Lean FIRE: The Single Fastest Way to Retire?
How do you achieve financial independence and retire as quickly as possible?
Be born wealthy?
Win the lottery?
Find the buried treasure of a long-dead pirate?
Sure, all of those work. But they’re not the most reliable methods.
On the other hand, Lean FIRE is a reliable method used by regular people worldwide to start from $0 and reach financial independence. Some retire as early as 30 years old.
In this article, we’ll explain everything you need to know about Lean FIRE. By the end, you’ll know whether Lean FIRE could work for you and how to take the first steps toward financial independence.
What is Lean FIRE (Financial Independence, Retire Early)?
FIRE stands for Financial Independence, Retire Early.
Lean FIRE is a variation of the traditional approach to FIRE.
The Lean FIRE movement focuses on strategies that maximize your investments by minimizing your spending. It’s the fastest way to fully secure your financial future.
The FIRE movement encourages a frugal lifestyle, pushing FIRE devotees to ask themselves hard questions like:
- What do I truly want out of life?
- What do I value?
- What’s non-negotiable for me?
- What does my happiness look like?
By stripping away everything unnecessary, followers of the FIRE movement can reach financial independence and retire more quickly with a smaller investment portfolio.
It’s arguably the hardest way to reach financial independence and retire early because it requires the most sacrifice. But it’s the choice of method for many younger people nowadays who love working through their 20s so they can kick back and relax by age 30.
But just how quickly can you achieve FIRE?
Want to Retire Early (FIRE), and have a Leaner Lifestyle? Here’s How Long it Will Take.
How long it takes to reach financial independence and retire depends entirely on your circumstances, so it’s hard to give a rough idea that applies to everyone.
Lauren and Steven Keys, who run the Trip of a Lifestyle blog, were part of the FIRE movement throughout college. They reached financial independence and were able to retire at age 29. Throughout this period, their salaries ranged from ‘pretty poor’ to ‘pretty good but nothing special.’
An anonymous writer who goes by the alias “Purple” and runs the A Purple Life blog didn’t start as early as the keys.
At 25, Purple made a Lean FIRE plan to attain financial security and retire in 10 years. However, they smashed it out of the park and were financially independent and able to retire in just five years.
That is eye-watering speed, even in the world of the FIRE movement. Purple achieved this partly because they started on a higher salary, which kept increasing rapidly. But mostly, it was due to their highly minimal living expenses.
We’ll talk more about these two high-profile FIRE movement success stories throughout the rest of this article.
Let’s just say that if you’re starting from $0, Lean FIRE could see you handing in your resignation in 10-15 years, realistically.
How Much Capital Do You Need to Fuel your Lean FIRE Journey?
We get it if this is the first question on your mind. What net worth do these people have that they’re able to have such an early retirement?
The general principle of FIRE is to invest enough money into retirement accounts that you can withdraw 4% of your nest egg every year. The interest your investment accrues is equal to or higher than 4%, which means it will never run out.
The 4% you withdraw must be enough to cover your annual budget to truly retire early.
So, you need to find a number high enough that 4% of it is enough to cover your yearly expenses.
The easiest way to do this is to calculate your annual expenses and multiply that number by 25. This is your FIRE number.
Annual Expenses x 25 = FIRE Number
But this is napkin math at best, and you could use our FIRE Age Calculator to give you a more in-depth answer.
Nevertheless, this method can give you a ballpark answer: How much capital do you need to fuel your Lean FIRE journey?
For Lauren and Steven Keys, it’s around $800,000. They retired with annual passive income streams of around $40,000. That’s relatively high in the Lean FIRE community— but remember that it has to cover the yearly expenses for two adults.
Purple’s FIRE number was $500’000. That’s conversely pretty low, but Purple aims only to spend about $20,000 a year.
At this point, most people have at least one of two thoughts:
- $500.000-800,000 is a lot of money. How am I supposed to save that?
- $20,000-40,000 isn’t a lot of money. How am I supposed to live off of that?
The answer lies in Lean FIRE. You see, it’s not just a framework for calculating the numbers and figures of financial milestones.
