Lean FIRE vs Coast FIRE vs Fat FIRE: Your Monthly Number

The short answer

FIRE stands for financial independence, retire early. Each type is a variation on two questions: how much do you spend, and what do you do after you stop saving?

• Lean FIRE: independence on a trimmed-down budget.
• FIRE (regular): independence at the spending you have now.
• Fat FIRE: independence on a generous budget.
• Coast FIRE (sometimes written Coast FI): you have saved enough that growth alone reaches your number by retirement age. You stop adding and earn only what today's bills need.
• Barista FIRE: part-time earnings plus investment income cover your spending.

The most useful way to compare them is as a monthly number: the net income you need each month. For a household that spends $4,000 a month, Lean, regular and Fat FIRE come to $2,800, $4,000 and $6,000 a month. The sections below show where each figure comes from and how long it could take.

FIRE first: what the term means

FIRE joins two ideas. Financial independence means your assets pay for your living costs, so a salary becomes optional. Retire early is the choice to stop paid work before the usual age. Many people want the first and never take the second. Having the choice is the point.

There are two common ways to put a number on it. The portfolio method counts capital: save about 25 times your annual spending, then draw 4% a year. The rule comes from a 1994 study by William Bengen of US market history, and NerdWallet calls it the rule of 25. The income method counts cash: do your assets already pay enough each month to cover your spending? How to Track Passive Income walks through that method step by step. Each type of FIRE can be stated either way.

I call the second figure your monthly number: the net passive income you need each month. It has one advantage over a portfolio figure. It sits in the same unit as your bills.

One caution. The 4% rule assumes a 30-year retirement, according to NerdWallet. Someone who stops work in their 30s or 40s may want more cushion than 25 times spending.

Lean, regular and Fat FIRE: one sum, three spending levels

Lean FIRE means independence on a trimmed-down budget. You cut costs, sometimes hard, to stop working sooner. Regular FIRE covers the life you live now. Fat FIRE covers a generous budget, with room for travel, a larger home or help for family. The formula does not change. Only the spending does. Income Refinery Pro sets Lean at 70% of your spending and Fat at 150% by default, and you can change both.

The example household is the one from How to Track Passive Income. It earns $1,862.17 a month from a US dividend stock, a Singapore REIT, a rental flat and a savings account. Against the three targets, the gap is $937.83 a month for Lean, $2,137.83 for regular FIRE and $4,137.83 for Fat.

The dollar lines people quote, and why they disagree

Search for Lean FIRE and Fat FIRE and you meet fixed dollar lines. ChooseFI, for example, puts Lean FIRE at $25,000 to $40,000 of annual spending and Fat FIRE at $100,000 or more. Converted to the monthly numbers used here, the lines look like this:

These lines disagree from one source to the next because the cost of living does. $40,000 a year is a comfortable life in some places and a tight one in others, and it stretches differently for a single person and for a family. Healthcare, housing and tax rules move the answer further.

The example household shows the problem. Its Lean figure of $33,600 a year sits inside the usual Lean band. Its Fat figure of $72,000 a year sits below the usual Fat line, yet it is 50% above what the household spends today. A Fat budget for one family is an ordinary budget for another. For that reason a percentage of your own spending usually serves better than a dollar line from the internet.

Coast FIRE: the usual version

Coast FIRE changes the question. You do not ask whether you can stop working now. You ask whether you have saved enough that you can stop saving. If your invested money, left alone, will grow to your FIRE number by the age you plan to retire, you have reached Coast FIRE. From then on you need to earn only enough to pay current bills.

That is the sum Financial Samurai sets out. Use a return after inflation, so the answer is in today's money. The result is very sensitive to the return you assume and the years you allow:

Moving from 5% to 7% cuts the number needed today by about 31%. Nothing guarantees either return, and the same source warns that Coast FIRE is the weakest type of FIRE for that reason. I would plan on the 5% case and treat the 7% case as a hope.

Coast FIRE in monthly income

The usual formula needs a retirement age and a return. An income version needs neither. It asks how long your existing passive income would take to reach your target if you added no new money, with every payment reinvested and the income growing a little each year.

Income Refinery Pro measures Coast FIRE this way, so it uses the same monthly numbers as the rest of the method. It is not the retirement-age model. Run the example household through it, with a 5.5% yield on reinvested money and 2% income growth a year:

Reinvestment does most of the work. Switch it off, so the household spends every payment and only the 2% growth lifts income, and regular FIRE takes 38 years 8 months instead of 10 years 4 months. Coast FIRE by income is a statement about what you do with the payments, as much as about what you hold.

The two versions answer different questions. The usual one asks whether you have saved enough for a fixed retirement age. The income one asks how soon your income would cover your bills if you stopped adding. Many people find it useful to know both. The method behind the projection is set out in step 7 of the tracking guide and in the methodology article.

Barista FIRE: part-time pay closes the gap

NerdWallet describes Barista FIRE as semi-retirement: savings cover part of your spending, and you keep working, often for the meaning or for benefits such as health insurance. In monthly terms it lowers the target. Subtract what the part-time work pays after tax, and ask your investments to cover the rest.

The target falls from $1,200,000 to $660,000 of portfolio, and the example household is within $337.83 a month of it. Keep the part-time pay out of your passive total. Earned income needs your time, so it belongs on the other side of the sum, where it reduces the target instead of padding the progress figure. The risk is plain too: the plan only holds while the part-time work does.

How long each one takes

Here are the same four goals for the example household. The assumptions are stated, not forecast: a 5.5% yield on new money, 2% a year income growth, and either $1,500 of new money invested each month or none. Reinvesting means every payment of passive income goes back into the portfolio. The last column is the income version of Coast FIRE.

