Lean FIRE: financial independence on a smaller life
Lean FIRE applies the standard formula to a smaller life. You decide what you would spend if you trimmed hard, then multiply that by 25 instead of your current spending. Cut from €3,500 a month to €2,450 and the target falls from €1,050,000 to €735,000.
The formula
Reduced annual spending ÷ withdrawal rate.
Assumptions: 4% withdrawal rate, 8% growth before inflation, age 35 targeting 60. Stated in full in the methodology.
Worked example: €3,500 a month
This is not a round number. It is what my own living costs were at the point passive income covered them, which is the moment I would call being free.
70% of today's spending at a 4.0% withdrawal rate.
And here is how long that takes, by what you put in every month.
| Invested each month | Time to Lean FIRE |
|---|---|
| €1,000 | 22 yr 3 mo |
| €2,000 | 15 yr 6 mo |
| €3,500 | 11 yrs |
Look at what changes between those rows. The gap between them is a pay question, not an investing question, and that is the whole argument of this site. The calculator works out how much more you could be putting in without changing job.
Who it suits
People with low fixed costs, no dependants, and a genuine taste for a simple life.
What I think of it
Lean FIRE is the savings side of the equation taken to its end point, and it runs into the ceiling that side always has. There is a floor under your costs and you hit it fast. I saved 80% of my income for a year and it nearly broke me. The exit was not spending less. It was earning more, so the same freedom cost the same and arrived sooner without the misery.
Questions
How is Lean FIRE different from just being frugal?
Frugality is a habit. Lean FIRE is a target built on the assumption that the habit lasts for the rest of your life. That is the part worth thinking hard about.
What happens if my costs go up later?
The number moves with them, which is the risk. A plan sized to a very small life has little room in it for a child, an illness, or simply changing your mind.
The other eight
- Traditional FIREI never have to work again
- Fat FIREFreedom and a great lifestyle
- Coast FIREWhen can I stop needing to save?
- Barista FIREI only need to work a little
- Flamingo FIREThe halfway strategy
- FI, not REWork because you want to
- Slow FIDon't sacrifice your 30s for your 60s
- Geoarbitrage FIRESame portfolio, cheaper life
None of this is financial advice and I am not an adviser. Read what this is and what it is not.