You need less than you think: the case for a smaller number

Most people think of early retirement as a question of income: earn more, retire sooner. The arithmetic says something else. Spending sets both the size of the pot you need and the speed at which you save, so a smaller lifestyle moves your date further than a bigger salary does. This is also the idea behind our book.

What spending does to your date

Take an example person: 30 years old, CHF 20,000 saved, CHF 40,000 in the pension fund, saving CHF 1,500 a month. Change only the monthly spending.

Cutting CHF 1,000 a month brings the date forward by almost six years. Taxes are simplified in these figures, but the shape is robust. Every franc you do not need to spend is worth more than a franc you earn, because it works twice: it lowers the pot and it raises the savings. The saving rate follows the same logic, see the savings rate guide.

Where the money goes

For most Swiss households the big items decide everything:

1. Housing. Often a third or more of the budget. A smaller flat, a cheaper municipality or shared costs can change the total more than anything else. See rent or buy.
2. Health insurance. A fixed monthly premium. Model and deductible are choices.
3. Transport. A car costs far more than the petrol: insurance, depreciation, parking, tax. A subscription for public transport may replace it.
4. Food and travel. Where habits are most flexible.
5. Subscriptions and small leaks. Small, but they repeat for decades.

Cutting without feeling poorer

The goal is not a joyless life. It is to find the spending that you do not notice.

• Track three months of real spending in categories.
• Sort each item into needed, chosen and leaking. Needed: rent, insurance. Chosen: what you would pick again today. Leaking: what you cannot remember choosing.
• Cut the leaks first, then challenge the chosen only where the price is far above the pleasure.
• Try a lean month. Live on a lower budget for a month. You learn what you miss and what you do not.

What "enough" means

Enough is a number you can define. Once you know it, extra income stops being the point and time becomes the point. A plan built on a modest number is easier to reach, easier to sustain in a bad year and easier to adjust if life changes.

The risk of going too lean is to underestimate real costs. Keep a margin, and test your plan with higher spending as well as lower. If you want to see the full range of ways to build a smaller plan, read lean, fat, barista and coast FIRE. For the basics, start at what FIRE is and whether it works in Switzerland, and for the other end of the plan read rent for life, die with zero.

Next step

Open the calculator and lower the spending until the date feels worth the trade.