What is fatFIRE?

Four years ago, I didn’t know what FIRE was. I mean, I knew what fire was — something to gather ’round to drink beers, tell stories, and burn marshmallows. But I was oblivious to the acronym that has since become life changing: Financial Independence, Retire Early.

Now, four years later, you could say FIRE is my middle name. Except you’d be wrong. It’s my last name — “on” is my middle name. But that’s neither here nor there.

I’ve learned what it means to be financially independent. I’ve taken advantage of my FI status by working less and adventuring more. More recently, I have realized that FIRE comes in multiple flavors.

 

What is fatFIRE?

 

First, there was FIRE. You save up at least 25 times your anticipated annual spending and you’ve got a 97% or better chance of that money lasting at least thirty years. That was based upon a typical level of spending, whatever that might be for the individual of the family.

Astute people quickly realized that spending less, a.k.a. living frugally, while earning the same amount or more, led to financial independence much more quickly.

Some people, like Jacob Lund Fisker of Early Retirement Extreme fame, took spending to a new low and frugality to the next level. Achieving FIRE by virtue of a particularly lean budget became known as leanFIRE.

If leanFIRE is the term for spending quite a bit less than the average, what would a sensible person call the opposite thing — spending quite a bit more than the average early retiree? fatFIRE, of course. A subreddit was created and fatFIRE officially became a thing.

More recently, a fatFIRE Facebook group has surfaced (I may have had something to do with that), and fatFIRE fans from around the globe have a new gathering place.

 

fatFIRE Defined

 

I don’t believe there’s a consensus or standard definition of exactly what constitutes fatFIRE, so I get to go ahead and make my own.

The average American household spends somewhere between $50,000 and $60,000 in 2018. A leanFIRE budget is at most half of that. I’d say fatFIRE is somewhere in the neighborhood of double. Since we like round, even numbers, let’s call a fatFIRE budget $100,000 a year.

The ability to spend $100,000 a year based on the 4% rule requires retirement savings of $2.5 Million or passive income streams that add up to an equivalent budget. $100,000 a year isn’t a steady diet of caviar and champagne, but with a paid off mortgage and no work-related expenses, $100K can go a long way.

There’s nothing in the fatFIRE literature, which I believe consists of this post and some threads on the fatFIRE Facebook group and subreddit, that says you can’t spend more than $100,000 a year. That’s just a starting point. If you’ve become accustomed to spending $400,000 a year and have the funds to continue to do so indefinitely, enjoy your membership in the 8-figure club and fatFIRE with the budget that suits you.

I would also like to postulate that it’s possible to fatFIRE without spending $100,000 a year as long as you’ve got the means to do so. No one’s going to confiscate your fatFIRE card when your household budget ends up being $92,000 per year.

Personally, I anticipate our spending to be in the $80,000 range although we’ve got a nest egg to support a six-figure spend with a sub-4% withdrawal rate. With the rising cost of healthcare for early retirees (and everyone else) and some increased travel expenses, we may soon find ourselves pushing that six-figure number, anyway.

 

Who fatFIREs?

 

fatFIRE is early retirement for the entrepreneurs and high-income professionals that choose not to fully embrace frugality or give up certain creature comforts that have become customary. It’s financial independence for the well-heeled.

Whereas plain vanilla FIRE and leanFIRE may require certain choices — I would never call them sacrifices — fatFIRE allows those who have undergone some lifestyle inflation and have spent some time on life’s hedonic treadmill to maintain that particular standard of living.

I’m not saying fatFIRE is better or worse than the other less costly flavors. It’s just different.

There are some clear advantages to a lower cost standard variety of FIRE. I’ve discussed relative frugality as a win/win. You get the triple advantage of a higher savings rate, a lower target number, and a resulting shortened timeline to financial independence. However, earning more also gets you two out of those three advantages, the higher savings rate and the shortened timeline. Your target number doesn’t change, but neither does your lifestyle and as Meatloaf would say, two out of three ain’t bad.

Retiring early with a multimillion dollar net worth requires a high income. Compound interest can work wonders, but it requires decades, so to generate and save that kind of money and still retire early, you’re going to need a six-figure salary. Preferably an income in the multiple six-figures. fatFIREees are likely to be doctors, lawyers, engineers, small business owners, and entrepreneurs who have learned to generate solid income and set a large chunk aside.

These people have also chosen to retire early (the RE), so it goes without saying that these are people who are not defined by their jobs or are comfortable giving their mind, body, and ego a rest as an early retiree.

There are certainly many people who have can claim fatFI with a net worth north of $2.5 Million and annual spending of $100,000 or less who have no interest in retiring any time soon. When such an individual (and I am apparently one of them now) does retire eventually, they may find themselves in a level up category known as moFIRE, or morbidly obese FIRE.*

 

 

*moFIRE may or may not be a real thing, but it was recently coined in the Facebook group to describe annual spending in the $200,000 and up range.

 

How does one go from FIRE to fatFIRE? If you’ve got a solid income and aren’t quite ready to call it quits, string together a few One More Years as many of us who wear the golden handcuffs tend to do, sprinkle in a little lifestyle inflation, and you’ve got yourself a fatFIRE life.

 

What Can fatFIRE Do For You?

 

Financial independence gives you options. The plump variety simply expands those options. I do believe that a wonderful, meaningful, and joyful life can be had with a moderate level of spending. There are examples of this throughout the FIRE blog genre, and I won’t take anything away from them.

But there are some tradeoffs that have to be made to meet a particular budget to best ensure the longevity of a portfolio that doesn’t measure in the multiple millions. A FIREd life can be life well lived, but by definition, it’s a life with certain monetary limitations.

