This blog, for all intents and purposes, is categorized as a general finance blog. However, I’ve never been secretive about my pursuit of FIRE (hello, it’s in my Twitter bio). There’s been a lot of conversation lately around the differences between LeanFIRE, FIRE, and FatFIRE. At first, I didn’t pay much attention to it, though I definitely identify with LeanFIRE, which is otherwise known as the idea that retirement can be achieved with yearly expenses of roughly $40K (or less). The funny thing is, while all my retirement calculations use an extremely low annual expense input, the reality is that LeanFIRE isn’t for me. How did I build up a notion of a desired lifestyle that doesn’t actually make sense for me?
I Like Bucketing Things
I like knowing where I belong. The more structure I’m given, the better I perform. For this reason, I never imagined myself pursuing a side hustle or starting a blog. Well, here I am, so that was silly. I still like lists – posts like the PF Blogger list by Personality Type by My Son’s Father appeal to my analytical side greatly. So of course, when the Lean vs Fat FIRE discussion surfaced, I had an opinion. At last, I had the right vocabulary and multiple resources to express how I felt. I promptly messaged Ian and assigned positions.
Ignore the question mark; that was my thinly veiled way to invite him to self-identify. (He was smart to not take the bait.)
Living With Someone Pursuing Fat, Fat FIRE
Ian is not on the FIRE train. At least, not in the way that I am. He’s always supported my journey, but it’s very much been my journey, not ours. There’s nothing wrong with that, but it felt wrong to me. I couldn’t understand it. Why would someone not want to pursue FIRE if presented with the option? It’s unfathomable, right?
The problem has been, and still is, how we define FIRE. I’ve always explained my version of FIRE to Ian as needing very little, aka the LeanFIRE route. On the other hand, Ian wants more. He wants the financial independence to get a really nice car, have a beautiful house (or multiple), and travel the world (if that’s not FatFIRE, what is?). That’s about as far as our conversations get before one of us tunes out or gets exasperated (usually me).
The thing is, I want expensive things, too. I’ve always just contextualized this as not wanting things that are as expensive as the things Ian wants. However, when calculating whether or not I could my life with less than $40K a year to cover all expenses, I’m hesitating. Sure, right now, my annual expenses are well under that. But one day, I want to start a family. Get into real estate. Travel. All those things cost money. It’s also a little naive to not factor in major costs like healthcare and education costs for future kids. Based on how most people seem to define LeanFIRE, does this make sense for me long-term?
Am I LeanFIRE? FatFIRE? Am I Still Even Pursuing FIRE?
As much as I like the idea of LeanFIRE, I don’t want it badly enough. I spend lots of money when I’m stressed, and also when I’m not. Ian and I have a goal of traveling internationally once a year (which we’ve successfully done for the past four years), and we go to expensive events like music festivals. On the flip side, I also got upset last week when he bought $1.99 bean sprouts instead of $0.89 sprouts. I happily do our grocery shopping so we can save a few bucks, and get annoyed at small, unnecessary purchases (which we’re both guilty of).
I’ve realized that it’s not about Lean vs Fat when it comes to FIRE. Instead, I’m questioning what it means to be financially independent and retire early. Do I still want to be financially independent? 100%. Retire early? Hmm…
Retiring Early ≠ Not Working
I think many people agree with this, although just as many people view retirement as leaving the workforce entirely. If I hit my FIRE number ($700K), that means I can quit my job to do other income-generating projects. I’d love to write a book, get into real estate investing, or create a yet-to-be-thought-up passive income stream. Providing myself with minimum living expenses gives me the freedom – mainly, the time, to pursue those activities. Even so, there’s a chance that I will continue working when I reach my goal. Why? Because I enjoy making money, and in my high-income field, it’s difficult to walk away from an income that has allowed me to build up wealth so quickly.
There are so many FIRE-related acronyms to remember now. LeanFIRE and FatFIRE aside, there’s also FIOR, which stands for financial independence, optional retirement. That sure sounds like what I’m talking about, right? FemmeCents also has an extremely relevant post that sums up a lot on how I feel about retirement.
Call it LeanFIRE, FIRE, FIOR, or Just Plain FI
Personal finance is personal. We’ve all heard this one before, although it’s always relevant. Perhaps what I’m pursuing is just FI in the traditional sense, but I’ll probably use all of the above terms somewhat interchangeably. The idea of reaching financial independence on $40K a year is still something I want because that will be my signal to start the post-corporate phase of my life – IF that’s still something I want when I get there.
It’s somewhat silly to condense all my thoughts on my FIRE journey into a small paragraph, but if I didn’t at least try, then I’m not really being true to myself.
So, to summarize:
Hi, I’m Jane, a personal finance blogger in my 20s who is currently pursuing FIRE but also loves the flexibility of FIOR. I’m using a LeanFIRE mindset to calculate financial independence goals for myself, but realistically am hoping to live a lifestyle that more closely resembles FatFIRE. I’m only a couple years into the FI track, so let’s just say that I have plans, but simultaneously realize that those may change in the near future. 😂
Comments
I identify so much with this post! And you and Ian sound similar to my husband and I… my husband definitely wants the expensive things too 😉
I think it’s smart to think about and question whether planning your whole future on limited expenses will get you where you want to go. I think one of the hardest things about planning for financial independence is so much can change in the future; idk if my wants/needs now will be the same in 15 years (and then there’s always inflation…)! Maybe I’ll feel like I need a lot more money, maybe I won’t, who knows?
It’s so easy for the internet to get caught up in debating terms: is it FI or RE, what does ‘retired’ really mean, fat FIRE, lean FIRe, etc… The tricky part is it all comes down to how YOU define those terms for you!