Each step up the ladder costs time, and more than time: the extra income has to keep arriving for the rest of your life. With $1,500 a month going in and reinvestment on, Lean FIRE arrives 3 years 8 months before regular FIRE, and Fat FIRE 4 years 5 months after it. Treat the table as a projection from stated assumptions. Yields change, dividends get cut, and rents do not rise by exactly 2% a year.

Choosing between them

The types are not rival religions. Most people move through more than one. A few questions narrow the choice:

• Do you want out of full-time work as soon as possible, and can you live on less? Lean FIRE. It only works if you really spend 70% of what you spend now, so track spending as carefully as income.
• Do you want today's life, paid for by assets? Regular FIRE.
• Do you spend a lot, or want slack for healthcare, family and rising prices? Fat FIRE.
• Do you have a long horizon and meaningful savings? Coast FIRE lets you ease off saving, and lets you take a lower-paid job you prefer, once the sum works.
• Do you want to leave full-time work but not all earnings? Barista FIRE.

One sensible route treats them as rungs: Barista or Coast first, then Lean, then regular, then Fat. Each rung is a smaller step than the whole climb, and each one gives you more freedom than the last. In the example household, Lean FIRE at $2,800 a month is 3 years 9 months away with reinvestment. That is a better monthly number to aim at first than Fat FIRE, which is 11 years 10 months away on the same assumptions.

What the rules of thumb leave out

Every figure above is a starting point. Six things can move it:

• Tax. Set the target high enough to cover tax, or track income after tax. Do not mix the two.
• Healthcare. Costs differ widely by country and age, and they often rise as you get older.
• Inflation. A target of $4,000 a month today will be larger later. Raise it each year, or work in today's money.
• Retirement length. The 4% rule assumes 30 years. Early retirees need to plan for longer.
• Reliability of the income. Dividends get cut, tenants leave and interest rates fall. A target that depends on one stream is fragile.
• Currency. If you earn in one currency and spend in another, convert every stream into the currency you spend before you compare.

There is also a difference between the two methods. An income plan does not need to sell anything, so it can need less capital than the 25× rule, if the portfolio really pays enough:

The saving is not free. A portfolio that pays 5.5% tends to carry more risk to the payments themselves than one built for growth. The 4% rule asks for more capital and lets you sell shares when payouts fall short. The income method asks for less, and you take what the assets pay. Neither is safe in every case. Many people watch both numbers.

Tracking Lean, regular, Fat and Coast in one place

Whichever type you choose, the discipline is the same: a net monthly figure, in one currency, set against a target that comes from your spending. I built Income Refinery to do that for dividends, rent, bonds, savings and other streams together.

The free app tracks your net monthly passive income against a target you set, shows the percentage covered and the gap, and runs in your browser with no account. Your saved portfolio stays on your device. The free version covers 10 holdings, one property and three other income streams.

Pro is a one-time purchase. It sets Lean FI, FI and Fat FI from your monthly spending, shows all four markers, including Coast FIRE, on the Dashboard, and projects the dates under Conservative, Base and Optimistic scenarios. The user guide covers setup.

Common questions

What is the difference between Lean FIRE, Fat FIRE and Coast FIRE?

Lean FIRE covers a trimmed-down budget, Fat FIRE a generous one, and regular FIRE sits between them at your normal spending. Coast FIRE is a different kind of goal: you have already saved enough that growth alone would reach your FIRE number by retirement age, so you stop adding to retirement savings and earn only what today's bills need. Barista FIRE combines part-time work with investment income.

How much do I need for Lean FIRE and Fat FIRE?

Online rules of thumb put Lean FIRE at about $25,000 to $40,000 of annual spending and Fat FIRE at $100,000 or more, but the lines depend on where you live and who you support. A better test is your own spending. With a $4,000 monthly budget, Lean FIRE at 70% is $2,800 a month and Fat FIRE at 150% is $6,000 a month.

What is my FIRE number?

Annual spending multiplied by 25, which assumes you draw 4% of the portfolio in the first year. Spending of $4,000 a month is $48,000 a year, so the FIRE number is $1,200,000. The income version asks instead for $4,000 a month of net passive income.

How do I calculate my Coast FIRE number?

Divide your FIRE number by one plus the annual real return, raised to the number of years until you plan to retire. A $1,200,000 FIRE number with 20 years to go and a 5% real return gives $452,267 needed today. Use a return after inflation so the answer is in today's money.

Is Coast FIRE the same as Barista FIRE?

No. With Coast FIRE you stop adding to retirement savings because growth will carry them to your target, and you keep earning enough to cover current spending. With Barista FIRE you leave full-time work and let part-time earnings plus investment income cover your bills.

Is the 4% rule safe for early retirement?

The 4% rule was built around a 30-year retirement, so people who stop work in their 30s or 40s often plan for a lower rate. Treat 25 times spending as a starting point, not a guarantee, and test your plan against a cautious case.

Should I aim for Lean FIRE first?

Many people treat Lean FIRE as a first milestone on the way to regular or Fat FIRE, because it covers the essentials sooner. In the example household, Lean FIRE arrives in 3 years 9 months with reinvestment, against 7 years 5 months for regular FIRE, on the stated assumptions.

Can I track Lean, regular and Fat FIRE progress in one place?

Yes. The free Income Refinery app tracks your net monthly passive income against a target you set, with a progress bar. Pro adds Lean FI, FI, Fat FI and Coast FIRE markers on the Dashboard, set from your monthly spending.