With a fatFIRE portfolio, you can do things others can’t afford to do, at least not as often. You can travel regularly during the high season, even flying first class if it suits you. You can pick up a Tesla or an Acura NSX because you want one and you know it won’t derail your FIRE plan.

You also have a better ability to trim the fat when times are tough. If our economy hits a Stormy patch and stock values plummet, who’s got more discretionary spending in the budget to cut? That’s right, the fatFIRE family.

Sure, it might mean not going to the Super Bowl and spending more time in Southeast Asia and less in New Zealand, but your worst case scenario might be reducing spending closer to the level of a more standard level FIREd person. And as I said, that’s not a bad life, either.

Of course, there will always be someone living a grander lifestyle, and even a fatFIRE lifestyle will be constrained by the size of nest egg or passive income flows. You’re just giving yourself a lot more living space under that spending ceiling with fatFIRE.

FatFIRE Quotes:

 

I asked current fatFIRE Facebook group members why fatFIRE appeals to them. A sampling of the responses:

 


“Hmmm…why would having more money be better than less money?” – Viet. [PoF: I took that to be a rhetorical question.]


“My version of fatFIRE is really doubleFIRE – enough from my investments that I am able to FIRE comfortably, plus I’m working towards a pension that will be worth roughly the same amount.

This gives me peace of mind, because I know that if I don’t achieve the pension for some reason I’ll still be able to FIRE when I want. Plus, a lot of my family hasn’t had the same financial success I have. I’ll be able to use all of that extra money to help them if I end up doubleFIRE!”Military Dollar

 


“I realized in my late 20’s that I was not playing “all out”…my effort did not match my potential in many areas of my life. 

FatFIRE supports my overall life mantra of being a better person tomorrow than I was today.” – Paul

 


“Having more money is having more options.” – Vadim

 


“It’s a platform to give you an honest baseline of others in your SAME situation. This is an awkward or false conversation with my local friends. Everyone wants to put on a “good face”. fatFIRE seems like a more comfortable place to retire. Especially since I’m already there.” – Kel

 


“I am approaching the finish line. I have never wanted anyone to call me fat before.” – hatton1

 


“I don’t think of fatFIRE as a dollar amount ($5M vs $1m), so much as a mindset. Having leanFIRE under my belt gives a sense of security and confidence, that allows me to get off the hamster wheel that many live life on. I can take risks and pursue things without worrying about money.

fatFIRE keeps me motivated to keep learning and improving as I strive for a life of abundance that allows me to be more generous with my money and time while never having my options limited in life by how much something costs. I am searching for the right balance of learning to be happy with “enough” (leanFIRE) and continuing to grow, learn, and be productive (fatFIRE).” – Chris of Can I Retire Yet

 


fatfire

fatFIRE along the amalfi coast

 

 


“Bulletproof. We all want our plan to be bulletproof. FatFIRE is as close as you get.” – Doc G of DiverseFI

 


“I can quit work now and pinch pennies (leanFIRE) the rest of my life. Or I can work for about 5 more years, and maintain our current lifestyle for as long as we live (fatFIRE). I think I can manage another 5 years.” – Kemin

 


“We used a high savings rate to achieve a regular ol’ FIRE, but 16 years later it’s clear that we overshot the mark. Our FIRE expenses have lagged while our investments have outperformed. Our 4% Safe Withdrawal Rate FIRE has not only had a 100% success rate but has grown into a 2%-3% fatFIRE.”
– Doug Nordman of The Military Guide

 


I was thrifty during my twenties for an extended period and it’s more fun being less thrifty”Actuary on FIRE

 


 

fatFIRE Resources

 

I’ve already referred to a couple of these, but I’d like to highlight the aforementioned discussion groups and list a few websites that lean (no pun intended) towards fatFIRE:

 


Track your investments for free with Personal Capital. That's how I track the PoF portfolio.  

 

Are you a leanFIRE, run-of-the-mill FIRE or fatFIRE aficionado? What would you consider an ideal spending allowance in retirement? 

Got a fatFIRE resource to add to the list?

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112 comments

  • Good to hear fatFIRE being discussed more. I was chatting with another blogger this week about both wanting an enticing retirement – actually having enough really enjoy it. Even having to work a few extra years to achieve it, I’d be very content with the relatively modest luxury that can be had from expenses around $80k p.a., – way less than moFIRE but almost double what I spend at the moment!

    • Thanks, WF30.

      I think there’s a correlation between a high savings rate and willingness to work towards fatFIRE. The less additional work you would need to put in, the easier it is to make it happen.

      The same could be said for how much you enjoy your job, too.

      Cheers!
      -PoF

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  • Man, these rules are getting tricky. What if you want closer to moFIRE but are happy to only to marginally RE (mid50s) to achieve it? I guess I’m moFI-lessRE plan! “Mo money, less RE”

    • I dunno, man. Biggie says “mo money, mo problems.”

      Mid-50s counts for RE as a physician. That’s at most a 25 year career. If you had a job straight out of high school or college, 25 years would put you at 43 or 47.

      Cheers!
      -PoF

  • Great to see “living comfortably” after financial freedom has been achieved is starting to be discussed, rather than just the more common “living constrained/comprised”.

    Miss Mazuma had a great quote about “not frugalling yourself into a corner”, to me “fatFIRE” is a great example of that.

    Thanks for the mention PoF.

    • You got it, Slow Dad. I think the #1 turnoff for physicians when they first learn about FIRE are the tradeoffs. I want to make it clear than you don’t necesarily have to make any. You can order up the FIRE of your choice and make plans accordingly.

      Cheers!
      -PoF

      • Indeed, bollocks to tradeoffs. The fatFIRE process is actually ridiculously simple:

        Invest in yourself.