A <$40K salary could probably provide me with my desired lifestyle for the next 10, maybe 20 years, but I know it's after that where I'll likely need more. Saving for that future now, where compounding interest will be of immense value, just makes sense. It seems silly to debate over what to call it, but I feel that's exactly what's been happening online. You're right though, I just need to figure out what it is I'm looking for out of financial independence.
It sounds like you’re thinking about things super-long term with a solid understanding of what you want (something that I struggle with understanding, that’s for sure). The lean fire camp does really limit some of those options long-term, while the FIOR side seems to fit in well with a lot of that.
From the sound of it, you’ll be an awesome entrepreneur (especially with the added time to do it). Could always use thoe income-generating projects can help lead to a FatFire lifestyle at a younger age too! (maybe Ian wants cars/houses now, but at age 60 would want less?).
It’s true! I want to approach lifestyle planning with a long-term view, but it’s difficult when I know my priorities will change drastically in the next couple decades (and I can’t necessarily predict how it will change). I’m definitely antsy to get started on those income-generating projects as well; sometimes things feel like they’re moving at a glacial pace.
All the way up to college, I used to think anyone should be able to live with a $40k annual salary. I never knew it was LeanFIRE. That number stuck to me because I saw my own parents do it! However now that I have a family of my own and I see the world through my own eyes of living in southern California, that can be quite a challenge unless you aren’t planning to do any traveling, eating out, etc. If this is a criteria for Lean, then I must be FatFire.
Well, the point I’m trying to make is that FIRE is however you want to define it. 🙂
I just came back from a weekend in SoCal, and it’s one of the few places in the US where the cost of living rivals that of NYC, that’s for sure.
I don’t really have anything to add. I just wanted to step in and say I understand exactly what you’re thinking through. I lied. Here’s my add. Most of saving for FI are a number of years away, relatively young, and going through major life events (marriage, family, career growth). It’s really hard pinning down what we want with so many moving parts, but saving for FI gives us a foundation for options. I think I’m just describing FIOR (whatever that is!) 😛
That seems to be the consistent thought here – just keep saving 🙂
Better to have saved more than you end up needing rather than not enough.
FI/FIOR is definitely where we land. The goal is to someday get to CHOOSE if/what/when we work in a traditional sense, but also to have the security to choose to do other things (or if things are out of our control at some point, which happens to plenty of people). I’d maybe push to a leaner spend now / leaner eventual number, but I think my husband does a good job tempering that and making sure we DO spend money on things we enjoy.
I like that! It makes a lot of sense to start with a goal slightly more conservative than where you’ll think you’ll end up, but to your husband’s point, it shouldn’t get in the way of enjoying things now.
Great post. I tried the retirement thing for just over two years (started with 700k). It‘s been a fantastic two years. I learnt to spend much less than in the past (stressful high income career) but also realised it might not be enough to support what my partner expects out of life (planning a family) in HCOL. Changed plans and going for the farFire thing in round two starting sometime this year. Good luck!
Thanks for the insight from the other side! My original plan never considered raising a family and HCOL (which I am in), and I made a huge oversight in never adjusting that even as my situation changed. But hey, a mini-retirement in preparation for the real thing sounds really nice. 🙂
Hi
I have calculated 3 target figures for FI. Average, Comfortable and Luxury. My aim is to get to a point where I don’t have to work for money and my net worth should continue to increase in excess of inflation during the drawdown phase.
Both of us like our jobs (at the moment) and are working full time. I would like to reduce my hours to about 25-30 hrs per week but I would do that after we reach Comfortable FI. We have reached Average FI this year 🙂
We easily save 75% of our net income with two young kids. We don’t have a strict budget but we track our expenses. We buy what we consider ‘value’ regardless of what it is but we don’t waste a cent if it is not necessary. We like to travel and so we do that a lot but we don’t waste money on eating out every week or upgrading iPhone etc. just because we can.
I think the best thing a person can do for their finances is ‘front load them’. Meaning if you plan to save $1000 per month for 20 years which equals 240k total savings and invested at 7% equals ~500k.
It is far better to save ~$2500 per month for first 5 years (total saving $150k) and not ‘have to’ save after that if you want. You end up with approx. same amount after 20 yrs but with a lot less stress and flexibility.
“Frontloading” finances makes a lot of sense! Essentially it’s a way to expect the unexpected because the unexpected will happen. It seems like you and your partner have a solid starting plan, which is great. I’m currently in the process of redoing mine. It seems like every few years the plan needs to be redrafted because circumstances change significantly. For example, I never expected to be engaged to someone who’s working on the other side of the country! (My 2019 situation.) Frontloading savings goals takes a lot of stress from early retirement planning, and I’m also doing the same.
Can I suggest you take a look at Financial Sustainability rather than FIRE? The problem is that your strategy doesn’t account for a recession or a down market, where returns on investments won’t support your draw rate. And IMHO, $700K is WAY TOO LOW for any investment return. This might help you out:
https://www.beunconstrained.com
and check out their podcast at https://www.beunconstrained.com/podcast
I think their methodology would make a lot more sense for what you are looking to achieve.
You’re right, $700K is way too low for successful FIRE; my outlook on my finances have changed since this post but I’ll continue to keep this up for posterity.
Financial sustainability or financial independence; the principals are roughly similar, although there are now a flurry of terms to address the exact way that individuals what to be financially comfortable.
With the recent market drops due to COVID-19, I think we’ll see a lot of people rethink how to reach financial independence, myself included.