leanFIRE and fatFIRE definitions

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jacob
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leanFIRE and fatFIRE definitions

Post by jacob » Fri Dec 07, 2018 5:16 pm

What are the consensus definitions these days?

The definition that got stuck in my mind is that leanFIRE is now <$40k/household/year and fatFIRE is >$100k/household/year. However, as I'm paying scant attention to where the FIRE community is heading these years, I'm looking for some clarification.

iopsi
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Re: leanFIRE and fatFIRE definitions

Post by iopsi » Fri Dec 07, 2018 5:32 pm

Didn't know there was a definition. Anyway that seems pretty US-centric... maybe a definition based on % would be better?
Even though absolute numbers have their importance ofc.

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Re: leanFIRE and fatFIRE definitions

Post by prognastat » Fri Dec 07, 2018 5:45 pm

The way I've been seeing them are:
LeanFire - FIRE on a working class or lower level of income(ERE)
FIRE - FIRE on a middle class income(MMM)
FatFIRE - Fire on upper middle class or even upper class income or higher(Bogleheads maybe?)

With income I mean how much you are spending post FIRE, not how much you made during accumulation.

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Jin+Guice
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Re: leanFIRE and fatFIRE definitions

Post by Jin+Guice » Fri Dec 07, 2018 8:10 pm

@jacob: Those numbers are insane! I don't think FIRE is that out of touch with it's roots. I guess depending on how you define your household, how you count taxes and how you deal with housing expenditure if the mortgage is paid off, $40,000 isn't that crazy. For example if this is a 5 person household still paying off a mortgage (or imputing rent, which I know you don't do, due to computational difficulties) and you're counting income and SS taxes they pay, I can kind of see $40,000 a year as leanFIRE if I squint at it just right. I mean shit, that's still $1,000,000 needed to FIRE at a 4% SWR. That's just regular average guy finance a fucking 4 door megatruck so every other polo shirted over-weight office slave knows I'm a real man retirement at that point. $100,000k is $2.5 mil for 4% SWR. Even if you work for 25 years you'd need to bring home 200k a year after tax to save that much at a 50% savings rate (assuming no returns in accumulation).

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Re: leanFIRE and fatFIRE definitions

Post by classical_Liberal » Fri Dec 07, 2018 8:26 pm

Jin+Guice wrote:
Fri Dec 07, 2018 8:10 pm
I don't think FIRE is that out of touch with it's roots.
Check out the MMM forum sometime. I don't spend much time over there because they have lost touch with roots. You will be VERY hard pressed to find anyone planning to FIRE on MMM-level family spending (25-30K a year without mortgage). I know of 1 person (of thousands) who journals on MMM who has ERE level spending. I would guess the average is much higher than 40K, They even have a "low income thread" which is defined as income less than 50K per year. WTF?

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Bankai
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Re: leanFIRE and fatFIRE definitions

Post by Bankai » Fri Dec 07, 2018 9:03 pm

$100k is a joke, right? We spend less than 1/5 of that and feel like we're splurging left, right & centre.

How much are these people making? If they need $2.5m & spend $100k while accumulating, and want to retire in 10y, and pay, say, 40% tax... that's like $580k income pa? Or $380k pa with 30% tax & 15y accumulation?

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Re: leanFIRE and fatFIRE definitions

Post by ThisDinosaur » Fri Dec 07, 2018 9:23 pm

Agree with prognast.
LeanFIRE is when post FI spending is less than median income. FatFIRE is just another word for run of the mill "wealthy."

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BRUTE
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Re: leanFIRE and fatFIRE definitions

Post by BRUTE » Fri Dec 07, 2018 10:20 pm

brute thinks roughly like this:

1 jacob ~= 7k (net worth < 200k)
ERE ~= 15k (net worth ~300-400k)
lean FIRE ~= 30k (net worth 1/2M - 1 1/2M)
fat FIRE ~= 75k+ (net worth ~= 2M+)

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Jin+Guice
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Re: leanFIRE and fatFIRE definitions