        Work smart.

        Earn a bunch of money.

        Invest it wisely. Then leave it the hell alone.

        Let it grow until it can replace some/all your earned income (dividends/interest/rent/royalties… or selling down capital if that is your thing… or some combination of the two).

        Now you have removed the financial imperative from how you invest your time. Financial freedom baby!

        Retire. Or don’t.

        Keep working. Or Don’t.

        In the same profession. Or something new.

        Full time. Or part time. Or seasonal. Or whatever.

        The luxury of choice.

        Do what makes you happy, but recognise what is right for you will be different to what is right for the next person.

        Don’t gloat. Nobody likes a dickhead.

        Don’t apologise. Regardless of whether you started out with a silver spoon or in struggletown, where you find yourself now is largely down to your own choices (and lots of luck… the financial market gods have been unusually kind lately!).

        If you’re unhappy, make changes. Don’t complain. Nobody likes a martyr, a victim, or an asshole either.

        Now go enjoy it. Financial freedom is not the end of the journey, it is just the beginning.

        • best comment i’ve read in some time. i write up the same thing as having enough “needs” money to retire but i’m still working for our “wants” money. i like good wine and would like to be able to have a chateauneuf du pape occasionally. i’m not asking permission from the frugal or retirement police either.

  • Yep, I’m in the fatFIRE camp, except when I talk to people who have never heard of FIRE at all (then I switch to leanFIRE mode). That’s because people that aren’t familiar with the whole concept of financial independence seem to already be in the fatFIRE (or moFIRE) camp, assuming they’ll need $10 million to “retire comfortably”, so ironically for many people it’s a journey of Assuming You Need More Money Than You Need To Retire —> leanFIRE —> Actually, fatFIRE sounds pretty good.

    • Wait. Are you telling me you don’t need $10 Million to retire in New York City? Can you somehow make it happen with $9 Million? 😉

      Whatever it takes to get people to understand the concepts. At least you’re able to get people to start having that conversation.

      Cheers!
      -PoF

  • Great concept! I think fatFIRE can certainly help to ease some of the more skeptical high earners into the FIRE realm.

    I do wonder if it’s possible to couple fatFIRE with sustainability (and say, minimalism)? One of the big reasons (along with good old fashioned stoicism) MMM goes leanFIRE, is to limit the damage we do to the planet by purchasing gobs of plastic encased manufactured goods, and exhausting fossil fuels to travel all over hell’s half acre and back.

    Course, I’m sure Elon Musk is cooking up something to help with all that – assuming the S3 ever gets rolling off the line… 😉

    • That’s a tough question, Cubert. Travel, one of the main reasons many fatFIRE budgets are fat, is resource heavy. But it also exposes you to the wonders of the world and can make you appreciate this planet more than if you rarely leave home. I think minimalism is compatible with sustainability. fatFIRE… it depends.

      Best,
      -PoF

      • The problem indeed with lots of travel during FIRE is that it is disproportionally detrimental for the planet. Unless you bike/walk/train everywhere, of course. Now, the number of people that are able to reach fatFIRE are very limited, so the overall impact might not be too bad.
        A privileged position it certainly is, should be enjoyed responsibly still.

    • Thanks for bringing this up, Cuthbert. I really admire Mr. Money Mustache’s leanFIRE view toward sustainability, but I’m not that lean.

      On the other hand, I can’t relate to fatFIRE. More power to people who adore their white coats, or need that extra security, but I’m more of a “live simply so others may simply live” type than “I’M ON A BOAT” type.

      I can see how it’s joyful to find a subgroup you belong to, but I wish we had fewer divisions. FIRE=FIRE. Let’s all party together.

      • I got my swim trunks. And my flippy floppies. I’m flipping burgers, you’re at Kinko’s straight flipping copies. ⛴️

        We’re probably more like you. Spent $61,000 for a family of four last year. Add in health insurance and some extra travel and we’re not far from six figures, though.

        Cheers!
        PoF

  • Definitely FIREing Fat. Plan on annual spending round $120,000.

    I plan to accomplish lean FI in my early to mid 40s and work til I am 50 so that we can increase our annual spending, and more importantly our annual charitable giving.

  • I always took fatFIRE to be some percent higher than your own personal FIRE mark, making fatFIRE as relative as FIRE is.

    If 25x your spending is FIRE then either 30x or 33x is fatFIRE to me.

    Similarly leanFIRE is when you have enough invested that your basic living expenses are taken care of, again being relative to your FIRE goal.

    I’m pretty sure this came from Brad and Jonathan over at ChooseFI on their milestones of FI episode. I like keeping it all relative because they become person targets rather than competitive ones

    • On one hand, I see the logic in making it personal. It costs a heck of a lot less for one person to FIRE in Mason City, IA than it does for a family of 9 in Palo Alto, CA.

      On the other hand, if using only a multiple of expenses in retirement assets, a high multiple only suggests a really low withdrawal rate and has no bearing on lifestyle. Someone with 100x expenses living on $9,000 a year with a $900,000 net worth is not the fatFIRE I’m thinking of. At a minimum, I’d say it’s a spending level above the median. Maybe using a multiple of poverty level like they do for the ACA subsidies makes more sense. If your spending is higher than the taxable income that qualifies your household for an ACA subsidy, you’re fatFIRE?

      Cheers!
      -PoF

      • I was using the multiple as a proxy for some amount greater than your FIRE goal of 25x. Regardless of how many times your annual spending you have saved, I’m still going with the 4% withdrawal rate. After thinking about this for a while, I’m sticking with the Degrees of FIRE being relative.

        LeanFI 25x. An amount sufficiently more bold than your FI goal so that an extra fancy vacation or other luxury can be had every once in a while.

