FatFIRE: What Is It? The Ideal Lifestyle for Early Retirement


The people who want to quit working prior to arriving at standard retirement age stick to the Monetary Autonomy, Resign Early (FIRE) development.

They look for ways of collecting an adequate number of assets to resign sooner and afterward live off the returns of their resources as opposed to surrendering a calling in their mid-60s and starting to get Government managed retirement installments.

A variety of FIRE development is called FatFIRE. Contrasted with FIRE, it requires higher measures of retirement investment funds and pays. The accompanying data may be valuable in understanding how FatFIRE capabilities:

What Is Fat FIRE?

What Is Fat FIRE

The FIRE movement focuses on determining your FIRE number, or the amount of invested assets you need to retire early and live off investment income, and then raising your income and reducing your spending to achieve your net worth targets more quickly. Your yearly costs may be multiplied by 25 to get a rough estimate of your FIRE number.

Annual expenses x 25 = FIRE number

In the study paper Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable, written by three Trinity University professors and published in the American Association of Individual Investors Journal in 1998, his equation gained widespread attention. The paper’s data set, better known as the Trinity Study, determined that retirement plans with withdrawal rates of 4% per year or less and net worths over a particular threshold had a 0% chance of running out of money.

Financial independence (FI): The ability to generate enough “income” from assets and savings to pay for all of your living costs.

Early Retirement (RE): Leaving the regular workforce before reaching retirement age.

The two components of FIRE—achieving financial independence and retiring early—are distinct concepts.

Unfortunately, many people who achieve financial independence are obliged to retire early, many of whom would not often be regarded as financially successful.

It’s important to keep in mind that many members of the FIRE movement continue to work long after they “retire.” They may continue doing a side job or another part-time employment to earn money, but by leaving a traditional 9 to 5 job, they get more control over their schedule.

Calculating FatFIRE

FatFIRE will be determined by two elements:

  1. Annual Expenditures in Retirement.
  2. Savings as of late per year.

Annual Expenditures in Retirement

Calculate your savings rate in the following step. You put in this amount each year.
You may calculate how long it will take to go to FatFIRE using these two figures.

FatFIRE Number = (25 x Yearly Spending)

$2.5 Million = (25 x $100,000)

Fat FIRE Number = $2.5 Million

Pros of FatFIRE

The ability to live without working is maybe FatFIRE’s greatest benefit. Galstyan quips, “Your level of living may be higher than it is now. This is particularly true if you try to save as much money as you can while living on a smaller budget. You might be able to take up new activities or dine out more frequently once you retire. Additionally, you’ll gain from time and be able to organize your days any way you choose. You could decide to volunteer at a nearby nonprofit organization or spend more time with family and friends.

Workers are drawn to the FatFIRE movement by greater benefits. Some folks could seek a means of supporting a life of travel or of helping to pay for child-rearing costs. Others could be drawn to buying expensive products, retiring to a large home or numerous homes, or residing in a place with a high cost of living. The FatFIRE idea could also be interesting if there are loved ones to support, such as an elderly relative who lives with the family.

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Cons of FatFIRE

Even while the benefits in the future might build up, it could be challenging to save the required amount. In addition to budgeting millions, there is also a matter of time. According to Galstyan, “FatFIRE might easily take 20 years or longer.” You might have to alter your goals if unanticipated circumstances arise and utilize your money to pay for immediate needs.

You could discover after retirement that maintaining your lifestyle is more expensive than you anticipated. If friends or relatives ask you for money, you can find yourself in a difficult situation. Some people miss the social interactions that come with employment, and it can be challenging to transition into a new position and engage in fulfilling endeavors.


Although the statistics are greater overall, fat FIRE is identical to ordinary FIRE. Your FIRE number and yearly investment income will need to be larger and might take longer to reach since you want a lifestyle that will have higher monthly costs.

Davis and his wife now have a net worth of roughly $600,000 and are expected to surpass $7 million in the following two years. We’re still a ways off from some of our objectives, he admits. But rather than retirement itself, it’s more about comfort, flexibility, and certainty.

Although the $2.5 million network threshold may seem high, some people accomplish FIRE and retire early with only $1 million or less saved for retirement. Here are several further FIRE movements, listed in order of how much money you’ll need to leave your job, from low to high.

Fat FIRE vs. Coast FIRE

Coast FIRE is a retirement planning method that completely eliminates the “retire early” component. It’s more about mental tranquility.

