Different ways to F.I.R.E.

F.I.R.E. stands for ‘Financial Independence Retirement Early.’ Read here on the core philosophy of F.I.R.E. It is a widely accepted term yet highly misunderstood in the community. There are four ways people consider F.I.R.E., but not all four ways are genuinely F.I.R.E. Let’s discuss.

1. Retire at age: People in this category believe in continuing to do their day jobs until their retirement benefits kick in, such as Social Security, withdrawal from 401(k) without penalty, etc. By definition, this is not F.I.R.E., but a shockingly high number of people consider it a way to fire.  
2. Lean F.I.R.E.: People in this category aim to retire as soon as possible by hitting a target accumulation goal such as $2 million. As they focus on the earliest possible retirement, people in this category mostly want to do a lean F.I.R.E. The idea is to stop working with enough money to live a minimalistic lifestyle. People in this category place almost no emphasis on building passive income-generating streams. People aim to withdraw just enough that it does not reduce net assets. One popular rule is called 4%.
3. Fat F.I.R.E.: People in this category want to retire early by aggressively building passive income streams that not only help maintain a luxurious lifestyle but also have the potential for growth in income generation. They are not shy of taking bigger risks and are entrepreneurs. They tend to invest in building businesses, real estate, multi-family homes, etc.
4. Hybrid F.I.R.E.: This is most popular in high-earning individuals. The idea of hybrid F.I.R.E. is to start building passive income streams as a side hustle while building assets traditionally, such as owning a house and having 401(k) and IRA accounts. People in the category plan for a F.I.R.E. date based on passive income streams, plus the potential of generating additional passive income by converting their assets into passive income-generating streams at the F.I.R.E. age

Considering all these four methods, as I mentioned earlier, method one is not F.I.R.E. as it is neither retiring early nor focusing on any passive income streams. The other three methods are true ways to fire. Method two and method three differ in the lifestyle you want to pick post-F.I.R.E. As discussed earlier, neither of the two approaches is better: lean F.I.R.E. versus fat F.I.R.E. The fourth method is a balanced approach that is much more practical. The downside of the fourth method is that it is not aggressive enough to retire as early as possible.

I recommend educating yourself for not considering method one as fire. Method one takes the valuable years of your life when you are healthy and can live an active lifestyle. Let me know in the comments which method suits you the best and why