        Thanks for starting such a vibrant discussion!
        -Kpeds

  • We retired early (40s) and our spending is right around $90k (sub-4% withdraw). So I guess we’re fatFIREers.

  • I never understood the appeal of lean fire – when you restrict yourself far below your own normal (whatever that is) to retire early – is it reasonable to expect you to maintain that level? It’s a lot like crash dieting and then hitting the buffet – is it healthy?

    • I understand that leanFIRE isn’t for me, but I suppose it depends on your alternative. There is some beauty in finding peace and happiness on a much smaller budget. As you point out though, making that last a lifetime could become a challenge.

      I’ve found that my priorities and preferences evolve over time. I’m now earning money I don’t necessarily need, but while the sun is still shining, I’m gonna make a little more hay.

      Cheers!
      -PoF

  • Have we considered HuskyFIRE or Big Boned FIRE? Maybe the $60-$75k range. This seems like the place I’d like to be. fatFIRE might be a bit out of reach if I still want to RE, but I think HuskyFIRE is doable.

    • Nothing wrong with your FIRE being slightly portly.

      If you crave freedom and more time with your sons, trading an early retirement for a less-than-fatFIRE budget seems like a great tradeoff.

      Cheers!
      -Pof

  • Here’s where we are:

    Our assets generate enough income (best guess this year is $100k or so) that we don’t need to draw them down one penny. We simply leave them in index funds to keep growing.

    Our spending will be about $80k to $90k this year even if we spend $15k on travel, so we have plenty of cushion.

    If we were forced to withdraw our assets at 4% and combine it with our income, we’d be around $200k per year total (including the $100k income) which is waaaaay more than we can spend.

    The BIG questions now — what portion of our assets do we spend now and what do we do with them when we die?

    • Interesting ESI!

      You could pull a Warren Buffet and encourage your children to have charity organizations, which have been funded by you :).

      You could fund your grandchildren’s college 529s?

      • Yes, there are a lot of options on the table. We’ll probably have a plan for the next 5-10 years, see how our kids mature as adults (and how they handle money), and then adjust from there.

        For the 529s we will likely let it sit for 20 years and divide among any grandkids we have.

    • You, sir, are fatFIRE.

      I know you’re a big proponent of charitable giving, and I’m sure that will factor big into your future plans. What a great spot to be in. I hope to find myself in a similar position when I’m your age. 😉 Ha!

      Best,
      -PoF

  • I am fatFiring on July 1. I am blogging about the process at DoctoroffinanceMD.com. Having the resources for a fat or mo FIRE is very reassuring. I think of it as a very large cushion.

  • I love the term fatFIRE – and apparently, I’m a fatFIRE and didn’t even know it! I’m not sure why anyone would target a leanFIRE scenario unless they had to. Shoot for fatFIRE and if you are a little shy of the mark, you are still OK.

    Once the kids are out and house is paid off, $100k is about right for a very comfortable life with plenty of money set aside for travel and other diversions for us.

    fatFIRE all the way!

  • Wait, you might not be able to go to the Super Bowl every year? Guess it’s a good thing that my Niners suck at the moment then. I have no desire to go until they dig theirselves out of the hole their in.

    And did you really just quote Meatloaf? I dig!

  • DL

    The biggest appeal to me about fatFIRE is that once I pull the plug on working in medicine, I want to do so many different things that I didn’t have time for before, and some of those plans (hobby farm/animal sanctuary) are going to cost way more than what we spend now. I don’t want to have my post retirement budget set so tight I don’t feel comfortable exploring things in the world I want to do. fatFIRE gives me more flexibility and a sense of comfort to do things that aren’t even on my radar right now.

    At 46yo with 3 million saved, I could easily stop working now IF my goal was to continue living our life exactly how we have been (spending $60,000-$75,000/yr). For now I have decided to cut back to part time until I have a better handle on what expenses will be like for my post-medicine life. That way we aren’t touching our savings and will continue to earn until we have a firmer idea of what our future spending needs will be.

    • Animal sanctuary! That sounds like an awesome plan 🙂

    • There are lots of good reasons to build up that cushion, and we’re fortunate to be in a position where working just one more year can give you a substantial advantage. Since your numbers are strikingly similar to mine, I’m guessing you can save enough in a year to add at least 5% to that nest egg (ignoring market returns which you’d get whether working or not).

      Cheers to the hobby farm!
      -PoF

  • Thanks for including me. I’m fatFI but haven’t figured out how to RE yet, My Heart is not there!

    • RE is completely optional. Tough to break free of those golden handcuffs, too, even if freedom is what you truly desire.

      I look forward to chatting more at Camp (fat)FI Midwest in August. Snow should be melted by then. Probably.

      Cheers!
      -PoF

  • Amy G

    I only discovered FIRE this past weekend and I have devoured every article I could read over the past 4 days!!! I think shoot for leanFire as a means to cover basic expenses and then shoot for FatFire to enjoy life more in retirement. For some, leanFire is all they need to enjoy life without working. I’ve been grappling with this for the past few days. We routinely spend $8k a month with basic expenses at $5k. We don’t really want to take a lifestyle hit in retirement. We have enough income to save over half of our pay so I don’t think achieving FatFire will be a problem even though we didn’t earnestly start on the financial independence path until 5 years ago. Paying off our mortgage this year will help reduce basic needs to $4k and allow more money for investing into our nest egg. Husband will take a less stressful job next year that might reduce pay but that will make the remaining working years enjoyable for him. I’m lucky that I adore my work. Not everyone is so lucky.

  • Thanks for the shoutout to my obscure corner of the web, Dr. POF.

