The Money Muse

As you progress along your journey toward financial independence and early retirement (FIRE), you may encounter different FIRE categories that vary in terms of how much money you need to sustain your lifestyle once you retire. While the basic principle of FIRE remains the same – save aggressively and live below your means to retire early – the exact approach and how much you’ll need for retirement can vary. That’s where lean FIRE, chubby FIRE, and fat FIRE come in.

Let’s break down these three terms to help you understand which one might be right for you, based on your retirement goals, desired lifestyle, and spending preferences.

What is lean FIRE?

Lean FIRE is the most frugal version of FIRE. With lean FIRE, you’re aiming to retire early, but you plan to do so with a more minimalist, budget-conscious lifestyle. You’re spending as little as possible to live comfortably – and sometimes, this means drastically cutting expenses to achieve financial independence.

For someone pursuing lean FIRE, the focus is on saving as much as possible by reducing living costs as much as possible. Think of a lifestyle that involves living in a smaller home, minimizing discretionary spending, and cutting back on luxuries. The goal is to accumulate enough savings and investments to cover living expenses while still being able to enjoy life, just without the frills that many people typically indulge in.

How much do you need for lean FIRE?
The amount you need for lean FIRE depends on your annual expenses. For example, if you can live on $30,000 per year, you’d aim to accumulate about $750,000 (using the 25x rule). The goal is to create a solid financial cushion to allow you to retire early while minimizing spending.

What is chubby FIRE?

Chubby FIRE is the middle ground between lean FIRE and fat FIRE. If lean FIRE focuses on extreme frugality, chubby FIRE allows for a bit more flexibility in your spending while still aiming for early retirement. Chubby FIRE followers generally spend more than those pursuing lean FIRE but less than those aiming for fat FIRE.

With chubby FIRE, you might still make sacrifices, but you’re willing to include some luxuries or a few non-essential expenses in your budget, such as eating out, traveling, or indulging in hobbies. The goal is to have enough savings to maintain a comfortable lifestyle without the extreme frugality required by lean FIRE.

How much do you need for chubby FIRE?
For chubby FIRE, you may aim for an annual expense of $50,000 or more in retirement. This would mean saving 25 times that amount, so you’d need around $1.25 million. Chubby FIRE offers a balance between enjoying some luxuries and maintaining financial independence.

What is fat FIRE?

Fat FIRE is the most luxurious and least restrictive form of FIRE. It’s for those who want to retire early with a higher standard of living than most people expect in retirement. Fat FIRE doesn’t require strict budgeting or limiting your spending. You’re essentially building a nest egg large enough to allow you to live a comfortable, worry-free retirement – one where you don’t have to constantly think about cutting expenses.

Fat FIRE is designed for those who want to maintain a similar lifestyle to the one they had while working, including frequent travel, dining out, and living in a bigger home. You’re likely going to need a much higher savings amount and more aggressive investing than lean or chubby FIRE.

How much do you need for fat FIRE?
For fat FIRE, you may need $75,000 or more per year in retirement. Using the 25x rule, this means you would need $1.875 million to retire. Depending on your goals and the lifestyle you envision, some people aiming for fat FIRE may even target a nest egg worth several million dollars.

How to choose the right FIRE strategy for you

Choosing between lean FIRE, chubby FIRE, and fat FIRE depends on several factors:

1. Your desired lifestyle: Do you want to live a minimalist life or continue to enjoy a higher standard of living? The more luxurious your lifestyle, the higher the amount you’ll need to save.
2. Your current expenses: How much do you spend now? How much will you need to sustain your desired lifestyle in retirement? Consider your current monthly expenses, including discretionary spending on entertainment, dining, and travel.
3. Your risk tolerance: Fat FIRE may seem appealing for those who are risk-averse or want more flexibility in retirement, while lean FIRE requires more discipline and the ability to live on a strict budget.

The Bottom Line

Whether you’re aiming for lean FIRE, chubby FIRE, or fat FIRE, the key is knowing your financial goals and understanding the amount you need to save to retire comfortably. While lean FIRE might be right for someone who values extreme frugality and early retirement, chubby FIRE offers a balance between comfort and financial independence, and fat FIRE allows for a more luxurious lifestyle.

Ultimately, the best approach is the one that aligns with your personal values, goals, and vision for the future. By setting clear goals and sticking to a disciplined savings and investing strategy, you can achieve your version of FIRE, no matter how much you want to spend in retirement.