Has the FIRE Number Gone from $1M to $2.5M?

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2:27Mindy Jensen:10 years ago,$1 million was kind of the benchmark for the FI community. Then it became$2 million. Today, I'm hearing$2.5,$3, even$5 million. So what happened? Are these inflated FI numbers actually necessary, or are people being too conservative?

2:50Mindy Jensen:Hello, hello, hello, and welcome to the BiggerPocketsMoney podcast. My name is Mindy Jensen, and with me as always is my million-dollar co-host, Scott Trench. Thanks, Mindy. Great to be here. That was a grand, a 40 grand intro right there. So today we're going to be talking about whether FI numbers are, in fact, creeping higher than they need to be and how to avoid becoming so conservative that you delay the optionality we're all pursuing when you set out upon the journey to financial independence. Scott, that was a really great joke that you made. I called you my million dollar co-host and you said that was a 40 grand introduction.

3:23Mindy Jensen:$40 ,000 is the amount of money that you can spend with a$1 million portfolio, according to the 4 % rule. So thank you so much for that little nerd joke. At$2.5 million, you're now able to spend$100 ,000 a year. Do you think this is enough for most people? Do you think people are inflating their fine numbers because they're being conservative? Yes, I think that$2.5 million is enough for most people to enjoy true and lasting financial independence, even with a family in this country in most places. Not all places at the median, but in most places. So I think that that's my short answer to that.

4:05But there's a lot of nuance behind it. And I've actually gone into great lengths and data once again to kind of test that assertion. But I think I think, yes, that is the answer. And I also think that the FIRE community is a large and growing population. The BiggerPocketsMoney community is fire or more firey than fiery because I think a lot of two-thirds of BiggerPocketsMoney listeners, for example, say that they're open to or definitely intend to have some kind of ongoing business or active income that they earn after reaching financial independence, which may be at odds with some other members of the fire community who really want to just be totally passive after that.

4:44There's still a third of BiggerPocketsMoney listeners who want to be truly financially independent with no active income whatsoever. But that's not the norm in this part of the community. And I think that that is why our listeners here at BiggerPocketsMoney tend to cluster around this$2.5 million number or even higher in terms of their target FIRE number than maybe some of our friends over at ChooseFI or on the LeanFire Reddit, for example.

5:09Mindy Jensen:Scott, do you think the$2.5 million is enough for that one third of our audience who isn't planning on generating income after they retire? Or do you think the$2.5 is enough for people who are also going to be generating income? It implies$100 ,000 a year in inflation-adjusted spending, right? And so that's the question. Is that enough for you? The spending forecast is much different there. I think I'm going to have to reframe your question because I think that the is$2.5 million enough question is about goalposts moving, right? The number used to be a million bucks, and now it's$2.5 million in this community.

5:47Mindy, you're pretty frugal. I don't think you would enjoy living on 40 grand a year anymore.

5:53Mindy Jensen:Not that I've now had a taste of the 100 grand a year lifestyle. No. Yeah. And so I think the short answer is, yes, the goalposts have moved. And I think that there's a portion of the community that digs their heels in and says, no, they shouldn't have moved. That's a you problem, Mindy or me, Scott. You know, my goalposts have certainly moved. So that changes the game. Okay, fine. If you want to spend the same amount for the entirety of your life, that's great. Maybe a million bucks is enough for your version of financial independence. But it's not enough, I think, for a lot of people as this generation approaching fire has, I think, grown up, gotten married, had kids, and life has evolved and they've gotten wealthy and their portfolios allow more spending.

6:38and the combination of accumulating wealth and increasing incomes allows that to happen very naturally and very responsibly. And I think that's the challenge that people are grappling with in the community is these numbers seem larger and larger, and they are. And there's a reason for that, right? That it's the compounding effect of wealth growing. Maybe Mindy, can we go through your story here or hear about your journey? Like what was your spending like 10 years ago and what is it like today?