    When I started with my $10! Goal years ago, I never fully got the concept about FIRE let alone what fatFIRE is. I find moFIRE funny, though confusing as in India, this would be called MotaFIRE, “mota “ being Hindi word for Fat. I maybe only borderline fatFI, as that’s an exclusive club where the upper echelons are way above my basic entry.

    Beyond a point, Fat or Mota ain’t healthy for you. So, we will FIRE whenever the right time comes, with or without $10! 😊

    • For the normal person who doesn’t recall the weird math that has few practical applications outside of combinations and permutations, $10! = 10 factorial = $3,628,800.

      Was that too harsh? It’s a good fatFIRE goal, though. I’ll give you that.

      Cheers!
      -PoF

  • FatFIRE and moFIRE I love the incorporation of medical terminology.

    Maybe according to these definitions we should correlate living expenses / annual spending with BMI…

    FatFIRE = 25-30x
    ObeseFIRE = 30-40x
    MoFIRE = 40-50x
    SoFiRE (super obese) = >50x

    What do you think?

    Eh… nvm. This doesn’t work. FatFIRE is way to lean.

    It would be awesome to be soFIRE though!

    😀

    • soFIRE. Love it.

      On every pre-eval I write, and that’s a lot, I use the proper terms as related to BMI. Sadly, that includes writing (or typing) Super Obese on a regular basis. Not my opinion, people — it’s the medical term for a BMI of 50 or above.

      Best,
      -PoF

  • Great article and concept. Personally, I’m leaning toward phatFIRE.

  • GasFIRE

    FatFire sounds like a great plan to me. I didn’t know you could grade the degree of FIRE but I like it. I’m working part time so I think I’m really FatFI. During my previous full time practice I achieved FI but I suffered enough burnout that I decided to leave. I will now refer to the interim period as BurnoutFIRE. I’m not sure when I will fully retire but the part time gig is certainly helping me get Fatter.

    • Too often I hear negative comments about FIRE because “I would never want to live like that,” as if there’s only one way. I wanted to emphasize that there are many ways to FIRE. All require the same basic math, but when investment and passive income easily exceeds spending at whatever level you’re comfortable, you’re FI and good to go.

      Cheers!
      -PoF

  • My net worth is long past regular 25x spending FIRE. So I just consider myself FI. And semi-RE. I don’t know what I’m really shooting for per se, maybe beerbellyFIRE?

    • It’s pretty much all gravy once you’re in a spot where you’re not interested in spending more than you already do. But now you can afford the really expensive limited release beers that only come in bombers and crowlers.

      Cheers!
      -PoF

  • We’re kind of in the middle. I guess healthyFIRE? leanFIRE is too lean for us and fatFIRE is too much spending at this time.

    I like fatFIRE, though. If you can get there without too much stress, why not? We might get there if Mrs. RB40 keeps working. She is doing very well at work so why quit now. Life is good for us already. Besides, she’d probably drive me nuts if she’s home all day. 😉
    Different strokes.

  • MoneyNeverSleeps

    We used a high savings rate to achieve a regular ol’ FIRE, but 16 years later it’s clear that we overshot the mark. Our FIRE expenses have lagged while our investments have outperformed. Our 4% Safe Withdrawal Rate FIRE has not only had a 100% success rate but has grown into a 2%-3% fatFIRE

    Having spent time with older retiree friends of my retired mother, I have to whole hardedly agree with this statement. Depending on age, at some point income requirements from portfolio will drop due to social security payments. My parents and their friends have/had wonderful lives living on 50K including their social security, provided ya have no debt.

    If one is entering into “retirement” with mortgage(s), car payments and other debt the 50K can get eaten up quickly. Whereas drop the mortgage and car payments and save 2-3K a month for ya big spenders.

    Higher income people can expect SS of 30Kish a year and half more for spouse (if married and spouse was stay at home), this never seems to be considered. At 67 for me, my fatFIRE requirements drop by 45K making fatFIRE achievable on 55K (today’s dollars). At 25X one would need 1.4M-ish. Arguably one could spend down principal by some percentage based on number of years until social security as long as they have the (inflation adjusted) $1.4M. Local bank is giving 4 year cd at 3%, at 2M thats 60K a year.

    The conspiracy theorist in me says that the oft quoted rules are from the financial industry wanting more of your assets under management, `cause that’s how they generate more income.

    Me – FI at 53, firecalc tells me I can go to 90 livin moFIRE+, so not rationalizing. We live well on under 50K, no debt.

  • Hi POF,

    Love the name! 🙂 In terms of additional resources, I’d say that, on the “optimized spending” side of it, there are at least three blogs that are focused on “living well” for less: The Luxe Strategist, Champagne and Capital Gains (recently launched), and my own (The Rich Miser).

    I also think the travel hacking community is a great resource for those looking for premium travel at a greatly reduced cost. I especially love reading One Mile at a Time, which is within that niche.

    I’m a big proponent of optimized “luxury” spending, because I think it allows us to reduce expenses now (and thereby save and invest more), as well as spend less in fatFire (thereby needing less money to reach it in the first place). Examples of some techniques in this area would be: stretching luxury shopping dollars (Farfetch and The RealReal rather than boutiques), downgrading luxury cars (Acura rather than Mercedes), living in a gentrifying neighborhood (at least temporarily) rather than an established, swanky area, and staying in hotels with free breakfast and parking (like most Embassy Suites).

    Cheers,

    Miguel

    • I can identify with a lot of that – we have benefitted greatly from credit card reward bonuses, and we tend to favor 3 and 4 star experiences over the 5 star super-premium level.

      I’ve heard of your site and the Luxe Strategist — Capital Gains is new to me. If any of the sites feature an RE componenent, I’m happy to add them to the fatFIRE resources above.

