What is Mullet FIRE?

Mullet FIRE is a phased approach to early retirement where you keep spending lean, or keep some part-time income, for the first years after leaving full-time work, then raise your spending once the portfolio has made it through the riskiest stretch. The name comes from the haircut: business in the front, party in the back.

The logic is sequence of returns risk. A market downturn in the first years of retirement does more lasting damage than the same downturn later, because the shares you sell at depressed prices early on aren’t there to recover, and the portfolio has decades of withdrawals still ahead of it. Keeping withdrawals small at the start of Financial Independence, Retire Early (FIRE) limits that damage.

How Mullet FIRE Works

Say you retire with $1.5 million. A flat plan might spend $60,000 a year, a 4% initial withdrawal rate. A Mullet FIRE plan might spend $50,000 a year at first, about 3.3%, and plan to raise spending to $70,000 (in inflation-adjusted terms) once the early years are behind it.

The front half can come from spending cuts, part-time or freelance income, or both. Every dollar you earn or don’t spend in those years is a dollar you don’t have to sell during a possible downturn.

The step-up works best as a condition rather than a date. Raising spending in year eight because the calendar says so ignores what the market did in years one through seven. Tying it to the portfolio, such as waiting until the balance has grown enough that $70,000 is no more than 4% of it (about $1.75 million in inflation-adjusted terms), keeps the party from arriving before the money does.

Flexible spending rules in ProjectionLab apply the same idea, raising or cutting discretionary spending as the portfolio moves relative to its all-time high.

Mullet FIRE vs. Lean FIRE and Barista FIRE

Mullet FIRE borrows from both.

The difference is that the lean phase is temporary by design. A Lean FIRE budget is meant to last; a Mullet FIRE budget is meant to end.

The Tradeoffs

The party comes later in life, when travel and physically demanding hobbies may be harder. The retirement spending smile describes spending that tends to fall through the middle of retirement, and Mullet FIRE deliberately pushes discretionary spending the other way, toward ages when you may want it less.

A strong first decade can also mean you underspent years you won’t get back. A weak one can postpone the step-up indefinitely. Underspending through a good decade is the price of protection against a bad one.

Frequently Asked Questions

How long should the lean phase of Mullet FIRE last? Until your portfolio clears a condition you set in advance, such as recovering to its starting value after inflation, rather than for a fixed number of years.

Is Mullet FIRE the same as Barista FIRE? No. Barista FIRE relies on part-time work as a lasting part of the plan. In Mullet FIRE, work or frugality is a temporary front half, and spending is expected to rise once it ends.