Are we FIRE, leanFIRE, or FatFIRE?

I was talking with someone in the FIRE (Financial Independent, Retire Early) community recently and they asked if we were FIRE.

I didn’t know how to respond. Is there a “kind of” FIRE?

What do I mean by that? I’ll get to that in a bit, but first we have to come up with a definition of FIRE.

What’s the Definition of FIRE?

Unfortunately, there’s a lot of subjective grey area in both the terms “financial independent” and “retire early.”

Let’s start with “financial independence.” The most common definition is someone who has a nest egg that is 25x his/her expenses due to the rule of 4%. However, as that article pointed out, the rule of 4% may not be accurate. Almost no one talks about it, but expenses may vary greatly over time. Our expenses will change so much that I found it easier to estimate our next 45 years of expenses and then just use an average.

Essentially we have an uncertain, vague rule of thumb combined with a moving target. That leads to huge grey area when trying to define financial independence.

Unfortunately, the definition of “retiring early” is perhaps more difficult. Ten years ago, I tried to come up with a definition of retirement and in a lot of ways, even earning income as a blogger counts as retirement. It doesn’t necessarily mean sitting on the beach with a tasty beverage. With my dog sitting business, I sometimes enjoy the dogs I get so much that it’s strange to consider it “work.”

If you say that blogging and dog is work, I wouldn’t disagree. However, by that standard, I don’t know if I’ll ever retire. Even with blogging and dog sitting, I could take 3 months off to live in Spain. In that scenario, I’d be limited to blog income, but it would still be a retired lifestyle.

When I put these two nebulous concepts together, I struggle to come up with a firm definition of FIRE. I could say that I feel that we are financially independent, but you might look at the details and conclude differently. Some people could stretch the definition of retirement to include me, but it would be unanimous that my wife’s pharmacy career doesn’t meet any reasonable definition of retire early.

So are we FIRE?

Given the detail about my wife’s career, we are certainly not the RE part of FIRE. However, in 7 months she’ll be eligible to retire with a very healthy military pension. We could make some financial moves to get us through those 7 months.

I think the best answer of whether we are FIRE comes from this song:

“Whoopty fricken doo.” No, I’m not referring to that part of the song. Instead, it’s “I Could If I Wanted To.”

(It would be more accurate to say “we”, but it doesn’t fit the song as well.)

For most people pursuing FIRE it’s a gradual progress of saving and investing money month after month. Unless the market has some wild swings, it’s mostly a boring process of buying more and more shares of companies or index funds and growing that nest egg to be 25x expenses.

For us, it’s three major things:

1. The wife’s aforementioned pension – Again it’s a pretty big number compared to national averages. Also, since it is military, we are able to get into health care that most people wouldn’t get. Finally, her GI bill should cover half of the college expenses of our kids (unless they go to expensive private schools where it will cover less). For many people, this situation alone gives them a fast track to FIRE.
2. 2027 – What happens in 2027? Our primary residence and our investment properties have their mortgages paid off. That means that our living expenses drop by 30K and our income jumps by about 40K. It’s just your typical, run-of-the-mill 70K annual swing in income/expenses. (That’s a joke.)
3. The kids’ school – Due to the above two situations, and because we are doing financially well in other areas, we found ourselves in the position to invest in our kids’ education. While we get a very good discount, it’s still a lot of money.

The “we could if we wanted to” largely comes from that last point. If we eliminate that expense we could probably be FIRE if we sold off all the investment properties and paid off our primary residence. That would probably qualify us as leanFIRE in most people’s view. However, that series of moves is something we don’t want to do. They aren’t very smart in the long term.

In the long term, say post 2027, I’d think we’d be able to clearly say we’d be fatFIRE. It’s been a few years since I updated the article, What Does an Annual $200,000 in Retirement Income Look Like?, but it’s looking like it could be around $225-$250K a year as the market has done well since 2015.

So when a blogger asks me if we’re FIRE, leanFIRE, or fatFIRE, I suppose I should answer no to be accurate. However, I’m thinking of going with, FIRE isn’t the smart choice for us right now.

Am I alone in thinking that this is one of the more unique personal finance situations?