      Cheers!
      -PoF

  • First I’ve never heard of fatFIRE, but I’m digging it!

    I think it definitely resonates better and gives me more incentive to grow. I don’t really care to restrict myself at all and really never have. I want more meals at the French Laundry. 🙂

  • Mike

    The problem with FatFIRE is a lot more of your passive income will go into taxes. Over $250k per year means the additional 3.8% bite of the NIIT… so the government will also be taking a good chunk unless you are into Muni’s but then you have to absorb inflation on the large asset base.

    The advantage of LeanFIRE is that the government takes much less simply because you can live on less- you are truly under the radar.

    I’m on the road to FatFIRE or even MOFIRE so will be giving my pound of flesh…

    -Mike

    • You make a good point, but there is a way to fatFIRE with no income tax if you’ve got enough in taxable and Roth accounts. If most of your retirement money lies in tax-deferred accounts, you will be paying the taxman. If not, you can watch the taxman leaveth.

      Cheers!
      -PoF

    • Mr Household CFO

      I think people over worry about how much they pay in taxes. In the first order i priortize for what i want to have for me to spend. In the second order, i then take what steps i can to optimize the tax situation. Paying more taxes but being able to move from leanfire to fatfire makes total sense to me if you have a job that gives you an opportunity to chase fatfire and you like it well enough to put up with the extra years of work that pursuit would require.

  • I think we’re about regular fire with a 40k budget… I could always go back and fatten things up, but so far have found ways to do all the things I want while maintaining well under what our portfolio could support.

    Would more money make a difference? Probably less so with our spending, and more so with the warm and cozy feeling of more security. Am I willing to go back to my cubicle for it? Not really 🙂

    I’d welcome a Fat FIRE, so long as I can keep doing what I want. Now if I can only monetize vacationing…

    • Have you heard of travel blogging? Although from some of the stuff I’ve read, the reality is nothing like the carefree lifestyle depicted on Instagram.

      I think you’ve identified an important distinction. fatFIRE could be a bit better, but ordinary FIRE can be pretty great, too.

      The more you like your job and the more it pays, the more it might be worth sticking around a bit longer to have that cushion and bigger budget. But it’s certainly not necessary.

      Cheers!
      -PoF

  • Interesting discussion. Money is all relative. I have a SIL who earns almost a million a year as a physician. They have no kids and their personal home is over 7 million and is paid off. However, she likely could never retire since her lifestyle costs are very high. You can outspend almost any amount if you want to.

    I wager anyone who reads these types of blogs have minimal to worry about. Many of us have mastered the art of living on a portion of what we make. The money just keeps accumulating after that.

    • I agree with most points, Dr. MB.

      It’s true that there is no ceiling on how much one can spend. See the hedonic treadmill on ludicrous speed. I believe there is a ceiling, or vastly diminishing returns in regards to happiness on spending well above the fatFIRE level I’ve described, though.

      As far as the people reading these blogs — some are students and residents. Others are mid-career and just discovered the concept of financial independence. Eventually, they may be just fine, but for some, that point could be many years away.

      Cheers!
      -PoF

  • Mr Household CFO

    When i think about this i think about two dimensions. First, annual spending. If you are doing the super frugal version of annual spending you need to self assess your ability to keep that up for decades. Super frugality today can help create that spread between income and expense that helps enable extreme saving. But that purposr to super frugality is distinct from being happy, over a 3-5 decade period, with that level of spending. Maybe you would be but it is a separate question worth assessing. Additionally, how well have you pegged your lifetime annual spending ceiling? Are there unplanned external events that could cause you to go up in your annual spending and for good reason? LeanFIRE and regular FIRE are not so elastic in their ability to handle those scenarios. Second, there is the interplay with SWR. I see a lot of banking on 4% working. Another dimension in which flexibility is constrained.

    FatFIRE to me reduces these risks and for the high earner who starts saving early it seems like the right target. You can always reassess later and settle for FIRE. For me, I like layers of redundancy: using 33x instead of 25x of a target, choosing a target slightly above my current annual spending (which is higher because of geo influences that could be arbitraged later to create extra discretionary head room or deal with failure to have a bigger stockpile or performance returns), and try to pre-pay the biggest known future line items (college, mortgage) in that annual spending to create additional discretionary head room or at least avoid those increasing spending above the target.

  • We currently have fatFIRE. Even when converted to US dollars. That said, I have already found that we spend more now that I work less – due to travel and materials for my various crazy projects. Ironically, the one I just started is turning my recumbent eTrike into a recumbent eFat-trike. Not gonna be cheap, but so worth it.

  • These comments are golden. Great to see other high-income folk real plans and also that I’m not alone in treating ourselves to fatFIRE (not that it would matter).

    We are in regularFIRE territory now and will contemplate RE at fatFIRE of 120K which should be in the next 3-5 years.

    You mention in the comments PoF about travel being a large portion of a fatFIRE budget. I agree. Do you have a post on your planned fatFIRE budget (i think I remember seeing it), in the spirit on your recent total transparency and all?

    One last thing,…. tell me the truth, are you sour grapes about the Super Bowl because you bought home game tickets last year after Stefon Diggs crushed my Saints season? The Eagles killed the miracle my friend. It died a slow death in Philly over the course of 38 points. Oh, and my wife and I would go regularFIRE for a year to see the Saints in a Superbowl, fa sho. You should be able to afford it too thanks to the Smokey the Bear ads : )

  • ArmyDoc

    Bravo for a great post, PoF! I don’t really have “one more year” syndrome as much as “I love being a doc” syndrome.
    I’m retiring from the military in 2 years, but I don’t really WANT to retire from medicine. I will have worked to age 56, so not really “early” in this game even if I did retire.
    Like you I was at FI before I had ever heard of it, and am at fatFI even now – large savings/investments of 25X+ and my military pension will be ~$94K/year pre-tax, indexed to CPI, AND the holy grail of affordable health coverage as a retiree (albeit crappy payor -TriCare).

