What Is LeanFIRE? A Guide To The Ultimate Minimalist FIRE Lifestyle

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What Is Lean FIRE?

Lean FIRE is the variation of the Financial independence/ Retire early (FIRE) movement that involves extreme frugality and minimalism both before and during retirement. The emphasis is on achieving financial independence as soon as possible by adopting a lifestyle of extreme frugality.  

Read our blog post on ‘Top FIRE Books: Financial Independence Early Retirement Resources’

What Does a Lean FIRE Lifestyle Look Like?

The Lean FIRE lifestyle is for the truly frugal folks who are comfortable with a minimalist lifestyle. They like to drive used cars and avoid eating out by making their meals at home. Some may also prefer to live in low cost of living areas (LCOL) to avoid high housing and lifestyle costs. This frugal lifestyle before and after retirement ensures that they can save most of their take-home pay in their working years and support a simple retirement lifestyle.

Find out how to retire early at 55 with our blog post. 

Key Pillars of the Lean FIRE Movement

1. Extreme Cost Cutting

The most fundamental aspect of Lean FIRE is extreme cost cutting. Lean FIRE enthusiasts take pride in their minimalist lifestyle and many also value the fact that their minimalist and simple lifestyle sets them apart from our high consumption and materialist society. And all this reduced consumption can also be good for the environment!

2. Budgeting

The Lean FIRE lifestyle does not happen with good intentions alone. Rigorous budgeting is the engine that enables and drives the minimalist lifestyle. Start by setting a budget and deciding how much you want to allocate for various expense buckets. Then track your expenses obsessively to make sure you stay within this budget.

3. Investing in a Diversified Portfolio

It is not only enough to achieve a high savings level. It is also important to invest your considerable savings in order to generate a healthy rate of return while making sure to diversify your assets and focus on risk management. Reduce fees through investing in index funds with low expense ratios. You do not want to save all that money only to give it away to expensive fund managers.

How to Calculate Your Lean FIRE Age

Step 1

Calculate your expenses in retirement. How much money will you live on annually? Since this is Lean FIRE, choose a low expense level in retirement. 

Step 2

Calculate the net worth needed at your target retirement age to fund these expenses in retirement. 

Step 3

Calculate how much you need to save every year from now until your target Lean FIRE age. 

A much simpler way is to use Planwell’s financial planning app to calculate your Lean FIRE age and number. 

Illustrative Scenario: How To Calculate Lean FIRE Using Planwell

Let us assume that you are 30 years old and you make $100,000 annually. You contribute $10,000 to your 401K annually and additionally save a portion of your take home pay. 

We assume a 7% pre-retirement rate of return and 5% post-retirement rate of return. Inflation is 2.5% and wage growth is 3% every year on average. 

Scenario 1:

Your expenses are 75% of your take-home pay and you save the remaining 25% of take-home pay.

In this scenario, you can retire at age 55.

Scenario 2:

Your expenses are 50% of your take-home pay and you save the remaining 50% of take-home pay.

In this scenario, you can retire at age 44.  

See what extreme frugal lifestyle can do for you? It can help you retire decades early if you are really aggressive with your savings. 

However Lean FIRE is not easy and neither is it for everyone. You would do well to understand the advantages and disadvantages of the Lean FIRE approach before you decide if this is the right FIRE approach for you. 

Who is Lean FIRE Good For?

Lean FIRE is good for you if…….

• You really value retiring early or at least having financial independence early, and can organize your entire lifestyle around it.
• You are comfortable with extreme frugality.
• You are very detail-oriented about tracking expenses and budgeting.  
• Your family is on board with this and have the same financial independence goals as you. More importantly, they are willing to make the tradeoffs to achieve this goal. 

Lean FIRE may not be good for you if…….

• If you want to enjoy a more moderate lifestyle while achieving early financial independence, you should probably consider a regular FIRE approach. Even people who are good savers may prefer a more balanced lifestyle. The extreme frugality lifestyle is not for everyone.  
• You are not comfortable with extreme frugality or your family is not. You’d like to live a little. Maybe travel occasionally or enjoy dining out or splurging on a few special things. 
• You are not super obsessed about budgeting or cost cutting. You prefer to be a good saver but not pinch every penny. 

Lean FIRE vs FIRE

If you want to live a little and live a more moderate lifestyle while saving for early financial independence, you might want to consider regular FIRE rather than Lean FIRE. The regular FIRE approach believes in high levels of savings, but is a bit more flexible and accommodates the occasional splurge. 

This also means that with regular FIRE, you may have to wait longer to achieve financial independence and retire. As we saw in our example, you could retire at 55 with regular FIRE rather than 44 with Lean FIRE.

Lean FIRE demands much more frugality, and requires people to save more. But the big advantage is the ability to retire much sooner, and not have to be tied to a job. Just make an informed decision.

How Planwell helps you prepare for Lean FIRE

With Planwell’s Early Retirement calculator, you can determine your Lean FIRE age. You can also compare Lean FIRE and regular FIRE scenarios by modeling different savings levels relative to your income. Moreover, for Lean FIRE, make sure to plan for a very frugal retirement. 

Planwell is building a fully personalized financial planning app to help you plan your finances comprehensively, including financial independence and early retirement. You can use this to estimate your Lean FIRE age and decide if the low expense levels can work for your lifestyle. Additionally, you can also get support with other goals such as saving for kids’ college or buying a new home. You can then decide whether a frugal approach to other goals will help you achieve Lean FIRE.

What to Consider Before Attempting Lean FIRE

Make sure you are comfortable with a high level of minimalism and frugality both before and during retirement, and more importantly, whether your family is also on the same page. Also consider whether your portfolio will hold up in early retirement in the event of any stock market uncertainties.

At Planwell, we are building a fully automated AI financial planner and advisor to help you make super personalized financial decisions such as how much house you can afford, while considering your lifestyle, retirement goals and other key factors. 

We will be launching the product in the coming months. Stay tuned for an update. Join our waitlist for exclusive access to the free PlanWell beta. In the meantime, check out our blog posts to help you plan your finances.

• What is Barista FIRE? How to achieve early retirement while working part-time. 
• What is Coast FIRE? Find out how to Coast Your Way to Financial Independence.
• How to retire early and achieve financial independence: Tips to retire early and achieve FIRE (Financial Independence, Retire Early)
• How to build a personal financial plan: Before you make a home purchase, make sure to build your personalized financial plan with our 10 step guide. 
• How to Use AI Budget Calculators and Tools to Plan Your Finances: Take advantage of our free FIRE calculator  to plan your finances more effectively.
• 5 Common Money Mistakes to Avoid: Learn about the pitfalls that could derail your early retirement plans.

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