Social Security / Medicare Credits: 23/40

Current Salary: $23.32/hour ($26,678.08/year @ 22 hours/week)

Current Living Expenses: $1,319.04/month ($15,828.48/year)

Living Situation: With Family in New Jersey

Federal Poverty Line 2026: $15,960 per year

Modified Poverty Line 2026: $26,030 per year

Asset Allocation: 90% Stocks, 8% Bonds, 2% Cash

Modified Poverty Line

You may be wondering what this is. Since studying early retirement, I became interested in inflation and the change in living costs over time. I found it curious that the 4% rule and most, if not all, retirement planners assume that CPI is an accurate measure of inflation and properly reflects the change in true living costs over time. It’s sort of a given with the 4% rule that as long as you adjust by CPI, you’ll be maintaining the same standard of living. But there are some problems with CPI that I think need to be compensated for, especially since I would be retiring solo. I think any potential solo retiree would benefit from being more cautious about relying on CPI data alone to make adjustments to their budgets. Granted, I’m fully aware incremental CPI adjustments doesn’t align with how real people spend; real spending is lumpy and bumpy. But having a good model to work off of helps as a general outline.

Headline CPI might be good for a pair living together, or a family of earners living together, as economies of scale really benefit each individual. Many costs are split, so the fact that CPI masks the dramatically increasing cost of housing — for example — isn’t necessarily a problem. But for a solo earner, everything falls onto them. It’s hard for them to believe inflation is only 2.7% for the previous year when their rent, utilities, auto insurance, internet, and groceries each went up at least 5% over the same period. Below is a non-exhaustive list of items that benefit from economies of scale that a solo individual is fully responsible for.

• Rent
• Utilities (including internet)
• Transportation & Insurance (assuming a shared vehicle)
• Some Subscription Services
• Food (Groceries do not double with a second person)
• Taxes
• Retirement Savings/Investments

In some cases, CPI assumes lower quality, cheaper substitutions, or that the increasing quality of smartphones for the same price means effective prices actually went down. The use of “owner’s equivalent rent” also artificially suppresses housing cost increases, as those they survey aren’t necessarily up to speed on what their property would be worth on the rental market, so they probably would undershoot its real market value. Also, if we are to effectively account for “the singles tax” to living life, an adjustment must be made. There are plenty of criticisms that can be lobbied at how CPI is calculated, however I’m not going to directly address their methodologies. Instead I’m going to suppose inflation is under reported by a fixed percentage due to ways it can be artificially suppressed (intentional or not).

In the context of establishing a more realistic poverty line, I’ve settled on using +1% as my modifier. I’ve toyed with other modifiers and ran budgets on each final resulting number, but I’ve found that an inflation rate of CPI + 1% is adequate to make a poverty line that does exactly what I think it should do. That is, represent an entry point into solo adulthood; the bare minimum a healthy adult needs to make in order to pay for the bare necessities and a tiny release valve in cheap entertainment, all while making heavy compromises. No savings, no investments, no engagement with society (like going for a night out with friends). I will detail this in a future blog post.

There are also problems with the Federal Poverty Limit. The poverty line as we know it today was introduced under the Omnibus Budget Reconciliation Act of 1981. It’s a simplified version of the poverty line used prior, which assumed that families spend 1/3rd of their income on food. So they took a basic food budget and multiplied it by 3. We know in hindsight this was a poor methodology to settle on, as food takes up a lower percentage of our total budgets compared to back then. Housing, transit, and healthcare are the dominant forces in our budgets these days. It’s because they still use food as a baseline that annual adjustments to the Federal Poverty Line don’t move in lockstep with headline CPI. For example, between 2025 and 2026, the Federal Poverty Limit for a single individual went from $15,650 per year to $15,960 per year, only a 1.98% increase. Headline CPI over the course of 2025 averaged 2.7%, so already we are far behind. The table below compares and contrasts the different Federal Poverty Limit (FPL) numbers for a solo individual if they kept up with different measures of inflation.

