How much does financial independence cost?

How much money do you need to save if you plan to retire early? For some, retiring as young as your 30s means having accrued a million or more dollars. For others, a few hundred thousand dollars might suffice.

There is a debate raging in the FIRE community — which stands for “financial independence, retire early” — about how much a person needs to have set aside before quitting their 9-5 job. One side, known as Fat FIRE, believes retirees should have enough saved so they have a $75,000 annual budget in retirement, the other side, Lean FIRE, maintains that a $40,000 a year budget will do.

There are a few other variations, such as Barista FI, where you save enough to quit your day job and instead take on small gigs (like working in a coffee shop) to supplement your retirement income.

Financial freedom is a dream for many, but for a lot of us, it’s only a fantasy. Despite low unemployment, wages for many aren’t keeping up with inflation and saving for retirement is hard, even for those lucky enough to have access to retirement savings vehicles like 401(k) or 403(b) plans. Many 30-somethings say it’s already unrealistic to save for retirement, what with student loan debt and daily financial responsibilities. Still, there are countless blogs devoted to the topic, and as many ways to live in extended retirement.

Fat FIRE makes the most sense for people who want to maintain their preretirement standard of living (like paying for rent or a mortgage) if not go beyond that, whereas Lean FIRE is for the more frugal at heart. Vicki Robins, who retired at 25 five decades ago and is considered one of the pioneers of the financial independence movement, said she accomplished such by being extremely frugal and conscious investing. She told MarketWatch that for people to accomplish financial independence they must first get out of debt and save six months of income and then earn as much as possible without compromising their health and integrity (and of course not spend all of it).

Justin McCurry, 38, a blogger at Root of Good who retired at 33, and his wife, budgeted for between $1.3 million and $1.4 million to cover $40,000 a year. He said one rule of thumb people could use is multiplying your expenses by 25. In that case, a lifestyle that costs $100,000 a year would require $2.5 million saved for retirement, for example, whereas someone who intends to live off just $20,000 a year in retirement would only need $500,000 (and maybe have to take freelance work to supplement other goals).

Jillian Johnsrud from Montana Money Adventure, 32, took a frugal approach to her financial independence. She and her husband looked at their expenses and cash flow and saw they had enough passive income through a military pension and investments, as well as cash, to cover all their basic needs. They set out to experiment with financial independence for a year, which became two, and then continued on. “We are more interested in just creating a life so perfect for everything important to us,” she said.

To them, financial independence simply means the freedom to make their own choices. She and her husband never earned high incomes and didn’t come from privileged backgrounds. (“We always lived below the poverty line,” Johnsrud said.) Within a decade, they paid off their debt, bought their home with cash, adopted four children (and had two biological children) and traveled abroad. They had to be creative, such as reducing the grocery bill (she has written about $1 meals for breakfast, lunch and dinner), and relentlessly keep their goals in mind. “You might not be able to have the same metrics someone else has,” she said. Saving $5 million may take years for one person, and decades for another.

Financial independence ultimately relies on a very personal strategy — what people want in their lives, how much they need to fund those goals and a dedication to save enough to do so. “Fat FIRE versus Lean FIRE suggests numerical boundaries,” said Tanja Hester, personal finance blogger behind Our Next Life who is now working on a book called “Work Optional.” Along with having a vision for the future, everyone is coming at early retirement from different points in their lives — some are younger with more years to accrue returns and interest on their assets, others might be living in very economical cities (not expensive hubs like New York City and Los Angeles) and others might have one spouse earning a much higher income to more quickly attain their savings goal.

Still, people should factor in unexpected emergencies or health care costs. “For other reasons too, I think it makes sense to save a little bit more than they think is necessary, regardless of the budget or the 25x rule,” Hester said. Not everyone — especially millennials — plan for how much they’ll need in retirement. More than half of millennials guessed how much they would need to save, according to a 2014 Transamerica Center report, and only one in 10 used a calculator or spreadsheet to make those estimates. That generation in particular also has other financial considerations to make, such as how much they may really get in Social Security paychecks (they’ll still get a benefit, but it may be reduced by the time they retire) or potentially having to care for an elderly parent or loved one.

J, the personal finance blogger behind Millennial Boss and the podcast FIRE Drill, said she believes $2 million is enough, and she and her husband have incomes high enough to reach that goal. Using the so-called 4% rule, where you withdraw that much of your assets every year to live on, would be more than enough for the average person, especially if they pay off their home like they plan to do. But even then, she understands other expenses will pop up. “We don’t know what will happen with health care and we don’t know what the situation will be like with family, and we may need to support older members of the family,” she said. “To me, that number seems more safe.”

After determining how much money it will take to retire early, those interested should learn how to invest. A few other tasks to consider: automate paying bills and saving in various accounts; put aside enough cash to offset volatility in the markets; and focus on the long term.

After all, retirement will last a lot longer if you start in your 30s.