7:02Mindy Jensen:Well, today shouldn't really count because I'm building a house, but 10 years ago, it really was in the$36 ,000 to$40 ,000 a year range. And my husband was working and I had, oh, I guess I was working. I was at BiggerPockets. I was like, I was still a stay-at-home mom. I had just started at BiggerPockets. We were making enough money to cover all of our expenses and invest, max out both 401ks, Roth IRAs, et cetera, continue to put money in after-tax investments as well. And because we were spending so little, that is how we were able to get to financial independence in the first place. I don't want to say it was a tight life, but it wasn't a really lavish and extravagant life.

7:43Mindy Jensen:It's funny that we're recording this today. Carl and I went out to dinner last night at a very, very nice restaurant. I even said to him, I feel kind of like an imposter here because I feel so pretentious. This is such a nice restaurant and this isn't me. But the flavors were amazing. It was a really great restaurant. The only reason we went was because it was a credit card rewards thing. You get like 50 % off your meal or something. It was very delicious. I enjoyed my meal, but I still felt a little bit weird. So as my net worth has grown, my mental acceptance of my net worth has not grown. I still don't really identify with how much money we have.

8:23Mindy Jensen:I still go back to, you know, when I was a kid, shopping at garage sales, Everything was coupons and sales. And I just went to garage sales last weekend. I think they're fun. But I think that a lot of people are starting to recognize that$40 ,000 is a great base, but it doesn't allow for a lot of the extras. And if your net worth has grown to the point that you can have a lot of extras, my friend Chris said, I'm not going to fly coach so that my kids can fly first class when I'm gone. And I'm starting to have more of a shift to that as well. But it's hard for someone who has been frugal. It's hard to break out of that.

9:03Mindy Jensen:Now, how is my spending now? I spent$200 ,000 last month because I'm building a house and a lot of bills came due all at once. So my spending has gotten way freer. But even without the house spending, you're not spending 40 grand a year. No. Here in 2026, once we exclude the one timers, right? If I exclude those crazy house bills, I'm probably spending 75 to$100 ,000 a year. And when I say probably, it's because I'm not really tracking it. I mean, I have Monarch as my spending tracker and my net worth tracker, for lack of a better word. And everything comes in and out of the same bank account.

9:40Mindy Jensen:So it's way skewed right now. But before we were starting to build the house, it was probably between 75 and 100 ,000, depending on the month and what vacations we're taking. That's something that we're doing a lot more of is taking vacations with the girls. were going on a five friends travel trip next year to Japan with the girls. And that was not cheap at all. Yeah. My spending is averaging north of$12 ,000 a month, right? That's a lot more than I was spending when I was, you know, 20, 23. Now we have kids in childcare, but that's a big jump for us. And sometimes it comes in even more than that, depending on if we eat out or have a vacation or something like that.

10:14That's a big jump for us. Now those numbers will go down meaningfully when the kids go to school, going to public school, but that's a, that's a big challenge for us. And our version of financial independence is not stay at home with the two kids. We like to do this. We like to have professional pursuits and other interests with our days, Virginia and I. So that's our number for that. And that's not too far off the median household spending in the local area that we've chosen to live in. And I think that's the real framing of this is I think a lot of FIRE numbers are predicated on these very aspirational, highly frugal targets.

10:47And I think that there's a sect of the FIRE community that is very pure We're very purist in their adherence to a frugality ethos, right? I'm going to be frugal for life. That's the commitment we're making for fire. I think a lot of people in the movement as they've grown up and gotten wealthy and gotten married and have kids are realizing maybe they're in the same boat as me. You know, I can afford it. My portfolio is doing great. I'm going to go ahead and spend more and bump that spending up and enjoy more comforts, more luxuries and more travel. And I think that's what you're going through a version of that.

11:17Is that a common thread in the circles that you hang out with, with other people who are financially independent.

