The same $40,000 a year is poverty in California and luxury in the Philippines. Here’s what that actually means for your plan.
You’ve learned about FIRE. You understand the 4% rule. You’re thinking about retiring early.
But here’s what most people miss: your FIRE number isn’t a fixed target. It’s completely dependent on where you want to spend that money.
The same retirement plan looks completely different depending on your destination. And that changes everything.
The Different Types of FIRE
Not all FIRE is created equal. Understanding the types helps you understand what you’re actually working toward. (Note: All these examples assume you’re retiring at 55, which affects health insurance planning — more on that below.)
Lean FIRE
This is the bare minimum approach. You live frugally in an expensive country (usually the US) and your retirement number is modest — usually between $400K-$600K.
Example: You need $30,000/year to live by age 55. That’s $750K invested (30,000 × 25).
Reality: This works, but it requires discipline. No spontaneous travel. No flexibility. It’s tight. And at 55, health insurance becomes a consideration before Medicare kicks in at 65.
Regular FIRE (or Coast FIRE)
This is the middle ground. You have enough to cover a comfortable lifestyle without deprivation. Usually $800K-$1.5M depending on location and needs.
Example: You need $50,000/year by age 55. That’s $1.25M invested.
Reality: This is what most people aim for. It feels sustainable because you’re not penny-pinching, but you’re also not wealthy. Health insurance costs factor into this at age 55.
Fat FIRE
This is the luxury version. You retire at 55 with $2M+ and live a genuinely comfortable life with room for travel, experiences, and spontaneity.
Example: You need $80,000/year by age 55. That’s $2M invested.
Reality: This is achievable, but takes discipline and time. It’s the goal for people who want zero financial stress in retirement, including healthcare coverage.
Geo-FIRE
This is the one most people overlook. You achieve FIRE by moving to a lower cost-of-living country at 55.
Example: You need $50,000/year in California by age 55. Same $50,000 in the Philippines? You’re living like you have $100,000+. Plus, healthcare costs are significantly lower.
Reality: This is the secret weapon. It cuts your FIRE number in half or more, and solves many of your health insurance concerns.
Your FIRE Number in Different Locations (Retiring at 55)
IMPORTANT DISCLAIMER: The numbers below are estimates for illustration purposes only. They do not include:
- Federal and state income taxes on retirement withdrawals
- ACA health insurance subsidy interactions (ages 55-65)
- Healthcare emergencies or unexpected expenses
- Visa renewal fees, travel home, or other miscellaneous costs
These are meant to give you a general picture of cost-of-living differences — not a precise retirement budget. Your actual expenses will vary significantly based on your location, withdrawal sources, tax situation, and personal circumstances. Before retiring at 55, work with a tax professional to model your specific situation.
Let’s use a practical example: $40,000 per year in annual spending at age 55.
Using the 4% rule, you’d need $1 million invested to retire at 55 anywhere, right?
Wrong. Let’s see what $40,000 actually buys in different places — and how health insurance factors in.
California (Bay Area) — Retiring at 55
$40,000/year:
- Rent: $1,500-$2,000/month (if you’re lucky)
- Food: $500/month
- Transportation: $300/month
- Utilities: $200/month
- Health Insurance: $300-$400/month (before Medicare at 65)
- Everything else: $400/month
Reality: You’re surviving, not thriving. At 55, health insurance is a significant line item for the next 10 years until Medicare. You’re watching every dollar.
FIRE number needed at 55: $1M
Florida or Nevada (No State Income Tax) — Retiring at 55
$40,000/year:
- Rent: $1,000-$1,200/month
- Food: $400/month
- Transportation: $250/month
- Utilities: $150/month
- Health Insurance: $250-$350/month (before Medicare at 65)
- Everything else: $500/month
Reality: Better than California due to no state income tax, but health insurance still eats into your budget. You have slightly more breathing room than California, but it’s still lean.
FIRE number needed at 55: $1M (but you keep more due to no state income tax)
Philippines (Manila area) — Retiring at 55
$40,000/year:
- Rent: $400-$600/month (nice condo in good area)
- Food: $250/month (eating well, eating out regularly)
- Transportation: $50/month (Grab rides are cheap)
- Utilities: $80/month
- Health Insurance: $100-$150/month (private healthcare is affordable; expat plans available)
- Everything else: $200/month (travel, entertainment, experiences)
Reality: You’re living comfortably at 55. You can eat at nice restaurants, travel around Southeast Asia, and have flexibility and freedom. Health insurance is significantly cheaper than in the US.
