista. They are informal labels, not financial or legal terms, but they are a useful way to think about how much you need and how you want to get there.

The baseline: a FIRE number

All four versions start from the same idea. Your FIRE number is the amount whose withdrawals could cover your yearly spending, often set at 25 times spending, which matches a 4% first-year withdrawal rate drawn from Bengen's 1994 research on historical US returns. Our FIRE number guide explains the rule and why some people use a lower rate. The variations below change either the spending you plan for or how the gap gets filled.

Lean FIRE

What it is: financial independence on a deliberately low budget, covering needs with little room for extras.

Who it fits: people who genuinely enjoy a simple life, live somewhere with low housing costs, or want out of full-time work as soon as possible. A smaller target means you can get there much faster, especially with a high savings rate.

Risks: there is little slack. A rent increase, a health bill or a few years of high inflation can push spending above what the portfolio can safely support, and a thin budget leaves few easy cuts to make.

Fat FIRE

What it is: financial independence with a comfortable budget, often at or above what you spend while working.

Who it fits: higher earners who want to keep their lifestyle, families planning for children's costs, or anyone who wants a large margin of safety.

Risks: the target is big, so it usually takes longer, and the longer timeline means more years exposed to job loss or burnout before you get there. The upside is a cushion: you can cut spending in a bad market without cutting needs.

Coast FIRE

What it is: you have saved enough that, with no further contributions, your investments should grow to your full FIRE number by a traditional retirement age. From then on you only need to earn enough to cover current spending.

Who it fits: people who front-load saving in their 20s and 30s, then want lower-stress work, a career change, or time for family, without giving up on a normal retirement.

Risks: it depends entirely on long-run returns arriving as assumed. If they fall short, you may need to start saving again later. It also says nothing about the years before retirement: you still need income for every year until then.

Barista FIRE

What it is: you leave full-time work, and part-time or lower-paid work covers some of your spending while the portfolio covers the rest. The name nods to a part-time job such as working in a coffee shop, but any lighter work counts.

Who it fits: people who like the idea of some work, want an easier transition, or need earned income and possibly employer health coverage while they wait for Medicare.

Risks: the plan depends on that income continuing. Part-time work can disappear in a recession, the same moment a portfolio may be falling.

Worked example: the numbers behind each type

Assumptions for illustration only: amounts in today's dollars, a steady 5% yearly return after inflation, a target of 25× the spending the portfolio must cover (a 4% withdrawal rate), and no further contributions for the Coast rows. The Lean and Fat spending levels are examples, not definitions.

How to read it:

• Coast FIRE at 30. With 35 years to grow at 5%, $181,290 becomes $1,000,000, about 5.5 times what you started with. After that, you only need to earn enough to cover your $40,000 of spending each year until 65.
• Coast FIRE later costs more. At 40, with 25 years left, you would need $295,303. Time does less of the work, which is why Coast FIRE is mostly a strategy for people who saved early.
• Barista FIRE. If part-time work covers $15,000 of your $40,000, the portfolio only has to cover $25,000. That lowers the target from $1,000,000 to $625,000, a difference of $375,000.

Risks every early retiree has to plan for

Sequence of returns. Two retirees can earn the same average return and end up in very different places. If markets fall sharply in the first years of withdrawals, you sell more shares at low prices and the portfolio may never recover. Flexible spending, a cash buffer, or some part-time income in the early years all reduce this risk.

Health insurance before 65. In the US, Medicare is for people 65 or older (and some younger people with certain disabilities or conditions). Retiring at 45 can mean 20 years of buying your own coverage. If you retire before 65 and lose job-based coverage, you can buy a plan on the Health Insurance Marketplace, and losing coverage gives you a special enrollment period. Premium tax credits and lower out-of-pocket costs depend on your income and household size, which makes your withdrawal plan part of your health-insurance plan.

Social Security timing. You can start retirement benefits as early as 62, but they are permanently reduced. For anyone born in 1960 or later, full retirement age is 67, and claiming at 62 cuts the benefit by 30%. Waiting past full retirement age, up to 70, increases it. Stopping work early can lower your estimated benefit, so check your own estimate rather than assuming a number.

Getting at your money before 59½

Much FIRE money sits in 401(k)s and IRAs, and in the US withdrawals before age 59½ generally carry an additional 10% tax on top of income tax. There are exceptions. In general terms:

• Leaving your job in or after the year you turn 55 lets you take money from that employer's plan without the extra 10% tax. This applies to workplace plans, not IRAs.
• Substantially equal periodic payments, a fixed schedule of withdrawals based on life expectancy, avoid the extra tax from plans and IRAs, but the rules are strict.
• Disability and death are exceptions for both.
• Some exceptions are IRA-only, including up to $10,000 for a first home, higher-education costs, and health insurance premiums while unemployed.

Roth IRA contributions can also be withdrawn without tax or penalty, as our Roth vs traditional guide explains. A regular taxable brokerage account has no age rules, so it can also help bridge the years before 59½. Get professional tax advice before relying on an exception.

What to do this week

1. Write down the yearly spending you would want in financial independence, then multiply it by 25 to see your standard FIRE number.
2. Work out your Coast FIRE number: divide that target by 1.05 raised to the number of years until 65 (this assumes a 5% return after inflation; use a lower rate to be more cautious), and compare it with what you have invested now.
3. Price a Marketplace health plan for your age and a realistic retirement income, so health costs are in your plan from the start.
4. Create or log in to your my Social Security account at ssa.gov to check your benefit estimate.

General education, not personal financial advice. Figures are illustrations computed from the stated assumptions.