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Fat FIRE: A Game-Changer for Early Retirement Success

Are you a high-income earner seeking a path toward early retirement without sacrificing your current standard of living? The traditional Financial Independence, Retire Early (FIRE) model emphasizes frugality and substantial savings to achieve retirement as early as possible.

However, for individuals accustomed to a higher standard of living, the prospect of a frugal retirement may not be appealing. This is where Fat FIRE enters the scene as a game-changer. But what distinguishes Fat FIRE from the conventional FIRE approach, and how can it be a catalyst for achieving an affluent early retirement?

The spectrum of FIRE encompasses various other strategies like Coast FIRE and Barista FIRE, each with its unique approach towards achieving financial independence and early retirement. How do these models compare with Fat FIRE, and what insights do they offer for individuals at different income levels and life circumstances?

Today’s article by Debt-Free Doctor explores the topic of redefining early retirement to attain both financial abundance and lifestyle freedom. By following the pathway outlined, you can join the Fat FIRE revolution and enjoy an opulent early retirement.

There’s been a big push these days for high-income earners (i.e., doctors) to reach FIRE status.

With declining job satisfaction and increased burn-out rate, can you blame them?

Related article: I Can’t Do It Anymore: 3 Reasons Doctors Hate Their Job

Let’s start by defining the FIRE movement…

What is FIRE?

The acronym FIRE stands for Financial Independence Retire Early. This is an idea that the average person can save up to 25x annual living expenses; you can probably live off that amount of money for 30 years using the 4% rule.

This leads us to the next question…


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What’s the 4% rule?

The 4% rule was developed from a 1988 research paper (“Retirement Spending: Choosing a Sustainable Withdrawal Rate”) published by three finance professors from Trinity University that eventually became known as “The Trinity Study.”

It looked at the portfolio success rate for various withdrawal rates, and one of the results that had to do with a 4% withdrawal rate became famous.

It was shown that a 4% withdrawal rate adjusted yearly for inflation via a portfolio of stocks and bonds only failed to last 30 years in two of the starting years analyzed (1965 and 1966).

Thus, this withdrawal rate worked out 95% of the time.

For example, if your yearly spending is $200,000, the math is $200,000/.04 = $5,000,000.

Another way to calculate this is that you need 25x your yearly spending rate (25 x $200,000 = $5m).

Financial Independence (FI)

You’re considered “financially independent” once you save up 25x of your current annual spending. This is your regular FIRE number, which is the amount of invested assets you need to live off of for investment income to reach retirement early.

Annual expenses x 25 = FIRE number

To me, achieving financial freedom is where I have enough passive income streams to never have to work (aka Infinity Investing). I do NOT have to rely on dental income to cover our discretionary spending.

As a side note, I recently spoke with two dentists about money. One had been practicing for two years, and the other 5.

Their mindset was similar to mine right out of dental school: we’re taught to focus on growing active income (highest taxed income) and work until financial advisers say we’ve “accumulated” enough money.

I guess they weren’t too familiar with the Cash Flow Quadrant.

What is Fat Fire?

The Fat FIRE lifestyle is being able to live “large” in retirement without having to sacrifice your spending. In other words, you can continue maintaining a much higher standard of living and not worry about running out of money.

The average household in the United States spends roughly $60,000 per year, which puts those pursuing lean FIRE (minimalist) living on half of that.

For our purposes today, the fat FIRE number would be roughly double the average spend or $100k – $120k annually.

If you want to spend $100k/yr, you’d need a nest egg of $2.5m ($100k x 25x expenses).

Real Estate Fat Fire

If you’d invested in real estate syndications paying an average preferred return of 7%, you’d need less than what most financial advisors tell you (7% x $1.5m = $105k).

You get fantastic tax benefits (depreciation), quarterly distributions (cash flow) via rental income, and the continued appreciation of the property.

When you’re only invested in the stock market, you depend on whether the markets or up or down, along with constantly “drawing down” from your stash.

With real estate syndications, you don’t have to worry about running out of money.

Once I made this switch several years ago, I realized I didn’t need anywhere close to what I’d been led to believe for early retirement.

What Can Fat FIRE Do For You?

There’s nothing better than the thought of continuing the lifestyle you’re used to well into retirement.