11:22Mindy Jensen:That we're spending more as we get older and as our net worth continues to grow. Yes. Yes. Mr. Money Mustache still gets by on$24 ,000 a year or$30 ,000 or whatever. That actually is how much he spends. He just doesn't spend a lot of money. He's not a clothes horse, so he's not going out and buying brand new clothes. When he does buy clothes, he goes to the thrift store. He thinks it's fun. He does a lot of bicycling. He did buy a new car a few years ago when his car died. But otherwise, he doesn't have these giant expenditures. He eats low-cost, healthy foods at home. He doesn't really go out to dinner very much.

12:01Mindy Jensen:And that's the life that he wants to live. He doesn't have to live that life. He could spend more. He doesn't need to. He doesn't feel like he wants to. I am now trying to embrace the spending muscle, trying to flex that spending muscle a little bit more so that I can do more fun things with my kids. When my kids were younger, vacations really weren't a thing. They still need naps. Have you ever taken a vacation with your kids, Scott? Isn't it super awesome fun? Yes. You get a great moment out of the three-day trip. It's really wonderful. If you're lucky, you get one great moment. So I saw somebody say this somewhere and it was perfect.

12:41Mindy Jensen:They said vacations, when you have young kids, they're not vacations. They're just parenting in an unfamiliar environment. We didn't take a ton of vacations. We did family trips. We'd go up to Estes Park for the day, and then the kids would fall asleep on the way home. We didn't spend a lot of money because we were at home a lot of the time. But now that they're older and they're fun to go on trips with, a one-year-old who is cranky is not any fun to go on a trip with. Yeah, you asked me 20 minutes ago, are people in my community starting to spend more? yeah, I think there's a lot of people embracing this spending muscle after being so frugal for so long.

13:19Mindy Jensen:They're like, oh, look at what my money can do for my life. It isn't just let me buy brand new cars and toys and things because I want to spend money. It's let me use my money to enhance my life. And that is what Carl and I are doing as well, is just how can our money enhance our life? Oh, you know what? We live in a house with stairs everywhere. We're building a ranch house so that we can age in place. Of course, I nerded out about this to an extreme degree. And the way I would phrase this challenge is the spending reverts to the mean. People tend to, over time, become like the average of the people in the areas that they live in.

13:58Now, Mr. Money Money Money is an exception, and you can certainly live a frugal lifestyle forever. But many people don't want that and don't need to do that once they've gotten to or well past the baseline level of financial independence. So I've tried to articulate this with a series of data sets around what is average spending for households like mine in my area, right? So I live in Denver. I have a household with four people who are age 35 and spending for the middle 20 % of a household like this looks like around$9 ,000 per month in our area. That's between housing, utilities, transportation.

14:38That's different from another area like Los Angeles, right? Where they're going to spend more, at least$1 ,000 more a month, most of that going to incremental housing costs, but also hitting other categories. And so for the Denver area, that's what median income looks like. And now if my fire plan says, I'm going to spend half of that forever. That's doable. That's not an unrealistic, the bottom 20 % income quintile in Denver does live on less than$5 ,000 per month for a household of four. That's just a fact. They make less than that. They spend less than that. So it is possible. But you may find over time that you're going to want to revert to the mean.

15:16You're not going to want to spend$740 on food for life if you don't have to for your family of four in the Denver area. So I think that's where the middle percentile comes up. And I think higher earners should also be very careful here because you may find that if you're a high income earner and you're able to spend at a certain level on the journey to fire and all your peers are doing that and all your social circle is doing that, you may not want to live like the middle or the second or the bottom quintile households in your area do. You may want to live like that for a period of time to get to financial independence because financial independence is more important than luxury spending.

15:48But once you get there, if the option exists, you may find that your long-term numbers tend to regress towards the mean. And that's okay. That's the whole point of financial independence. I think that's why the goalposts are moving. That's the data reason. What do you think, Mindy? Do you think I'm onto something here?

