What's the difference between Lean FIRE and Fat FIRE?

Lean FIRE is early retirement on a frugal budget, typically under $40,000 a year, which needs a smaller portfolio. Fat FIRE is a high-spend lifestyle of about $150,000 a year or more, needing a much larger portfolio.

What is a safe withdrawal rate?

A safe withdrawal rate is the percentage of your portfolio you withdraw each year in retirement. The classic figure is 4% for a 30-year retirement; early retirees often use 3.25–3.75% because their retirement is longer.

FIRE glossary

Q: What is Coast FIRE in simple terms?

Coast FIRE is the point where your existing investments will grow to your full FIRE number by traditional retirement age with no further contributions, so you can stop saving even if you keep working for income.

Q: What is the Rule of 25?

The Rule of 25 is a shortcut for your FIRE number at a 4% withdrawal rate: multiply your annual spending by 25. For $40,000 a year, that's a $1,000,000 target.

Plain-English definitions of the terms you'll meet on the path to financial independence. Where a term has its own calculator, the link takes you straight to it.

FIRE types

FIRE (Financial Independence, Retire Early)

A movement and a math problem: save and invest enough that your portfolio can cover your living costs, making paid work optional. The rest of these terms are variations on that idea.

Coast FIRE

The point where your existing investments will grow to your full FIRE number by traditional retirement age with no further contributions. You can stop saving — though you may keep working for income. Calculate your Coast FIRE number.

Barista FIRE

Semi-retirement where part-time income (often with health benefits) covers part of your spending, so your portfolio only has to fund the rest. Barista FIRE calculator.

Lean FIRE

Early retirement on a frugal, intentional budget — typically under $40,000/yr — which means a smaller portfolio and a faster finish. Lean FIRE calculator.

Fat FIRE

Financial independence with a high-spend lifestyle — usually $150,000/yr or more — and a correspondingly large portfolio. Fat FIRE calculator.

Chubby FIRE

The comfortable middle between Standard and Fat FIRE, roughly $100,000–$150,000/yr of spending.

Standard FIRE

Mainstream financial independence at a typical middle-class budget, about $40,000–$100,000/yr.

Core numbers

FIRE number

The invested amount that lets you live off your portfolio indefinitely: annual spending divided by your safe withdrawal rate. FIRE number calculator.

Rule of 25

A shortcut for the FIRE number at a 4% withdrawal rate: multiply your annual spending by 25.

The 4% rule

The guideline that withdrawing about 4% of your portfolio in the first year (then adjusting for inflation) has historically lasted a 30-year retirement. Early retirees often use a lower rate.

Safe withdrawal rate (SWR)

The percentage of your portfolio you withdraw each year. Lower rates are safer but require a bigger portfolio; 3.25–4% is the common range. See the full safe withdrawal rate guide.

CoastFI number

The amount you need invested today so that growth alone reaches your FIRE number by retirement age — the threshold that defines Coast FIRE.

Time to FI

The number of years until your portfolio reaches your FIRE number at your current savings rate and expected return. Estimate yours.

Returns & risk

Real vs nominal return

Nominal return is raw growth; real return subtracts inflation. FIRE planning uses real returns so results stay in today's dollars.

Inflation-adjusted (today's dollars)

Expressing future money in today's purchasing power, so a "$1M" goal means $1M of spending power — not a number eroded by decades of inflation.

Sequence-of-returns risk

The danger that poor market returns early in retirement, combined with withdrawals, permanently shrink a portfolio. It's the main reason early retirees keep a cash buffer and stay flexible.

Drawdown / decumulation

The phase where you spend from your portfolio rather than add to it — the opposite of accumulation.

Accumulation phase

The years of building wealth, when contributions and compounding grow your portfolio toward your FIRE number.

Strategy, accounts & tax

Geographic arbitrage

Lowering your cost of living by moving to a cheaper region or country, which stretches the same portfolio further — a popular Lean FIRE lever.

FU money

Enough savings to walk away from a job or situation on your own terms, even before full financial independence.

Nest egg

An informal term for the invested portfolio you'll eventually live on — your FIRE number, once reached.

Work-optional

The real goal of FIRE for many people: a financial position where paid work is a choice, not a necessity, whether or not you fully retire.

Bridge account

Money in taxable or otherwise penalty-free accounts used to cover spending between early retirement and the age you can tap retirement accounts.

Roth conversion ladder

A US strategy of converting tax-deferred savings to a Roth IRA during low-income early-retirement years, so the money can later be withdrawn tax- and penalty-free.

72(t) / SEPP

A US rule allowing penalty-free early withdrawals from retirement accounts as a series of substantially equal periodic payments.

ACA subsidy cliff

The income thresholds that determine US health-insurance marketplace subsidies — a key planning factor for early retirees keeping taxable income low.

Asset location

Choosing which account type holds each investment (for example, bonds in tax-deferred accounts, stocks in taxable or Roth) to minimize taxes — distinct from asset allocation, which is the mix itself.

Ready to run the numbers? Start with the Coast FIRE calculator, find your target on the FIRE number calculator, or compare every path on the FIRE types overview.

Last reviewed: June 2026