The Lean FIRE framework also covers snowballing your retirement savings and leveraging compound interest to build your wealth quickly. It also teaches you to cut out everything you’re spending on but don’t care about.
What you’re left with is a lean but intensely rewarding FIRE lifestyle.
Embrace Lean FIRE and unlock a world of financial independence
The Lean FIRE lifestyle has a lot in common with the minimalist lifestyle.
At its core, it’s about rejecting luxury, frivolity, and social expectations. It’s about going against the grain because you know that the everyday lives people lead— that isn’t what you want.
The critical difference is that a minimalist lifestyle isn’t only about money; Lean FIRE is wholly focused on finance. It is a personal finance framework, after all.
Here are some of the things Lean FIRE encourages its followers to consider:
Use Geographic Arbitrage
Geographic arbitrage is when you work in a strong economy but live in a weaker one. The most common example is remote workers who have jobs based in the United Kingdom or the United States and choose to live in countries like Mexico, Georgia, or Thailand.
You could be earning a mediocre salary in your country of employment. Still, your living expenses are so low in your country of residence that you can sock away much larger amounts without compromising your quality of life.
Geo arbitrage doesn’t have to be this drastic. Purple reduced its expenses by 40% by moving from Manhattan to Seattle.
Let Your Support Network Help You
“Don’t force yourself to be unnecessarily independent at a young age,” write the Keys. “If you have access to help, use it.”
Living with family or friends can significantly reduce your living expenses— and accommodation is one of your biggest costs.
If you find relying on others unsavory, think of it like a debt. Once you’re retired, you’ll have many years to make it up to your loved ones.
Avoid Life’s Biggest Money Sinks
Life’s biggest money sinks are shared experiences by most people:
- Education/College
- Buying a house
- Owning a Car
- Traditional weddings, holidays, and other celebrations
These are the low-hanging fruit when you’re trying to save money. You can save big with relatively little effort.
College might be the default option for most young adults, but question whether it’s precious for you. If it is, do everything you can to minimize the financial impact.
“Nice” cars are financial garbage disposals. Most people can make huge savings by focusing solely on efficiency and value in their transport solutions.
Weddings are costly. Getting married isn’t.
Christmas is very expensive. Spending time with your loved ones isn’t.
Holidays are costly. Experiencing the world doesn’t have to be.
Reject Lifestyle Creep
Lifestyle creeps up when your income gradually increases, and the initially low cost of your lifestyle silently increases with it.
It’s widespread if you’re not vigilant and intentional. A 2022 report by PYMNTS found that one in three households with an income of $250’000 a year still lives paycheck to paycheck.
This should be fervently avoided. Slightly more expensive lifestyle changes won’t make you happier but will eat away your financial goals.
Don’t Take On Dependents.
Lean FIRE is only feasible for those happy to live with less income forever. That means choosing not to have kids. Arguably, that means not keeping pets, either.
Dependents not only cost more money but reduce your flexibility.
These considerations can help you save more money and prepare you for a Lean FIRE lifestyle.
“A super high savings rate depends mostly on your spending, and when you attack the big stuff first — like housing and transportation — you can live very happily on less money than you ever thought possible.” —Trip of a lifestyle.
At the heart of it all, Lean FIRE means rejecting how society tells you to live your life and where you should spend your money.
Lean FIRE isn’t for everyone. A low-cost lifestyle just doesn’t cut it for most people. But for more and more young people, it’s the path of choice for achieving financial independence.
If you’re still on the fence, let’s distill the pros and cons:
Pros of the Lean FIRE Movement
A Faster Path to FIRE
Lean FIRE is the fastest way to reach early retirement for most people. It can take as little as ten years to achieve financial independence and retire from full-time work.
It’s never too late to jump on the bandwagon. You can start at 40 and retire much earlier than the traditional retirement age.
A Minimalist Philosophy
Through practicing Lean FIRE, you learn how to be happy with less. You figure out what matters to you in life and prioritize that.