    I’m really thinking of taking a page from your book and will look for part-time, fun work and be willing to say ‘no’ if the job doesn’t fit. Anyhow, thanks for leading the way, and thanks again for a thoughtful post.

  • Thanks to our real estate investments, my wife and I are nearing FI – I retired early from my corporate job last year at age 46 to focus more on our real estate investments and to pursue other avenues of passive income.

    leanFIRE is the direction we are headed in as we have simple tastes and enjoy travelling frugally (for example – we just spent a week in the Philippines where we ate out every meal but spent well under $200 in total on food!) but are hounded by a couple of expenses that will be large for the time being:

    1 – supporting our kids. One is finally just about on her own now but the other is just starting college next year, ouch – and has several interests outside of high school we don’t want to shut down but cost us a fair bit of money on ongoing classes and lessons, etc.

    2 – New York is our home state (for now – until we can relocate to Florida when our younger goes off to college), and the cost of our family medical insurance coverage is VERY high.

    Thankfully, between our real estate investments and 20+ years of retirement savings, our net worth and passive income support a fatFIRE lifestyle, but where we want to be long term is leanFIRE – and we should be there once the following is complete: New York is no longer our primary state, no longer supporting our kids, and reducing our health insurance premiums.

    My point is that there is a set of people who may ’embrace frugality’, but leanFIRE is impossible due to unavoidable large expenses like healthcare or supporting kids, and if RE is the goal, then fatFIRE might be the only way for them.

    • Congrats on your FIRE last year — are you loving life now?

      If I didn’t have the ability to set aside 3 to 4 years’ worth of expenses in one year of full-time work (last year we spent $61,000), I’d probably be content with a more standard FIRE allowance. But each year is pretty valuable, even working part-time like we do now. But at some point, we’ve got all the cushion we need, and it will be time to hang it up.

      Cheers!
      -PoF

  • Gasem

    This thread is kind of manic. I can tell because it’s wearing me out. I’m retired so maybe I’ll go take a nap on my sun porch.

    How about “right size fire”. Personally I’m glad to be rapidly sliding down the income scale. For the first time last year I made so little money I qualified for a Roth IRA, and I was able to write some college expense off my taxes. Now that’s what I call a treat! I already pay double for Medicare, (because I made too much money in 2015) which I hope will become regular once I get done with Roth conversions. I spent 28 years in the top 1% but lived like a 10%er diverting my excess into investments. Now I’m living like a 25%er, I’m bulletproof and it’s glorious. My taxes are so friggin low it’s unbelievable! I could buy a Tesla on what I’m not paying in taxes, but I’m a loyal 25%er so I bought a Honda.

    When I retired I could have maintained full spending but I budgeted 80% of what I was spending monthly on my advisers recommendation. Couldn’t tell the difference in my lifestyle. I decided to stress test that to see what was possible before the pain kicked in, so I cut another 30%, my wife didn’t even squawk, she just came along for the ride. I married right! So now I just approach my life like I always did. If I want a new car I save up and plan for it and buy it. A month in Italy same gig. My experience as I’ve planned out my future to my death and then to my wife’s death is I don’t see how you can run out of money if you optimize taxes and benefits along the way and not be controlled by a “number”.

    I think we come to FIRE be it fat or lean on a faulty premise, a premise of maximizing (minimizing) consumption. So far I haven’t found consumption to be the most interesting part of retirement. The most precious thing you have to spend in retirement is your time. I do what I want, when I want, as much as I want, and engage it fully. It’s an exquisite way to live. I recently went back to my old practice because my mom needed some surgery. I saw my old partner of 28 years who was quiting 2 days later and moving to VA. I realized I could just walk back into that drama without missing a beat. So glad to already have had the fork stuck in me.

    You want a NSX? $1368/mo on a 39mo lease deal $10K down at signing. If I had one after 1 month my theme song would be: “my Maserati goes 185…lost my license now I can’t drive” and I’d still have 38 months on the lease.

    • “I do what I want, when I want, as much as I want, and engage it fully. It’s an exquisite way to live.”

      I think that could be another definition of fatFIRE. The ability to afford to do just that.

      Cheers!
      -PoF

  • I’ve always considered financially independent to mean the amount of money it takes to live the lifestyle you want. So Lean/fat is really irrelevant. Whatever budget target you set for living expenses, you will need at least 25x that amount saved or in equivalent passive income. I had never thought of it in terms of how other people live and what they spend in comparison to me.

    I guess by these terms I’m a fat guy. But I never look at my lifestyle and think of it that way. I think of it as normal.

    Thanks for including me on your list,

    Dr. Cory S. Fawcett
    Prescription for Financial Success

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  • Hey Doc. FatFIRE here. Gave it One More Year, will be spending ~$100k, and pulling a 3% Safe Withdrawal Rate. I like the comfort of knowing we can always reduce our spending if the world goes nuts. I’d be nervous if I was “Lean” since it kills the option of spending less if necessary.

    Great post. Missed your FF FB group, just signed up! Count me in!

    • You’re in!

      That One More Year can give you a solid sense of security, although I keep hearing from people on the other side who later regret it. Of course, they have survivor bias. If they retired into a bear market (as you and I may very well do), they might be singing a different tune.

      Cheers!
      -PoF

  • I personally identify more with fat / lean / normal being more of a multiplier of your yearly expenses.