FIRE number needed at 55: $1M (but your lifestyle is 2-3x better)
Mexico (Guadalajara or other expat hubs) — Retiring at 55
$40,000/year:
- Rent: $500-$800/month
- Food: $300/month
- Transportation: $100/month
- Utilities: $100/month
- Health Insurance: $150-$200/month (private healthcare is accessible and affordable)
- Everything else: $300/month
Reality: Similar to Philippines. You’re comfortable, not struggling, at 55. Health insurance is manageable. You can enjoy life without constant financial anxiety.
FIRE number needed at 55: $1M (with a comfortable lifestyle)
A Word on Health Insurance at 55
Here’s something most early retirement calculators gloss over: at 55, health insurance matters.
You can’t access Medicare until 65. That’s 10 years of coverage you need to plan for.
In the US: Private health insurance (ACA marketplace) costs $250-$600+/month depending on your income and location.
Internationally: Many countries offer affordable private healthcare or expat-specific plans for $100-$300/month.
This isn’t a detailed guide (that deserves its own post), but it’s a real line item in your FIRE number. Factor it in.
The Hidden Cost: Taxes and ACA Subsidies at 55
Here’s what nobody talks about: your $40,000 withdrawal doesn’t equal $40,000 in spending power.
Federal taxes: Withdrawals from a traditional 401(k) are taxed as ordinary income at your federal rate. For a married couple over 55, your effective federal tax rate on $40k is roughly 2-5% (not 22%), thanks to standard deductions. That’s about $800-$2,000 in federal taxes.
State taxes: This is where geography matters. Nine states don’t tax 401(k) withdrawals at all: Florida, Nevada, Texas, and others. California, by contrast, could add $2,400-$3,600 in state taxes to that same $40k withdrawal.
The ACA subsidy trap (ages 55-65): You’re not on Medicare yet. ACA health insurance subsidies are based on your Modified Adjusted Gross Income (MAGI), and 401(k) withdrawals count as income. Higher MAGI means smaller subsidies—or you lose them entirely. This can cost you an extra $500-$2,000+ per month in health insurance premiums.
The real impact: Your living expenses are $40k/year in these examples. But to have $40k left after taxes, you need to withdraw MORE from your 401(k).
The takeaway: State choice and withdrawal strategy matter more than you think. This is worth working through with a tax professional before you retire.
Here’s where it gets interesting. Let’s compare what the same $1 million can buy you:
| Location | Annual Spending | Lifestyle | FIRE Type |
|---|---|---|---|
| California | $40,000 | Lean, restricted | Lean FIRE |
| Florida/Nevada | $40,000 | Modest, careful | Lean FIRE |
| Philippines | $40,000 | Comfortable, flexible | Fat FIRE equivalent |
| Mexico | $40,000 | Comfortable, flexible | Fat FIRE equivalent |
Same number. Wildly different lives.
Why This Matters for Your Plan
Here’s the uncomfortable truth that most FIRE blogs won’t tell you:
If you’re targeting a $1-2M retirement number while planning to stay in the United States, you’re making it harder than it needs to be.
Not because the math doesn’t work. It does. But because you could achieve the same lifestyle (or better) with half the number by moving strategically.
This isn’t about giving up on America. It’s about understanding your options.
If you’re Filipino-American, Filipino, or connected to any lower cost-of-living country, that’s not a limitation. That’s your competitive advantage.
You’re not locked into California retirement math. You have optionality. And optionality is what makes early retirement actually possible for regular people.
The Question You Need to Ask Yourself
Before you lock into your FIRE number, ask yourself this:
Where do you actually want to retire?
Not where you think you should retire. Not where your family expects you to retire. But where you genuinely want to spend the next 30+ years of your life.
Is it:
- Your childhood home country?
- A beach somewhere in Latin America?
- A smaller city in the US with lower costs?
- Southeast Asia?
- Mexico?
- Somewhere else entirely?
Because once you answer that question honestly, your FIRE number becomes crystal clear. And for many people, that number is smaller than they thought.
What’s Next
Next Tuesday, I’m going deeper into the personal side — why I chose the Philippines, what changed when I became a dual citizen, and the trip that made it all feel real.
But before then, I want to know: Where do you want to retire? Drop a comment below. Don’t overthink it — just answer honestly. Your dream retirement location is the first step to calculating your real FIRE number.
About the Author
Ono is a banking professional documenting his journey toward early retirement. What started as a personal question at 39 turned into a real plan backed by numbers, intentionality, and the willingness to do things differently. He’s sharing CraftYourExit because the path he’s building didn’t have a blueprint—and he thinks you might be building something similar.
Learn more about Ono’s story →
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