FIRE Glossary
30 essential FIRE terms — from Coast FIRE and the 4% Rule to Geo-Arbitrage and Roth Conversion Ladder. Definitions, worked examples, and how to apply each to your plan.
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FIRE
FIRE stands for Financial Independence, Retire Early, a lifestyle and savings strategy where you accumulate enough invested assets that work becomes...
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Coast FIRE
Coast FIRE is the point where your existing investments, left untouched, will grow to a full FIRE number by traditional retirement age, meaning you no...
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Barista FIRE
Barista FIRE is a semi-retired state in which your portfolio covers most but not all of your expenses, and you work part-time, historically at a job like...
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Lean FIRE
Lean FIRE is financial independence achieved at a frugal spending level, typically under $40,000/year per person in the US, or roughly the national median...
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Fat FIRE
Fat FIRE is financial independence designed around a comfortable or luxurious spending level, typically $100,000 to $250,000+ per year, requiring a...
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Chubby FIRE
Chubby FIRE is the comfortable middle ground between Lean and Fat FIRE, an annual spending target of roughly $80,000 to $120,000 per household, that funds...
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Safe Withdrawal Rate (4% Rule)
The Safe Withdrawal Rate (SWR), popularized as the "4% rule", is the annual percentage of a retirement portfolio you can spend in year one (then adjust for...
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25x Rule
The 25x Rule is a FIRE shortcut stating that your FI Number equals 25 times your expected annual expenses, the arithmetic inverse of a 4% Safe Withdrawal...
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Crossover Point
The Crossover Point is the moment when monthly investment income from your portfolio exceeds your monthly expenses, the tipping point after which your money...
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Geo-Arbitrage
Geo-arbitrage meaning: earn in a strong currency, spend where costs are low, and reach FIRE years sooner. Includes real estate strategy and examples.
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Early Retirement
Early Retirement means permanently leaving full-time paid work before the traditional age of 65, typically anywhere from the late 30s to the late 50s, ...
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Financial Independence
Financial Independence (FI) is the state in which your passive income from investments, rentals, and other non-labor sources fully covers your living...
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Passive Income
Passive Income is recurring revenue that requires little to no ongoing active work to maintain, dividends, interest, rental income, royalties, and capital...
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FI Number
The FI Number is the total invested-asset value required to sustainably cover your annual expenses indefinitely, the headline goal of any FIRE plan.
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Expense Ratio
An Expense Ratio is the annual fee a mutual fund or ETF charges, expressed as a percentage of assets under management, deducted silently from returns and...
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Sequence of Returns Risk
Sequence of Returns Risk is the danger that poor market returns in the early years of retirement will permanently impair your portfolio, even if the...
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Bond Tent
A Bond Tent is a retirement glide path where you temporarily raise your bond allocation around the retirement date, then gradually reduce it over the first...
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Roth Conversion Ladder
A Roth Conversion Ladder is a US tax strategy where early retirees annually convert Traditional IRA or 401(k) funds to a Roth IRA, paying income tax now at...
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Mega Backdoor Roth
The Mega Backdoor Roth is a US tax strategy that lets high earners contribute tens of thousands of after-tax dollars per year to a Roth account by exploiting...
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HSA for FIRE
A Health Savings Account (HSA) used for FIRE is a triple-tax-advantaged investment vehicle, tax-deductible contributions, tax-free growth, and tax-free...
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SEPP/72(t)
SEPP (Substantially Equal Periodic Payments), governed by IRS Rule 72(t), is a US provision that lets you withdraw from a Traditional IRA or 401(k) before...
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Rule of 55
The Rule of 55 is a US provision that allows penalty-free withdrawals from your current employer's 401(k), but not prior employers' plans or IRAs, if you...
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Die With Zero
Die With Zero is a retirement philosophy, popularized by Bill Perkins' book of the same name, arguing that maximum life utility comes from spending your...
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Sabbatical FIRE
Sabbatical FIRE is the practice of taking extended breaks from work, typically 6 to 24 months, funded by savings rather than a full portfolio, then...
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Mini-Retirement
A Mini-Retirement is a deliberately taken break of typically 1 to 12 months between jobs or careers, popularized by Tim Ferriss in The 4-Hour Workweek, ...
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Slow FI
Slow FI is a philosophy of pursuing Financial Independence at a deliberately unhurried pace, accepting a longer timeline to FIRE in exchange for a more...
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Flamingo FI
Flamingo FI is an FI strategy where you aggressively save to reach half of your full FI Number, then stop contributing entirely and let compounding alone...
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Coast Number
A Coast Number is the invested-asset balance that, left entirely alone and compounding, will grow to your full FI Number by a chosen target retirement age.
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FIRE Movement
The FIRE Movement is the global community and cultural phenomenon, primarily online, dedicated to achieving Financial Independence and Retire Early through...
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Mustachianism
Mustachianism is the FIRE sub-philosophy founded by Pete Adeney, aka Mr.
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FIRE terms, explained
- What is geo-arbitrage?
- Geo-arbitrage means earning in a strong currency or high-paying market while living somewhere with lower costs. It can dramatically shrink your FI number, because the same lifestyle costs less in a cheaper location.
- What is Coast FIRE?
- Coast FIRE is when you have already invested enough that, with normal market growth and no further contributions, your savings will reach your FI number by traditional retirement age. You still work to cover current expenses, but you no longer need to save for retirement.
- What are Barista, Lean, and Fat FIRE?
- Lean FIRE means retiring on a modest, frugal budget. Fat FIRE means retiring with a generous budget and more comfort. Barista FIRE is a middle path where part-time or casual work covers some expenses, often for the benefits, while investments cover the rest.