If we assume headline CPI is behind by at least 1% when accounting for measures they use to suppress it and the added burden of being a solo individual bearing all living costs, we have an average historical inflation of at least 3.98%. When we apply it to the Federal Poverty Limit for a single individual in 1982 ($4,680) and onward, we discover that the “real” poverty line should be $26,030 for a single individual. And given the cost of living and how much it has increased, I believe this number over anything our government tells us. That means a person making this amount or less would be eligible for government assistance and resources. For states with expanded medicaid, that would mean you would qualify for medicaid if you made about $35,920 or less. For the ACA, this also means you would qualify for subsidies if you made between $35,921 and $104,120. I also don’t blame them for wanting to cut costs by keeping to an outdated poverty measurement, as under my numbers, the vast majority of Americans would qualify for assistance in some form of another. It would also be very bad optics to admit that about 80% of the country would be considered “poor” enough to require some level of assistance, whether in the form of ACA subsidies or medicaid plus food stamps.

This isn’t a rigorous method by any means, and there’s probably more sophisticated ways of measure a more realistic inflation rate, but I think CPI + 1% is a good shorthand to account for the ways they keep CPI down plus the added burden living alone creates.

For my purposes of being a financial ascetic, I aim to keep my living expenses at or below this modified poverty line, adjusting by CPI + 1% each February. While I’m living with family I will aim to live on the official Federal Poverty Line or less, but since it is impossible to live on this once I inevitably live on my own, I will migrate to this modified poverty line. To see why I choose to live this way despite having over $1M, read about my philosophy.

Social Security / Medicare Credits

Even though on paper I am technically financially independent, especially given my exceedingly low intended safe withdrawal rate, I am not eligible for Medicare. I was a NEET (Not in Employment, Education, or Training) for much of my 20s. I had a few jobs here and there, but they never lasted very long and I never built up a solid work history for the purposes of Medicare and Social Security eligibility. I’m not so concerned about getting Social Security, not because I don’t think it will be there, but the amount I’d get from it would be so little that it would be a bonus at best. I’m robust enough financially that I don’t need to think about Social Security. But Medicare is the big one.

Because I have schizoaffective disorder, I need to make sure I have access to good quality psychiatric care and expensive anti-psychotics. If I choose to retire early today, then I am forcing myself to pay full price for Medicare Part A in the future. I’m sure by then I’d be able to handle the price jump, but I would be giving up my ability to live on my minimal target spend. There’s also the problem of Medicaid. This may be controversial, but I would be forced onto Medicaid when I retire early. My portfolio doesn’t throw off enough dividends to qualify me for the ACA Marketplace insurance, and I have over $200k in capital losses, so selling assets won’t work either. That means I’d have to either get on Medicaid or work to earn a certain amount to qualify for ACA Health insurance, which defeats the point of early retirement, as I’d like to be generous with my time and volunteer/work for free/near free. I may possibly be exempt from work requirements because of my condition, but I would face problems once I turned 65. Medicaid as of this writing doesn’t asset test you, but once you hit 65, Medicaid for seniors does asset test. Plus I’d be forced to purchase Medicare Part A as soon as I hit 65 anyway, even if my income on paper is exceedingly low.

I’m effectively required to work at a minimum of 4 more years until I become eligible for Medicare, then afterwards when I retire early I can work at my leisure, for money (or preferably not). I don’t mind this, as even though I don’t love my job, I at least have something valuable to do with my time while I build up other hobbies, fulfilling activities, and volunteering that I’d like to transition into.

Current Salary

Currently I work part-time at FedEx Express as a Dangerous Goods Specialist for $23.32 per hour. We’re set up on an hourly corporate pay structure that hasn’t been adjusted for inflation in years. So for the time being I will get predictable pay raises set in stone until I reach the max compensation level (which I would reach in 5 years or so). Once I reach the max compensation level I’ll get meager 2% pay raises, but hopefully I should be gone by then. Right now I make a minimum of 22 hours per week, which is enough to qualify for health insurance benefits. Some weeks are more, so the average number of hours is higher. The annual number you see at the top is the minimum I expect to earn.