When participating in Coast FIRE, your goal is to reach a predetermined point where your accounts have enough money invested to allow compound interest to take you the remaining distance toward your FIRE number.

You may cease making contributions to your retirement funds after you reach your Coast FIRE figure, freeing up monthly income. When you reach Coast FIRE (also known as Coast FI), you don’t have to stop making contributions to your accounts, but you can.

The Fat FIRE Lifestyle

  • Lifestyle
  • Lifestyle

If you are Fat FIRE, your investment income more than covers your best life’s living expenditures, so you can live without a job with ease. You don’t require any additional employment or activities in your life. Additionally, if you are Fat FIRE, you may live in some of the most beautiful cities on earth without having to worry about money.

Fat FIRE has been a topic of my writing since I launched Financial Samurai in 2009. With an annual passive income of roughly $80,000, I left my financial job early in 2012. I saw myself as a typical FIRE back then.

I didn’t, however, think of myself as Fat FIRE until my passive income inched up to $200,000 annually in 2017. At the current time, my passive income exceeds $300,000, which I regarded as Fat FIRE. San Francisco is a costly city to live in, especially if you have two kids!

When targeting a FIRE figure of $2.5 million or above, it is often referred to as fat FIRE. At a 4% withdrawal rate, this would result in an annual income of $100,000. The following reasons why people participate in Fat FIRE:

figuring out a way to pay for both early retirement and child-rearing expenses.
creating a travel or vacation budget so you may take advantage of your retirement years to explore the globe.

  • being able to spend money on nice things or luxuries.
  • wanting to spend their golden years in a more expensive city or region.
  • Including support for a loved one or elder care expenses in your early retirement budget.
  • Live in one of the most pricey cities in the world, where everything is wonderful: the people, the cuisine, the nightlife, the entertainment, the schools, the arts, and the weather.
  • If you have one or more children, live in a cozy home with at least three bedrooms, two bathrooms, and a yard. If you are a couple or person without children, consider renting a luxury apartment with at least two bedrooms.
  • Have enough money saved up or available to cover your children’s entire college expenses.
  • 8 or more weeks of annual travel while staying in 4 or 5-star hotels
  • Use a vehicle that is no more than five years old and is safe and trustworthy.
  • afford high-quality medical care (gold plan or higher without needing subsidies)
  • Considering how much your parents gave up to raise you, take care of all their financial necessities.
  • No longer necessary for either spouse or partner to work

How Much Money Is Enough for FatFIRE?

Your income and choices will determine the precise amount you set aside for retirement and utilize to support your lifestyle.

According to Samantha Hawrylack, co-owner of the site How to FIRE in Glenmoore, Pennsylvania, “Once you have your number, you can start to build a schedule for making FatFIRE happen.” “A general rule of thumb is that if you want to reach FatFIRE, you should attempt to save at least 50% of your income.”

Many people decide to save $2.5 million for FatFIRE and then take 3% to 4% of their investments each year as a withdrawal. You may earn $100,000 per year if you have $2.5 million in savings and take out 4% annually.

Some FatFIRE supporters make the decision that they would prefer to live on a greater salary and have more savings. According to David Hampshire, owner of Purple Egg Real Estate in Niceville, Florida, “you need to save at least $5 million in order to live off the interest while enjoying a pleasant life.” Hampshire is a member of the FatFIRE social network.

Fat FIRE Offer flexibility in early retirement

  • retirement
  • retirement
  • retirement

Both Lean FIRE and Fat FIRE have advantages and disadvantages. Dahleen is among many who contend that striving for a Fat FIRE figure can provide more flexibility, freedom, and even protection from unforeseen occurrences in early retirement, regardless of how much money you spend now.

You can do things that others can’t afford to do, at least not as frequently, if you have a Fat FIRE portfolio, according to Dahleen. “During the peak season, you are free to travel frequently and, if you like, even fly first class. If you desire one and know it won’t interfere with your FIRE strategy, you may buy a Tesla or an Acura NSX.”

He went on: “Additionally, you are better able to cut the fat when things are difficult. Who has more discretionary spending in the budget to reduce if our economy experiences a rough patch and stock prices fall? The family of Fat FIRE, that’s correct.”

In the end, it’s up to you to choose how your early retirement lifestyle will appear and how much it will cost. You may decide to go for Fat FIRE figures if you want some leeway. The shortest path to early retirement is definitely Lean FIRE if you’re ready to stop working as soon as feasible, are willing to live modestly, or have passive income sources set up.

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