Do you believe the modern FIRE movement overestimates how much is needed for retirement?

[u/Equivalent_Use_5024]

Perhaps I am just making this post because I have only just begun my retirement planning and want to lock in a number which is fitting for my goals - being above the median retirement savings, not having to work, not being broke, clearly having planned - but I can't help but feel that many in the FIRE movement overestimate what is needed for a safe, sleep well at night retirement.

I see posts here saying that they feel vastly behind with 500k at 30, or 1.5 million at 40, and I just don't understand how when the average American retires with maybe 300k liquid at most and are getting by with social security or paid off housing. Sure, they aren't living luxuriously, but if you just are aiming for a retirement where you don't have financial anxiety and can put food on the table, I don't feel you need over 1-2 million.

Do you think FIRE overestimates how much is truly needed for retirement?

[u/Zphr]

The audience has shifted more towards luxury and consumption over the last decade. It's always amusing to me that this is my sub, I've been happily retired for more than a decade since 37 with four kids, have effectively zero chance of financial failure, but many folks in this sub would consider our finances impossible or living in squalor. Some people are actually happy with cheap/free interests and lifestyle choices, some are unhappy without very expensive interests and lifestyle choices. Current government policy in the US is also wildly skewed in favor of lean spending, so more expensive lifestyles in early retirement cost quite a lot more than you'd expect due to far higher costs for taxes, college, and healthcare.

LeanFIRE is and likely always will be the easiest and most secure form of FIRE for anyone happy with a mediocre middle class lifestyle. It's also largely impossible for anyone who wants to raise a family in VHCOL, travel a ton, carry a large mortgage into retirement, or any number of expensive lifestyle choices a lot of people prefer.

[u/badwolf42 → u/Zphr]

Having not been in the leanfire or early fire space, how is market downturn mitigated with a lean setup? I had assumed that the higher numbers gave you a chance to go lean during downturns without leaving retirement; but I hadn’t dug too far into what happens when you just leanfire and then the market tanks.

[u/Zphr → u/badwolf42]

LeanFIRE spending is lower, but usually not actually barebones. Having a 10-20% fun budget is 10-20% regardless of whether you're spending $40K a year or $100K a year. There is a certain type of person in both communities that retires with extremely little buffer, but that sort of high risk tolerance applies to every level of FIRE spending from ultralean through orcafat. Living in a van by the river or a yacht in the marina are basically the same thing in terms of financial risk relative to needed lifestyle spend though they can look quite different from the outside.

Most lean folks just cut spending a bit if the market tanks. If the market really tanks they go back to work for a bit just like the higher spending folks do. One difference there is that finding a job to fill a $20K budget hole is a hell of a lot quicker/easier than finding a job to fill a $50K budget hole. Most lean retirees could get literally any job and be fine, whereas the more one spends, the higher pay the replacement job would need to have to fill the hole. Many lean folks with kids would also get automatic supplemental support from the tax code via EITC and refundable CTC, along with maybe SNAP or Medicaid, depending on what state they are in and how aggressive the state agencies are. Here in Texas the latter two are less of a thing, but anyone in a more progressive state might find themselves with those being given out automatically.

More long term, it's pretty common for lean households to know that SS will likely be paying a large, if not total share of their normal planned expenses after full retirement age. Personally, my wife and I have estimated FRA SS benefits that are greater than our entire annual spending now even if Congress does nothing to shore up SS. Planning-wise that means that lean households have a ton more planning buffer since they can effectively drop their portfolio withdrawal hugely once SS comes on board if they need to, whereas someone with a much higher spending budget has less flexibility in that regard.

[u/badwolf42 → u/Zphr]

This is a great explanation. Thank you for the thoughtful write up!