Lean FIRE Calculator
Calculate your path to Lean FIRE (Financial Independence Retire Early) with annual expenses under $40,000. This calculator helps you plan a minimalist early retirement by focusing on essential expenses and sustainable withdrawal rates.
Current Status
After inflation (real return)
Retirement Planning
Lean FIRE typically targets under $40,000/year
Conservative rates: 3-3.5% for early retirement
Expected monthly amount at age 62 (optional)
Monthly Expense Breakdown
Your Lean FIRE Results
Understanding Lean FIRE
Lean FIRE is a minimalist approach to financial independence and early retirement, typically targeting annual expenses under $40,000. This strategy emphasizes frugal living and focuses on essential expenses to achieve financial independence sooner.
Key Concepts
Safe Withdrawal Rate
The safe withdrawal rate is the percentage of your portfolio you can withdraw annually with high confidence it will last through retirement. For early retirement, many Lean FIRE practitioners use a more conservative rate of 3-3.5% instead of the traditional 4%.
Lean FIRE Number
Your Lean FIRE number is the total investment portfolio needed to support your retirement expenses. It's calculated by multiplying your annual expenses by the inverse of your safe withdrawal rate (e.g., annual expenses × 33.33 for a 3% withdrawal rate).
Social Security Consideration
While Social Security can supplement your retirement income, Lean FIRE calculations often exclude it for a more conservative approach. If included, it can reduce your required portfolio size, especially if you plan to claim benefits at 62.
Lean FIRE Strategies
Expense Optimization
Focus on reducing major expense categories like housing, transportation, and food while maintaining a good quality of life. Consider relocating to a lower-cost area, using public transportation, or growing your own food.
Healthcare Planning
Healthcare is often the biggest challenge in early retirement. Consider health sharing ministries, ACA plans, or part-time work for benefits until Medicare eligibility. Budget for out-of-pocket expenses and insurance premiums.
Investment Strategy
A diversified, low-cost investment portfolio is crucial for Lean FIRE. Focus on broad market index funds and keep investment expenses minimal. Consider a more conservative asset allocation due to the longer retirement horizon.
Frequently Asked Questions
What makes Lean FIRE different from regular FIRE?
Lean FIRE focuses on minimalist living with annual expenses typically under $40,000 for a single person or $60,000 for a couple. This approach often leads to earlier retirement but requires more frugal lifestyle choices compared to traditional FIRE.
Is Lean FIRE realistic long-term?
Lean FIRE can be sustainable if you're comfortable with a minimalist lifestyle and have thoroughly tested your budget. Success often depends on location choice, healthcare planning, and ability to adapt to changing circumstances.
Should I include Social Security in my calculations?
While Social Security can provide additional security, many Lean FIRE practitioners exclude it from primary calculations for a more conservative approach. If included, consider it a bonus that can provide extra flexibility in retirement.
How do I handle unexpected expenses?
Build an emergency fund and consider budgeting for irregular expenses. Using a lower withdrawal rate (3-3.5%) provides additional buffer for unexpected costs. Some Lean FIRE practitioners maintain side hustles or flexible work options.
What about inflation?
The calculator uses real (after-inflation) returns. Additionally, using a conservative withdrawal rate helps protect against inflation. Regular review and adjustment of your withdrawal strategy is recommended.