With $40,000 of annual spending and a 4% withdrawal-rate assumption, Traditional FIRE requires $1,000,000. Under the definitions used here, Lean FIRE is $700,000, Fat FIRE is $1,600,000, Coast FIRE capital today is about $384,000, and Barista FIRE is $850,000 when flexible work pays $500 per month.
Those numbers are not five forecasts of the same life. Each one changes a different part of the plan: spending, time, or earned income. This worked example keeps the baseline assumptions fixed so you can see exactly why the targets differ.
Run your own version: Open the Five FIRE Paths Calculator →
The assumptions in this example
The example uses the calculator's starting inputs:
- Annual necessary spending: $40,000
- Withdrawal rate: 4%
- Current invested assets: $150,000
- Monthly investment: $1,500
- Lean spending: 70% of the baseline budget
- Fat spending: 160% of the baseline budget
- Coast period: 20 years
- Nominal annual investment return: 7%
- Annual inflation: 2%
- Flexible income for Barista FIRE: $500 per month
- Spending and new monthly investments rise with inflation
The portfolio targets are rounded to the nearest $1,000 below. Estimated times are rounded to one decimal year and come from the same model as the calculator.
| Path | Portfolio target | Estimated time from the starting portfolio | Lever being changed |
|---|---|---|---|
| Lean FIRE | $700,000 | 15.0 years | Spend 30% less than the baseline |
| Traditional FIRE | $1,000,000 | 20.1 years | Fund the full $40,000 baseline |
| Fat FIRE | $1,600,000 | 27.7 years | Fund 60% more than the baseline |
| Coast FIRE | About $384,000 today | 7.7 years, then 20 years of compounding | Use time instead of future contributions |
| Barista FIRE | $850,000 | 17.7 years | Earn $6,000 per year after semi-retiring |
Traditional FIRE: $1,000,000
Traditional FIRE is the cleanest calculation:
$40,000 annual spending ÷ 0.04 withdrawal rate = $1,000,000
The withdrawal rate is entered as a decimal in the formula, so 4% becomes 0.04. The result says that a $1 million portfolio would support a first-year withdrawal equal to $40,000 under this planning assumption.
It does not say the portfolio will produce exactly $40,000 every year without risk. Taxes, fees, asset allocation, market order and changes in spending all affect a real withdrawal plan.
Lean FIRE: $700,000
In this example, Lean FIRE uses 70% of the baseline budget:
$40,000 × 70% = $28,000 of Lean annual spending
$28,000 ÷ 0.04 = $700,000
The $300,000 difference from Traditional FIRE comes entirely from the lower spending plan. Before treating it as a target, build the $28,000 budget from real housing, healthcare, transport, food, taxes and irregular costs. A percentage is useful for comparison; an itemized budget is better for a decision.
Fat FIRE: $1,600,000
Fat FIRE uses 160% of the same baseline:
$40,000 × 160% = $64,000 of Fat annual spending
$64,000 ÷ 0.04 = $1,600,000
This path needs $900,000 more than Lean FIRE because it funds $36,000 more annual spending. That additional budget might support travel, a more expensive location, family help, paid services or simply more margin. The useful question is which recurring expenses make life meaningfully better, because every permanent expense increases the target.
Coast FIRE: about $384,000 today
Coast FIRE asks a different question: how much capital is needed now if it receives no further contributions and has 20 years to grow into the future Traditional FIRE target?
Because the example raises future spending with 2% inflation, the $1 million Traditional target also rises for 20 years. The calculator then discounts that future target at the assumed 7% nominal return:
$1,000,000 × (1.02 ÷ 1.07)20 = about $383,997
Rounded, the Coast FIRE number is $384,000 today. Starting with $150,000 and continuing the modeled $1,500 monthly investments, the calculator estimates reaching that Coast amount in about 7.7 years. The model then assumes the Coast amount compounds for another 20 years without new retirement contributions.
Coast FIRE is especially sensitive to time and return assumptions. A shorter runway or lower return raises the capital needed today. Reaching the number also does not remove the need for income: current earnings must still cover current spending during the coast period.
Barista FIRE: $850,000
Flexible income of $500 per month equals $6,000 per year. The portfolio therefore needs to cover the remaining $34,000:
$40,000 − ($500 × 12) = $34,000 of uncovered annual spending
$34,000 ÷ 0.04 = $850,000
That is $150,000 below Traditional FIRE. The trade-off is an ongoing dependence on flexible income. A robust Barista plan asks whether the work is available, sustainable, taxed appropriately and still realistic during illness or a weak labor market.
Why the estimated times do not scale evenly
The targets rise in a straight line with spending, but the time estimates do not. The model compounds both the current $150,000 portfolio and future contributions. As the portfolio grows, investment returns account for more of each year's change.
At the same time, the model increases target spending with inflation. That means the finish line rises while the portfolio grows. The interaction between contributions, returns and inflation produces the estimated 15.0, 20.1 and 27.7-year timelines; they are not simple multiples of one another.
Smooth annual returns are a mathematical convenience. Real markets are uneven, and poor returns near withdrawals can matter more than the same average return delivered in a friendlier order.
Which result should guide the plan?
Use the five numbers as a decision map:
- Lean FIRE is relevant if the $28,000 lifestyle is durable and satisfying.
- Traditional FIRE is the baseline if $40,000 reflects the life you want investments to fund.
- Fat FIRE is useful if $64,000 represents specific priorities rather than an undefined wish for more.
- Coast FIRE can mark a career-flexibility milestone if you have a long runway and current income still covers life.
- Barista FIRE can reduce the asset target if earning $500 per month remains realistic after leaving full-time work.
You do not need to choose one permanent identity. A household can reach Coast FIRE, later use Barista income, and eventually become fully independent at a Traditional or Fat target.
Limits of this worked example
This is an educational model, not individualized financial advice. It does not simulate taxes, investment fees, sequence-of-returns risk, healthcare shocks, pensions, government benefits, debt, income interruptions or asset allocation. It assumes average return and inflation inputs continue smoothly. FIRE labels also have no single universal definition; the calculations above state the definitions used by Rich2Fire.
Recalculate with several withdrawal rates, returns and budgets. A range that survives less favorable assumptions is more useful than one precise-looking number.
