During my recent podcast with The Fifth Person, Adam asked me if I knew about F.I.R.E. I told him I only learned about F.I.R.E. after I did it! And there are so many versions of F.I.R.E. since the time I found out about it.
Of course, if you have been reading my blog regularly, you would have read my piece on Lean F.I.R.E. which I published not too long ago.
I didn’t think it was a good idea. Basically, it meant having only enough financially to fund a very simple early retirement lifestyle.
Lean F.I.R.E. leaves little or no room for error.
Without any buffer, if we should have a situation where inflation increases rapidly and stays persistently high, we could be forced to rejoin the labor force, and when we are much older too.
Of course, if we depend on some passive income to fund our Lean F.I.R.E. plan, we would have to depend on the reliability of such passive income too.
Rejoin the labor force when we are older because we have no choice but to do it? Not a pleasant thought. Being a worrier, I cannot live like that and would probably not be able to sleep at night.
I remember some people saying I could have retired earlier. Why did I wait till I was 45 years old? For one thing, my plan was always to retire at 45. OCD.
Another thing, I was worried I might not have enough, and having more money is always better. Yes, I was building a buffer. Some might even say I was building a buffer for my buffer. Or was it a buffer for a buffer that’s for another buffer? Whatever we might call it, it’s all good.
During the COVID-19 pandemic, we had an acid test for all F.I.R.E. practitioners. Not everyone could stay retired as we saw some rejoining the workforce. I think they would have been mostly people who practiced Lean F.I.R.E. Anyway, this is just my view. I am not demonizing Lean F.I.R.E. or anything. I just feel strongly that if we are planning for Lean F.I.R.E., we must be aware of the potential pitfalls.
Then, I recently read about “Barista F.I.R.E.” That name conjured for me a Bohemian image. Quite an attractive image, to be honest. I found out that Barista F.I.R.E. basically meant semi-retirement, or at least that is what people my age would call it. We would continue to be in the workforce but we would be working part time in Barista F.I.R.E.
So, this means we have more time to do the stuff we like. For people who are tired of working full time, this is certainly an option. A viable one too. For people who want to be a full time gamer like AK, of course, this is not an option. OK, I know. Bad AK! Bad AK! Talking about games, this is my latest warship, the Tier 9 Roon, which is a German cruiser. In my blog dated 28 July, I shared a photo of my warship then which was a Tier 6 German cruiser.
This being a public holiday, if you should be interested in a free to play video game, try World of Warships on the Asian server. I am having a lot of fun and have not spent a single cent. Use my referral link and both of us will get some freebies in game. We can both F.I.R.E. at some enemy warships! World of Warships. (AK’s referral link.)
On a serious note, I think that Barista F.I.R.E. seems like a safer choice compared to Lean F.I.R.E. for people who wish to retire earlier with less money. Barista F.I.R.E. means never leaving the workforce which means staying connected and probably more employable. In more difficult times, people who have left the workforce for some time might find it hard to find a job, especially when they are much older, and their skill sets might no longer be as relevant. So, Barista F.I.R.E. allows more room for error.
There are many ways to crunch the numbers for Barista F.I.R.E. If I were to do it, I would estimate how much I might need for 40 years if I would like to retire by age 45. This is because the average lifespan for males in Singapore is 85 years old. Of course, I am being very cautious here because I would invest for income and not just have the money sitting in a savings account to be drawn down. However, in an extremely unthinkable situation where passive income froze, then, I would have to draw on my savings.
Then, after estimating how much I might need for 40 years, I would need to estimate how much my part time job would pay me in those 40 years. Subtract that expected income from the expected expenses for 40 years and I would know how much money I must have by age 45 before I could execute Barista F.I.R.E. Of course, if we factor in the expected passive income from our investments, then, the amount of money required before we could enjoy Barista F.I.R.E. would be reduced.
Anything to add? I will say that for Barista F.I.R.E. to be quite comfortable and worry-free, we should still keep an emergency fund. We must be ready for the possibility of not only our passive income slowing to a trickle or drying up completely (if we have been wise enough to invest in some income generating assets,) we must also be ready for the possibility of losing our part-time job. Peace of mind is priceless. Don’t just say it. Make sure we have done enough to truly have peace of mind.
Neither Lean F.I.R.E. nor Barista F.I.R.E. is for me. They are watered down versions of the original concept of F.I.R.E. but they could be what some people want. Quite possibly, some people might even need them. Have to be fair. To be sure, I am not judging anyone for choosing these forms of F.I.R.E. It is never my way or the highway. As usual, I am just talking to myself. If AK can talk to himself, so can you! Happy National Day! Visit AK’s YouTube Community page: . References: 1. Retirement drawdown strategy. 2. Avoid Lean F.I.R.E. and struggling with higher costs.
