Short, plain definitions for the terms used across the site. For the actual argument behind any of these — not just what they mean — follow the linked piece.
The income threshold above which ACA marketplace health insurance subsidies shrink or disappear — a real planning constraint for early retirees managing taxable income before Medicare eligibility.
How a portfolio is split across asset classes (stocks, bonds, gold, cash, etc.). Accumulation-phase and drawdown-phase allocation logic differ.
Reaching enough financial independence to cover most expenses from a portfolio, then taking on lighter, often part-time work — for income, benefits, or purpose — rather than fully retiring.
The point at which current invested assets, left to compound with no further contributions, will reach full FI by a target retirement age on growth alone.
A U.S. law letting someone temporarily continue their former employer's health coverage after leaving a job, usually at full (unsubsidized) cost — a common short-term bridge before ACA or other coverage kicks in.
The process of spending down a portfolio in retirement — the mirror image of accumulation, with its own psychology (see: frugality-as-identity reflex) as well as its own math.
The idea — and the book of the same name by Bill Perkins — that optimal spending means deliberately running your net worth toward zero by the end of life, rather than defaulting to maximum accumulation.
The phase of retirement where a portfolio is being spent down rather than grown — also used to describe the decline in a portfolio's value from a prior peak.
Someone living outside their home country, often long-term. For Americans specifically, expat status doesn't end U.S. tax filing obligations — the U.S. taxes citizens on worldwide income regardless of residence.
A version of financial independence built around a higher, often unchanged-from-working-life spending level, rather than the reduced-expenses approach of Lean FIRE.
The portfolio size needed to sustain your actual expenses indefinitely at a chosen withdrawal rate — built from what you actually spend, not an income multiple.
Earning or holding wealth in one place while spending it somewhere with a lower cost of living, widening the gap between income and expenses.
Compensation or benefits structured (vesting schedules, bonuses, equity) so that leaving a job means giving up significant value — creating a real incentive to stay even when someone otherwise wants to leave.
A dynamic withdrawal approach (after the Guyton-Klinger method) that raises or cuts spending in response to portfolio performance, rather than holding to one fixed real-dollar amount for the full retirement.
Physical or tangible stores of value — gold, real estate, commodities — often held as a hedge against currency debasement or inflation, as distinct from financial assets like stocks and bonds.
The psychological process by which a higher standard of living stops feeling like an upgrade once someone adjusts to it — the mechanism behind lifestyle creep.
A U.S. tax-advantaged account (paired with a high-deductible health plan) for medical expenses — contributions, growth, and qualified withdrawals are all untaxed, making it one of the most efficient account types available.
A version of financial independence built around a minimal, tightly-optimized spending level — the counterpart to Fat FIRE.
The erosion of a currency's purchasing power over time, whether through inflation, currency expansion, or policy choices — distinct from ordinary short-term inflation in that it describes a longer structural trend.
The pattern of repeatedly delaying retirement past the point a plan technically supports it — "just one more year" — often driven by fear or identity attachment to work as much as by the actual numbers.
A nominal return is the raw percentage gain before adjusting for inflation; a real return subtracts inflation to show actual purchasing-power growth. The distinction matters most over long horizons, where the two can diverge sharply.
Periodically buying or selling assets to bring a portfolio back to its target allocation after market moves have drifted it away — has real tax consequences outside tax-advantaged accounts.
A multi-year strategy of converting traditional retirement account funds to a Roth account in stages, allowing early retirees to eventually access that money penalty-free before the standard retirement age.
The percentage of a starting portfolio that can be withdrawn annually (typically inflation-adjusted thereafter) with a historically low risk of running out of money over a given retirement horizon. See: The 4% Rule.
The share of after-tax income saved and invested rather than spent — widely considered the single most powerful lever determining how quickly someone reaches financial independence.
The risk that the order investment returns arrive in — not just their average — determines whether a portfolio survives a fixed withdrawal schedule. Poor returns early in retirement do outsized, often permanent damage.
A widely-cited guideline, originating in the 1990s Trinity Study, that a 4% initial withdrawal rate (adjusted for inflation thereafter) has historically sustained a 30-year U.S. retirement. Frequently cited past what it actually claims.
The 1998 academic study (Cooley, Hubbard, and Walz) that tested various fixed withdrawal rates against historical U.S. market data — the origin of the 4% rule.
The practice of deliberately identifying what actually matters to you, as a basis for spending and time decisions — treated here as a practical exercise, not an abstract platitude.
Definitions are reviewed periodically as the site's own pieces publish.