Post by Jin+Guice » Sat Dec 08, 2018 2:54 am

classical_Liberal wrote:
Fri Dec 07, 2018 8:26 pm
Check out the MMM forum sometime. I don't spend much time over there because they have lost touch with roots. You will be VERY hard pressed to find anyone planning to FIRE on MMM-level family spending (25-30K a year without mortgage). I know of 1 person (of thousands) who journals on MMM who has ERE level spending. I would guess the average is much higher than 40K, They even have a "low income thread" which is defined as income less than 50K per year. WTF?
Man that's depressing. I can see why y'all hate on MMM so much. #SublimeProblems #It'sNotYouIt'sYourFans

frommi
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Re: leanFIRE and fatFIRE definitions

Post by frommi » Sat Dec 08, 2018 4:58 am

I think you guys are limiting yourself if you just focus too much on the expense side. There are two more levers to pull to get to your target faster. (high job income+investments). Its like training only your legs while the rest of your muscles degenerate. The MMM guys are just better at the high job income side than you. You only get optimal results if you are good at all 3 parts.
I am not the perfect investor, expense controller or highest income earner and still my projections have me being a billionaire at 100. (Assuming i win the longevity race) Who cares if i can live on 7000$/year? :)

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Re: leanFIRE and fatFIRE definitions

Post by 2Birds1Stone » Sat Dec 08, 2018 6:16 am

My spending this year will come in $<18k all in. I would not consider 2X that for the household as "leanFIRE", even in my HCOL area.

I like Brute's numbers for a MCOL area in the USA, putting absolute values on it is silly if we are comparing across different geographies. $25k a year in San Francisco will be a lot different than Chiang Mai.

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Re: leanFIRE and fatFIRE definitions

Post by iopsi » Sat Dec 08, 2018 11:13 am

frommi wrote:
Sat Dec 08, 2018 4:58 am
I think you guys are limiting yourself if you just focus too much on the expense side. There are two more levers to pull to get to your target faster. (high job income+investments). Its like training only your legs while the rest of your muscles degenerate. The MMM guys are just better at the high job income side than you. You only get optimal results if you are good at all 3 parts.
I am not the perfect investor, expense controller or highest income earner and still my projections have me being a billionaire at 100. (Assuming i win the longevity race) Who cares if i can live on 7000$/year? :)
Well a big advantage of having really low expenses, is that you have much more "versatility" in your choices.
For example right now i work part time and make way more than enough, yet if i wanted i could change to a full time job, or another part time thing, or stop working for some time.

You are also more resilient in the case of an economic downturn (another recession for example).

With very, very low expenses levels, you are not dependent on an high paying job, or high returns on the stock market (or whaterver market you are invested in), etc.. Which as we know are all things that can change for the worst in little time.

Not that having an high paying job and being a good investor is a bad thing, but imo the expense side is more important.

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Re: leanFIRE and fatFIRE definitions

Post by jacob » Sat Dec 08, 2018 11:49 am

prognastat wrote:
Fri Dec 07, 2018 5:45 pm
LeanFire - FIRE on a working class or lower level of income(ERE)
FIRE - FIRE on a middle class income(MMM)
FatFIRE - Fire on upper middle class or even upper class income or higher(Bogleheads maybe?)
This makes sense to be and it would be easy and universal to define them as
Lean <33% percentile income (less than 40k/year/household gross(*))
Fat >66% percentile income (more than 84k/year/household gross)

(*) See viewtopic.php?p=164550#p164550

However, to FIRE in our late 30s or 40s, we still need to save 50% net. This means that leanFIRE should be talking about budgets under 20k/household/year and fatFIRE should be down to 42k/household/year with the other half being saved and invested. This is NOT the impression I'm getting when people are talking about lean and fat. If that's the case, then ERE is almost the only leanFIRE blog in existence.

Conversely, if they're defined as [LeanFIRE <33% percentile spending after saving 50%] then leanFIRE describes gross household incomes under the 65% percentile and FatFIRE describes gross incomes over the 85% percentile. This is much closer to the impression I'm getting.

This is what my original inquiry was aiming at. Which percentiles are we talking about?

Scott 2
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Re: leanFIRE and fatFIRE definitions

Post by Scott 2 » Sat Dec 08, 2018 12:16 pm

From what I've observed, the FIRE communities are self-selecting for high earners. 6 figure incomes are common. IMO this skews use of the words.