More Freedom and Independence
Once you achieve Lean FIRE, the world is your oyster. You could live out a traditional early retirement, yes. But you could also continue to work, but much less hard now that the pressure has been alleviated. It’s your choice.
Achieving greater efficiency with fewer resources
Lean FIRE makes the dream of early retirement possible for those with low incomes. It might be the only option of retiring early for some.
Cons of the Lean FIRE Movement
Restrictive Lifecycle
Lean FIRE-based lifestyles require you to operate within a tight budget. You must keep a tight lid on your finances, and your lean income limits your FIRE lifestyle.
You won’t be able to live as lavishly as others with a median or high income. Changing your current lifestyle to embrace frugal living can be a difficult thing to do.
Time Intensive
While Lean FIRE is faster than other variations of FIRE, it still takes many years.
The weight of those years might feel heavier if you struggle with the more restrictive lifestyle of Lean FIRE.
Compromise Momentous Occasions
Lean FIRE forces you to make some tough decisions. You will have to give up things you always thought you’d have. It can be hard to let go of such deeply ingrained ideas.
What Kinds of FIRE Should You Look Into?
If you’ve read this article and feel that Lean FIRE isn’t for you, don’t fret.
The dream of retiring early is achievable by following one of the other FIRE frameworks, like Fat FIRE or Barista FIRE.
Here’s a comparison of some of the most popular FIRE frameworks and how they compare to Lean FIRE:
Lean FIRE vs. Traditional FIRE
Traditional FIRE, also known as Regular FIRE, requires a higher FIRE number than Lean FIRE. It’s the more appropriate framework for the average person who doesn’t want to scrimp and save but also doesn’t want luxury.
If your monthly living expenses are between $4000-8000 and you live in the U.S., then traditional FIRE is for you. Your FIRE number will be between $1 million and $1.9 million.
Traditional FIRE might be better suited for couples who want children but want to retire as soon as their children become independent.
Lean FIRE vs. Fat FIRE
Fat FIRE is for those who want to retire in luxury. It requires the highest net worth of all variations of FIRE listed here.
Fat FIRE is your path if you want about $100,000 per year in passive income after you retire.
To earn this amount passively through interest on investments, you’d need to have a target Fat FIRE number of over $2 million. That will require an aggressive savings strategy or a very high yearly income. Or for you to raise your desired retirement age.
Fat FIRE lifestyle isn’t all about luxury, though. For example, it might be a better choice for those who want to retire while still raising children.
Lean FIRE vs. Barista FIRE
Barista FIRE is very similar to Lean FIRE.
The critical difference is that the goal is semi-retirement, not full retirement. Barista FIRE followers want to earn enough passive income to sustain themselves with only a part-time job.
You need much less passive income this way, so your retirement age can be lower. In the U.S., there are also health insurance benefits to remaining a part-time worker.
It might be better suited to someone who doesn’t want to retire fully but does want to get out of the rat race. It’s also an option for those struggling to reach retirement goals and who wish to readjust the goalposts.
Lean FIRE vs. Coast FIRE
Coast FIRE proponents frontload their investments earlier in life, then let compound interest work from there.
Compared to Lean FIRE followers, Coast FIRE followers have to save even harder for a few short years, then they can take their foot off the gas and relax a bit— but still have to work at least until compound interest earns them enough to hit their FIRE number.
If you’re willing to seriously immerse yourself in FIRE life for a few years, at the loss of nearly everything else, you might be able to make Coast work.
Mean, Lean, Saving Machine
Lean FIRE is the way to do it if you want to completely turn your finances around in just ten years.
It might not seem like enough time to rack up $600,000-800,000 in investments, but the numbers don’t lie. It is possible.
“Most people overestimate what they can do in one year and underestimate what they can do in ten years.”― Bill Gates.
It isn’t without sacrifice, but Lean FIRE doesn’t want you to sacrifice things that matter to you.
Lean FIRE wants you to seriously consider what matters to you and cut down to only the essential expenses.
Lean FIRE leads to a life of financial freedom and simplicity. All you have to do is let go of what society tells you life should be.