16:04Mindy Jensen:When you say regress to the mean, do you mean you're spending more than normal and you'll go backwards or you're spending less than normal and you'll move up? I'm saying that when people pursue financial independence. They are super cheap, frugal, wonderful people. And they go after that, that very intensely. And then when they reach fire, they become wealthy and the big things beginning to begin to compound. And they're like, I don't need to be frugal anymore. I'm not going to live like I'm one of the bottom 20 % earners in my area. That's possible. That's what I've done. But now that I can, I'm going to actually begin to live more like the average person in my area.

16:40And I'm going to increase my spending. I'm going to go out to the fancy restaurant a few times a month or a few times a year, whatever it is. So the reversion to the mean means I'm going to start very cheap and I'm going to move towards the average after I have the clear ability to do so.

16:54Mindy Jensen:Okay. I was going to say after you have the clear ability to do so, if you are running your fine numbers based on your current low spending, and that's your fine number is 25 times your low spending, you don't have the means to then bump up to the median. That's right. I think that's exactly what I'm trying to articulate here. During the journey to financial independence and in the early days of financial independence, as we're on the cusp of financial independence, I think a lot of people are very, very frugal in this community. But once they shoot past that and compounding begins to take effect or they find, hey, I'm actually fine with this extra work, you know, the two thirds of the bigger pockets money community who's fine with extra work after five.

17:33Why would you continue to spend like you're in the bottom quintile if you don't need to? If that's not something you want, if there's not an ideology behind that, if you're fine doing more, you will, of course, regress to the mean. You'll be more like the people in your local area. That's what's tending to happen, I believe, in the financial independence community to a large degree. Certainly in your case, certainly in mine, maybe others as well.

17:54Mindy Jensen:Yeah, but I had to force myself. I think that that's healthy, though. I think that's going through a lot of people. I think a good person in the community do have that problem because they're hoarders to a certain extent, right? As the term Frank uses, Frank Vasquez. And I think that's accurate. And then there's an unlearning of that. And then I think other people don't have any problem with it. It's just part of the journey. Yes, of course, I'm going to get to financial independence. And then as my financial independence number supports higher spending, I'm going to let my spending naturally increase responsibly in line with that.

18:20That's the way I thought about it from my perspective.

18:23Mindy Jensen:Well, do you think people are inflating their numbers along the journey? Or do you think people 10 years ago, we started off, oh, a million dollars. Everybody talked about a million dollars. Nobody talked about 2.5 million. It was a million. And now I'm hearing a lot more people talk about 2.5 million. So are people inflating their numbers because they realize that the 40 ,000 isn't enough? Or are people inflating their numbers because they're recognizing that we are in an inflationary time period? There's stuff that's just is more expensive. How everything has gone up, the cost of everything, groceries and health care.

19:01Mindy Jensen:And I think health care had like a 26 percent increase in premiums last year. Everything's more expensive. Are people adjusting their fine number because they're recognizing everything's more expensive or are they adjusting their fine number because they want to spend more? Mindy, your question is how much of this is inflation and how much of this is lifestyle creep, right? Trying to separate out the two. And it's part both, I think, for the financial independence community, right? So on the one hand, you have inflation. $40 ,000 of spending in 2015 is equivalent to$57 ,000 of spending here in 2026.

19:35I mean, that's still a lot. Yes, it basically go from$1 million to$1.5 million, right? I think that's more in the ballpark of where a lot of very traditional folks who are beginning the journey to financial independence will find is a good cusp of five number, right? There's a true independence, I think, that many in America can feel at that level where they've got a pretty good insulation from work if they keep their spending reasonable. And I think you can live on that in many places in this country. I think that the good life or more spending, more optionality, more freedom begins to hit harder at that$100 ,000 mark when we have another three to four grand in discretionary expenses every month.

20:11And that is something that I think many people are open to being somewhat entrepreneurial or working a little longer or harder if things are good, continuing in their status quo to achieve. And I think other people are very discontent at work and can't imagine working for that extra million or that extra$40 ,000 in spending right now and can't fathom that. And that's why there's this bifurcation or why people get so emotional about the moving goalposts in the financial independence community.