    $60k in annual spending may seem like deprivation to some and it may seem lavish to others.

    We are still quite a few years (9, but it was 15 before we found out about the roth ira conversion ladder and got a raise or two) out but are hoping to live on $40k per year quite comfortably. But of course we will be doing something that we will likely get paid for, so that will probably go up.

    Great post!

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  • I’m aiming for morbidly obese FIRE for myself but my hubby happily settles for fat. (I’m all ok with that!) I think we’re both too scared to do lean FIRE when we’re rising a family. We don’t want to pinch pennies on the kids extracircular activities and schooling.

  • For me, fatFIRE is having 25x my income rather than purely my expenses. What’s interesting is that puts my in the same place as the people fatFIREing with annual expenses of $100k.

    Although, I wonder, since I say my fatFIRE is 25x my income, does that make it more a moving target that 25x my expenses?

    • Yeah, I think that makes it tough. Every raise or promtion puts fatFIRE further away. I would need an 8 figure portfolio to meet your criteria. I’m comfortably FI at 1/4 to 1/3 that.

      Cheers!
      -PoF

  • Lawyers often get mentioned when people are discussing professions where FI is attainable but for the most part FI lawyers seem to be conspicuously absent from the blogsphere…

    HH

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  • I’m more on the leaner side and we now do have a FB group as well 😉
    …and I may have had something to do with that too
    https://www.facebook.com/groups/1998000863784473/?ref=br_rs

  • Interesting post as with 2 kids in private bilingual schools in Paris, living beside the Eiffel Tower and being the CFO of a listed company, I have never been certain that frugality (like that of Mr Money Moustache) is something I could embrace in the short term. While I like the concepts of living off the grid and being self sufficient and anti-waste etc (I’m extreme paraphrasing), I also like the international trips with my wife and kids, the beach house and not having to question every thing I buy. I do run a tight budget by the way, but don’t want to be a slave to it. I want to expose my kids to as much as I can, but also teach them the value of money and working hard to achieve what you want.
    My FI budget keeps getting ahead of me, but this time I’ve drawn a line in the sand and fixed a Fat-FI that should take me 3 years to achieve.

    • Sounds wonderful, CFO. I took my family to Paris a year ago, and we could have stayed six weeks or even six months if I didn’t have a job to return to! Since then, I’ve dropped to part-time, so we do get to take some longer trips now, and we love it.

      Cheers and best wishes on the remaining few years on your fatFI journey!
      -PoF

  • Nichole

    I really enjoyed this article. It made me feel like we are not alone. We are planning to moFIRE in a couple of years. If we can just get healthcare figured out.

  • Dr. DMoney

    Love the concept of fatFIRE, puts on a name on what we’ve been planning for all along.

    We’re aiming for about $150,000 post-tax spending in retirement. It’s nice to see people discussing this since a lot of the MMM-type stuff is aimed at <$50k spending. Our current annual spending has been around $150-170,000 and that includes childcare/activities for 3 kids, HCOL housing, and lots of household help for the two full-time professionals. When we plan to retire in 9 years, we will still have the kids at home and I think it will be hard to rip middle/high schoolers out of this HCOL area and picture the family being really happy in a new LCOL area. Ergo, we "need" fatFIRE. Whatever savings we have due to not working/less childcare/less household help, will likely transition into more travel budget.

    The trick is to not let the spending keep creeping up. That's been tricky for us and takes real effort!

  • I guess I accidentally made it to the fat fire level by teaching and investing overseas … … though I still choose to work …feels safer…

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  • Even on lean FIRE I don’t think I can sustain on black beans, rice, and ramen for long. In particular, if I weren’t occupied in my regular day job any longer I’d have a lot more time to go outside, consume, and upgrade my life. Even with more time to DIY there would still be purchasing of raw material inputs – back to cost$.

    To be FIRE for me is to live comfortably if not slightly better than the lifestyle during the regular work life. In addition, when one leaves traditional work to pursue alternate lifestyle business/cottage industries there are still initial capital inputs required (eg starting a website, web hosting, traffic boosting , etc) that will come out of the nest egg in the hopes of the semi-active income to complement the passive income. So why would I want to ACTIVELY take principal from the nest egg into a higher risk venture and requires more effort when I get a more reliable return from being a passive investor is also a debate to be reckoned with down the road.

    The other perpetual challenge to lean/fat FIRE is the cost of housing will continue to go up over long run. So in the instance of people living on the expensive coastal cities and want to maintain that lifestyle, then liquidating a primary residence for the capital gain and uprooting for geo arbitrage is not as easy for the elderly compared to a 20s/30s youngin

    It’s important when setting ANY goal to have something tangible to go after, but at the same time I think with general inflation and housing inflation in particular, that makes the FIRE number more of a moving target. It’s a challenging subject. I don’t have a clear answer. I’m still working on it until perhaps the day I get the boot. 🙂 Then hopefully I’ll be well prepared with all the support and education in the FIRE community over the years to set out in my next endeavor as the younger cheaper labour replaces me.

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  • It’s tough to resist budget creep as you get older. Our budget is around $110,000 now but I there’s really not a lot of fat to cut given our housing costs are 68% of our budget. And that budget doesn’t include any “extras” like a big travel expense or kitchen remodel or whatever. So we’re in the “FatFIRE” camp for sure whether I like it or not.

    • Well, if you’re housing costs are $75,000 a year, everything else is costing you $35,000 a year.

      Once the biggest expense is minimized (i.e. no mortgage / downsize / move) you’ll be practically leanFIRE. Or maybe you’ll be able to take those big trips and upgrade your lifestyle to true fatFIRE status.

      Cheers!
      -PoF

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