Jean
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Re: leanFIRE and fatFIRE definitions

Post by Jean » Sat Dec 08, 2018 6:07 pm

I think it would be nice to reframe FatFIRE as anything above the consumption level that would result in to much greenhouse gaz emission to avoid a catastrophic climate change.

The Old Man
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Re: leanFIRE and fatFIRE definitions

Post by The Old Man » Sat Dec 08, 2018 7:24 pm

https://www.reddit.com/r/leanfire
Reddit has defined LeanFire: "If you want to retire before 60 with less than $40k in planned yearly expenses, this is the place to discuss it!"

Personally, I think this is overly generous. It is more like standard retirement for people with median incomes; however, it does make FIRE (or standard retirement) more accessible to "normal" people. Much of FIRE as it is currently discussed on the internet seems to be out of reach of "normal" people (i.e. Frugalwoods).

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Re: leanFIRE and fatFIRE definitions

Post by Seppia » Sat Dec 08, 2018 8:55 pm

jacob wrote:
Sat Dec 08, 2018 11:49 am
Conversely, if they're defined as [LeanFIRE <33% percentile spending after saving 50%] then leanFIRE describes gross household incomes under the 65% percentile and FatFIRE describes gross incomes over the 85% percentile. This is much closer to the impression I'm getting.
Same impression here, the whole MMM crowd seems to think in terms of "look I make very good money and yet spend a bit less than the average, I'm awesome".
I'm fortunate enough to be in this group (except for the "I'm awesome" part.
I mean I am awesome but for other resasons than my spending which is just a bit less stupid than the average), but somehow don't relate much with my "natural peers".
This board is the best

If you look into the math, there's no big difference between a "fat FIRE" at (the very risky as of today IMHO) 4% SWR and a leaner fire with higher margin of safety (which is what I'm aiming for) though.

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Re: leanFIRE and fatFIRE definitions

Post by Lemur » Sun Dec 09, 2018 7:27 pm

I never put a numeric value on ERE; to me it was always just as low as you can handle and design your system...but Leanfire is $40k a year or less and regular FIRE to me was always the median household income ($53k?) or more till I would say about $100k.

Still I'll use the "Federal Poverty Limit" as the bench mark depending upon number of household

https://aspe.hhs.gov/poverty-guidelines
1 peron $12,140
2 people $16,640
3 people $20,780

Required Assets at 4% SWR

ERE (1 person) - $303,500
ERE (2 people) - $416,000
ERE (3 people) - $519,500
Leanfire - $1,000,000 or less
FIRE - >= $1,325,000
FatFire >= $2,500,000

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Re: leanFIRE and fatFIRE definitions

Post by prognastat » Mon Dec 10, 2018 11:28 am

For example I wouldn't consider MMM as leanFIRE.

If you impute rent for the house he owns his spending probably falls around 40k. This would pass the reddit requirement, but to me MMM is between LeanFIRE and FatFIRE.

Of course this would depend a lot on location, 40k annually would make you quite well off in rural Mississippi, yet would be quite tight if you were living in urban California/New York.
Last edited by prognastat on Mon Dec 10, 2018 11:53 am, edited 1 time in total.

jacob
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Re: leanFIRE and fatFIRE definitions

Post by jacob » Mon Dec 10, 2018 11:43 am

The Old Man wrote:
Sat Dec 08, 2018 7:24 pm
Personally, I think this is overly generous. It is more like standard retirement for people with median incomes; however, it does make FIRE (or standard retirement) more accessible to "normal" people.
I think I live too much in a[n ERE] bubble to have seen it that way. I supposed it depends on which side of it one sits wrt to Wheaton levels. Setting it to 40k lowers the bar as seen from above and makes people who spend $50k feel better about themselves and perhaps it also inspires them to make an actual attempt instead of adopting the "I can never retire"-attitude. On the other hand, those (and that would be more than half the population because the median income was 35k/person in 2016 IIRC) who make less might be annoyed about the ignorance when people claim they're being lean or frugal when they're still spending more than the majority. And they might conclude that if the supposedly hardest kind of FIRE happens at a spending level higher than themselves, they're totally excluded.

It's hard to create a message that's appealing to everybody.

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