I’ve spent a lot of time lately reading about retirement and Financial Independence over at Reddit. Reading other people’s questions and comments helps get a feel for the sorts of challenges they face as they boost their saving rate and cut their spending in order to pursue bigger goals.
For those unfamiliar, Reddit is a large internet community with discussion boards dedicated to different topics. Though redditors would cringe at this characterization, in many ways it reminds me of America Online twenty years ago.
I like to browse forums (or “subreddits”, as they’re called) on subjects like:
That last one merits more explanation. I’d never heard the term “lean FIRE” until I found the forum on Reddit. But I think it’s something that might appeal to a certain group of Money Boss readers. According to the LeanFIRE subreddit: “If you want to retire before 60 with less than $40k in planned yearly expenses, this is the place to discuss it!” In other words, “lean FIRE” is a term for early retirement with minimal money.
Note: FIRE is an abbreviation for “Financial Independence/Retire Early”. It’s a catch-all term for folks who want to stop working before traditional retirement age. But what are the differences between early retirement and Financial Independence? Stay tuned! That’s what this article is all about.
It’s strange to me that the LeanFIRE subreddit considers a $40,000 annual expense “lean”. That’s 75% of what the average American household spends ($53,495 per year), which doesn’t seem particularly parsimonious. My normal spending when I’m not traveling the U.S. in an RV is about $36,000 per year, and I don’t consider myself frugal at all.
To my mind, people like Pete from Mr. Money Mustache (household spending of around $25,000 per year) and Jacob from Early Retirement Extreme (household spending of around $14,000 per year) qualify as lean FIRE. But $40,000? That’s just slightly less excessive than the Joneses next door.
My desire to argue over what qualifies as a “lean retirement” highlights one problem we all have when we talk about money. Different words mean different things to different people. Today I want to explain what I mean when I use certain words and phrases at Money Boss. [Read more…]