With Fat financial independence, you’re able to have enough wealth to:

  • travel to enjoy good food, culture, and entertainment at 5-star resorts
  • have the freedom to choose where you want to live
  • Pay for all your kid’s college (if you choose)
  • Afford excellent health insurance
  • Give to any charity you choose
  • Leave a legacy
  • Help out parents financially if needed

Fat FIRE vs. Coast FIRE

If you haven’t heard of Coast FIRE before, don’t worry. I hadn’t either. This retirement planning strategy is more attractive to people like me as it takes out the “retire early” part altogether.

It’s more of a peace of mind knowing you’ve amassed enough money to let compound interest get you the rest of the way to your FIRE number.

You can stop contributing to retirement accounts, thus freeing up monthly income once you’ve hit your Coast FIRE number. If you don’t want to stop contributing, it’s up to you, but at least you have that option.

This reminds me of how the author of Die With Zero states we should live our life. If you haven’t read it, I highly recommend doing so.

Fat FIRE vs Barista FIRE

Barista FIRE got its name from Starbucks after they began offering their employees health insurance who average 20 hours of work per week.

Once you achieve Barista FIRE status, you can work as much or as little in a job that interests you (low-stress) for residual income and health insurance to help offset annual spending costs.

I predict there will be a movement towards this as more high-income professionals are reaching burnout status from their careers yet want to transition to something else and continue enjoying life.

Fat FIRE vs Lean FIRE

Lean FIRE status is being able to retire before the conventional retirement age of 65+ with a simple and lean lifestyle which is the complete opposite of Fat FIRE.

Lean FIRE status means you’ll have enough to cover the necessities such as food, housing, and transportation in retirement which could make it hard to live in a major city.

This status is defined as when your current annual spending remains under $40,000/yr in retirement. Using the Trinity study means you’ll need roughly an investment portfolio worth $1 million.

The Pros and Cons of the FatFIRE Movement


#1. Financial flexibility

Reaching Fat FIRE provides great financial flexibility due to the larger investment portfolio needed.

This “flexibility” allows for the following:

  • lower risk of losing FI status and having to work again
  • increased hedge against market fluctuations
  • the ability to decrease your safe withdrawal rate if the market tanks (which is why I love real estate!)

#2. Optional frugal lifestyle

It takes discipline and a degree of frugality to save money and reach FI.

But once Fat FIRE status is accomplished, then continuing a frugal lifestyle is optional as your saved wealth can cover your increased standard of living.


#1. Lifestyle inflation

For most people, the more we make, the more we spend.

Reaching Fat FIRE allows you to enjoy a HIGHER standard of living which could unintentionally create a new “normal spending level.”

If left unchecked, this can lead to lifestyle inflation rapidly eating away at their portfolio. Even though you have more than enough to live on with Fat FIRE status, it’s still important to ensure you follow a safe withdrawal strategy.

#2. It takes longer to achieve

Most of our Passive Investors Circle members are high-income professionals (accredited investors).

For them, it’s much easier to reach Fat FIRE vs someone with an average income. Even when accounting for compound interest, achieving Fat FIRE can add a few more years of having to work.

Best Book To Help You Achieve Fat FIRE

If you want to dramatically increase your chances of Fat FIRE, pick up a copy of my friend’s new book, (Sam Dogen from Financial Samurai) Buy This, Not That: How To Spend Your Way To Wealth And Freedom.

It’s packed with unique strategies to help you build wealth while living your best life.

Buy This, Not That is a #1 new release and #1 best seller on Amazon. By the time you finish BTNT, you will gain at least 100X more value than its cost.

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3 thoughts on “Fat FIRE: A Game-Changer for Early Retirement Success”

  1. The trinity studies wrote about a 4% safe withdrawal rate. But a withdrawal rate is not a spending rate. $100K/year in spending would not result from $2.5M at a 4% withdrawal rate due to taxes. Since taxes can be complex, probably better to say $100K before taxes.

    • Most of us consider taxes as a part of our annual spend. You need to factor in property tax, sales tax, and yes, income tax into your spending rate. For many retirees, income can be the smallest of the three. See The Taxman Leaveth for further information.


    • long term capital gains taxes are low.

      For a 100k per year withdrawal, if you assume that the 100k consists of 25k original investment and 75k capital gains, then tax is ZERO; since capital gains taxes for a married couple is 0% till $90k.

      For a 200k per year withdrawal, if you assume that 50k was original investment and 150k is capital gains, then taxes on that 150k is at 15% or $22.5k. So you effectively pay $22.5k taxes on $200k of withdrawal, i.e. tax rate of 11.25%


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