Transparent method
The formula
Worked example
Example inputs
How to interpret the result
A lean spending plan built around a minimal budget leaves very little room to absorb unplanned costs, particularly healthcare, which tends to be the single least predictable and potentially largest line item in a genuinely lean retirement budget once employer coverage is no longer part of the picture.
Before you rely on it
What to check
Confirm the lean spending figure includes a realistic healthcare cost estimate, not employer-subsidized rates, since that's the piece most likely to be underestimated in a minimal budget.
The common error
Where people go wrong with lean FIRE calculator
Building a lean FIRE target around a spending figure that assumes employer-subsidized healthcare costs continue after leaving full-time work. Actual individual healthcare costs typically run meaningfully higher than what a working-years budget reflects.
Sensitivity evidence
How withdrawal rate changes the FIRE portfolio target
| Withdrawal rate | FIRE portfolio target | Estimated years to target |
|---|---|---|
| 2.0% | $2,000,000 | 28.0 years |
| 3.0% | $1,333,333 | 22.0 years |
| 4.0%worked example | $1,000,000 | 18.0 years |
| 5.0% | $800,000 | 15.0 years |
| 6.0% | $666,667 | 13.0 years |
Every input, tested
Which input moves the FIRE portfolio target most
| Input | Tested from | To | FIRE portfolio target at each end | Swing |
|---|---|---|---|---|
| Withdrawal rate | 3.0% | 5.0% | $1,333,333 to $800,000 | $533,333 (53%) |
| Annual spending | $36,000 | $44,000 | $900,000 to $1,100,000 | $200,000 (20%) |
| Current invested assets | $135,000 | $165,000 | $1,000,000 to $1,000,000 | none |
| Annual investments | $18,000 | $22,000 | $1,000,000 to $1,000,000 | none |
| Expected annual return | 5.0% | 7.0% | $1,000,000 to $1,000,000 | none |
Two variables at once
FIRE portfolio target by withdrawal rate and annual spending
| Withdrawal rate \ Annual spending | $32,000 | $40,000 | $48,000 |
|---|---|---|---|
| 2.0% | $1,600,000 | $2,000,000 | $2,400,000 |
| 3.0% | $1,066,667 | $1,333,333 | $1,600,000 |
| 4.0% | $800,000 | $1,000,000 | $1,200,000 |
| 5.0% | $640,000 | $800,000 | $960,000 |
| 6.0% | $533,333 | $666,667 | $800,000 |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Annual spending | $40,000 |
| Withdrawal rate | 4.0% |
| Current invested assets | $150,000 |
| Annual investments | $20,000 |
| Expected annual return | 6.0% |
| FIRE portfolio target | $1,000,000 |
| Estimated years to target | 18.0 years |
Complete evidence
Full projection schedule
Show all 10 rows
| Period | Opening balance | Contribution | Growth | Ending balance |
|---|---|---|---|---|
| Year 1 | $150,000 | $20,000 | $9,000 | $179,000 |
| Year 2 | $179,000 | $20,000 | $10,740 | $209,740 |
| Year 3 | $209,740 | $20,000 | $12,584 | $242,324 |
| Year 4 | $242,324 | $20,000 | $14,539 | $276,864 |
| Year 5 | $276,864 | $20,000 | $16,612 | $313,476 |
| Year 6 | $313,476 | $20,000 | $18,809 | $352,284 |
| Year 7 | $352,284 | $20,000 | $21,137 | $393,421 |
| Year 8 | $393,421 | $20,000 | $23,605 | $437,027 |
| Year 9 | $437,027 | $20,000 | $26,222 | $483,248 |
| Year 10 | $483,248 | $20,000 | $28,995 | $532,243 |
Where the inputs come from
Lean FIRE uses a frugal spending level, often quoted at or below $40,000 a year for one person, but the right figure is what you can genuinely live on without stress. Add up rent or housing, food, healthcare, transport and a small buffer, and remember that lean plans have less room for a surprise. Current assets, annual investments and return are the same inputs as the standard FIRE calculator.
Using the FIRE portfolio target in a real decision
Consider whether you could return to work, and whether your spending could drop further.
When the result stops applying
A lean budget leaves little slack for inflation, home repairs or health problems, and pre-Medicare healthcare can be a large share of it. Geographic arbitrage, such as living in a lower-cost area, can make lean FIRE work but changes lifestyle. Part-time work income, if planned, helps. Taxes on withdrawals are small at low income, which is a benefit of the approach.
What to compare it with
Compare with the standard FIRE and fat FIRE calculators, and the barista FIRE page if you plan to keep earning some income. The coast FIRE calculator shows whether your savings could grow on their own. The retirement healthcare cost calculator helps size the largest unknown.
People also ask
Frequently asked questions
What is Lean FIRE?
Retiring early on a minimal budget, with a smaller portfolio target because spending is low. It trades lifestyle for an earlier date.
Is $40,000 enough to retire on?
For many people in lower-cost areas it is, but it depends on housing, healthcare and family. It leaves less room for surprises than a larger budget.
What is the biggest risk of Lean FIRE?
A small margin of safety. A market decline, higher healthcare costs or inflation can force a return to work, because the budget has little to cut.