Key Points

• The FIRE movement requires aggressive saving and present-day sacrifices to achieve early retirement.

• Most forms of FIRE involve saving at least 50% of your income each year.

• There are more flexible options that require smaller savings targets.

• The $23,760 Social Security bonus most retirees completely overlook ›

If you've done any research into early retirement strategies, there's a good chance you've come across the Financial Independence, Retire Early (FIRE) movement. It's been gaining steam over the last few decades, promising retirement in your 40s or even your 30s if you're willing to work hard and save aggressively.

But as the movement has grown, it's also splintered into different groups pursuing slightly different goals. Understanding these differences is the first step to figuring out which, if any, make sense for you. Here are the four most common types around today.

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1. Lean FIRE

Lean FIRE involves retiring on a modest income, often about $40,000 or less, adjusted for inflation. Like all forms of FIRE, it requires aggressive saving -- often 50% or more of your annual income -- throughout your working years. But because of its low annual retirement expenses, it's easier to achieve your lean FIRE number (your savings target) than it is with other FIRE subsets.

Lean FIRE may not appeal to you if you aren't comfortable making sacrifices over the long term. It's common for all FIRE adherents to live frugally while they try to save for retirement. But lean FIRE carries this frugality through the rest of your life.

This could become problematic for some, especially if you have a lot of unplanned expenses in retirement. You'll need a backup plan for what you'll do if you find you're draining your savings faster than expected.

2. Fat FIRE

Fat FIRE is the opposite of lean FIRE. It usually involves high annual expenses in retirement -- often $100,000 or more. This could be a better fit for you if you want a more luxurious lifestyle in retirement. It also gives you more cushion in case of unexpected expenses. You can always scale back your discretionary spending a little while still covering the basics.

The big problem with fat FIRE is that it requires a much higher FIRE number. A general rule for all types of FIRE is to save 25 to 33 times your annual expenses. That could be as much as $3.3 million for someone who hopes to spend $100,000 per year. It takes time to save that much, even if you can set aside half your income. You may not be able to retire as early as you could if you opted for one of the other FIRE types listed here.

Or you might have to make even greater sacrifices in the present. Some fat FIRE adherents save 75% of their annual income for retirement. That could seriously reduce the money left over for covering your living expenses today, and it might not be feasible for you.

3. Barista FIRE

Barista FIRE is an alternative to lean FIRE for those who want to retire early but are worried about draining their savings too quickly. With this strategy, you plan to work a flexible job, like being a barista, even after you retire. This way, you have a steady paycheck to supplement your personal savings.

This also reduces your FIRE number and gives you something to fall back on if unexpected expenses come up. You can always pick up a few extra shifts if need be until you've gotten your budget back on track. Some people enjoy the purpose and camaraderie that comes with having a job, too.

One thing to bear in mind, though, is that you may not be able to work forever. Sometimes, health or family caretaking issues force people to leave the workforce, whether they want to or not. So it doesn't hurt to have a little extra stashed away in case you aren't able to continue working as planned.

4. Coast FIRE

If you're skeptical about saving enough money to last 40 or more years of retirement, coast FIRE could be the right choice for you. This approach doesn't actually involve retiring early. You retire at a more typical age -- often your early to mid-60s -- but you get your saving out of the way as quickly as possible.

A significant chunk of your retirement savings often comes from investment earnings. Funds you contribute early on in your career often wind up being worth the most in the end because they're invested the longest and have the most time to grow.

With coast FIRE, you take advantage of this by saving up to a certain target. Then, you stop setting aside money and allow your savings to continue to grow until your retirement age. Once you've hit your coast FIRE number, you can scale back your hours in the workforce, possibly dropping to part-time.

This strategy involves making certain assumptions about how quickly your retirement savings will grow. It's important not to be too optimistic here. Plan for about a 6% average annual return, just to be safe.

If your investments grow more quickly, that's great, and you may be able to retire earlier than planned. If not, your plan won't be derailed.

It's OK if FIRE isn't right for you

It's also possible that none of the FIRE options mentioned feel like the right fit for you, and that's fine. FIRE isn't something that's appealing or feasible to everyone, and it's not necessary to enjoy a comfortable retirement.

A common rule of thumb is to save 15% of your income for retirement. This assumes you plan to retire at a more traditional retirement age. If you're able to do a little more than that without making too many sacrifices in the present, that might be a more sustainable path for you.

The most important thing is to find a plan that you can stick with. You don't want to burn out and save 50% of your income one year and nothing for the next five. Figure out what feels comfortable for you, and begin with that. Then, if you feel you can increase your savings rate a little down the road, you can give it a shot.

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