Five 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 learned what it meant to be financially independent. I took advantage of my FI status by working less and adventuring more. I finally put the RE in FIRE in August of 2019, retiring from medicine at the age of 43.
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 have 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. As of February 2020, there are over 10,000 members and you’re welcome to join us!
I don’t believe there’s a consensus or standard definition of what constitutes fatFIRE, so I get to go ahead and make my own.
The average American household spends 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 between $100,000 and $120,000 a year.
Your number will, of course, vary based on where you live and how large of a family you’re supporting, if any. A single guy in Walla Walla, Washington, certainly does not need as much as a family of six in Seattle to live large.
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.
FatFIRE vs. LeanFIRE
LeanFIRE and fatFire are different ways to live once you achieve Financial Independence and Retire Early (FIRE).
FatFIRE is a retirement strategy that allows you to maintain your lifestyle with little to no compromise. This means you get to live where you want and do what you want in retirement. If you are fatFIRE, you have enough money to cover the cost of most luxuries and unnecessary expenses. Most fatFIRE retirees would spend around $100,000 to $120,000 annually during retirement. At this level of spending, you would need between $2.5 Million and $3.0 Million of assets to retire.
LeanFIRE is a retirement strategy where you retire early by living a simple lifestyle, cutting unnecessary costs and luxuries. Most people consider spending around $40,000 to $60,000 annually during retirement. At this level of spending, you would need between $1.0 Million and $1.5 Million of assets to retire.
Who Is FatFIRE For?
FatFIRE is early retirement for 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 will need a six-figure salary. Preferably an income in the multiple six-figures. fatFIREees are likely 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 their jobs do not define them or are comfortable giving their minds, body, and ego a rest as early retirees.
There are certainly many people who 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 some tradeoffs have to be made to meet a particular budget to ensure the longevity of a portfolio that doesn’t measure in the multiple millions. A FIREd life can be a 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 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.
How to Achieve FatFIRE?
The rule of thumb for fatFIRE is to have enough money to cover 25 years of your living expenses.
Our baseline for fatFIRE expenses is around $100,000 yearly or around $8,000 monthly. To achieve FatFIRE at the minimum, you would need a retirement fund of $2.5 Million. This would allow you to follow the 4% rule and spend $100,000 yearly during retirement.
If you wanted to fatFIRE at a fatter level, such as $120,000 or $150,000 yearly, you would need a retirement fund of $3.0 Million or $3.75 Million, respectively.
With the above numbers in mind, fatFIRE is subjective for everyone. To create a more customized fatFIRE retirement plan, follow the calculations below:
- Retirement assets at maximum spending for fatFIRE: (yearly expenses from highest spending year during working years) x 25
- Retirement assets at target spending for fatFIRE: (target yearly expenses during retirement) x 25
- Retirement assets at minimum suggested spending for fatFIRE: $120,000 x 25 = $3.0 Million.
To calculate a scenario where you would spend the most during retirement, look at your historical spending habits and find the most money you’ve spent in one year, then multiply that by 25.
This would give you the total retirement assets you need to hit fatFIRE at your most expensive lifestyle. This number will likely be overestimated because it includes mortgage and other expenses you are unlikely to have during retirement.
You can also choose a target number you want to spend in retirement each year. Many financial experts expect you to spend between 50% and 80% of your annual employment income yearly. This number is meant to adjust for the cost of living and other expenses you are no longer expected to have during retirement.
Finally, the minimum suggested amount you will likely spend each year during retirement is around $120,000. You can reduce the suggested amount each year to $100,000 if you spend a minimal amount.
But with inflation, you will likely spend between $100,000 and $120,000 each year with fatFIRE. Following this rule, at the minimum, you would need between $2.5 Million and $3.0 Million in assets to fatFIRE.
To learn more about what variables you need to consider when calculating your fatFIRE number check out our article The Most Important Variables in the FIRE Equation.
How Much Do You Need To FatFire?
The amount you need for fatFIRE is subjective, but as a rule of thumb, we anticipate that most people would spend between $100,00 and $120,000 yearly in retirement. We also recommend following a 4% withdrawal rate each year during retirement.
With these two assumptions, you would need between $2.5 Million and $3.0 Million to achieve fatFIRE.
To calculate your level of fatFIRE, all you need to do is multiply your ideal yearly retirement expenses by 25. This will give you the total assets you need to achieve fatFIRE while applying a 4% yearly withdrawal rate for 25 years.
When deciding on your ideal yearly expenses in retirement, remember that for every $20,000 of additional annual expenses you want in retirement, you will need to save an additional $500,000 to achieve fatFIRE.
For example, if your fatFIRE ideal yearly expenses are $225,000, you will need $5.625 Million in assets to achieve fatFIRE. Below is a table showing the target assets you would need to reach fatFIRE at different levels of yearly expenses.
Once you have your fatFIRE numbers in mind, you can visit our Financial Independence calculator to understand how long it will take to achieve your fatFIRE goal.
Pros of FatFIRE
Maintain or improve your lifestyle
Unlike leanFIRE, fatFIRE offers you financial flexibility during retirement. This means you get to live the lifestyle you want during retirement rather than having to cut back and live a simple life.
Also, most people experience lifestyle inflation once they achieve fatFIRE. The main reason is that to achieve fatFIRE, you cut your costs to the minimum to increase savings. But, once you reach fatFIRE, you can resume your natural state of living and enjoy your retirement years by doing what you want.
Unlike leanFIRE, fatFIRE offers you financial flexibility during retirement. If you want to travel more, pick up a hobby, move to a nicer city, or buy a new car, fatFIRE offers you the financial freedom to do so. The fatFIRE retirement strategy allows you to do most things you want without worrying about money.
Peace of mind during retirement
FatFIRE gives early retirees the peace of mind they need when they retire. At the assets levels to achieve fatFIRE, you can be confident that you have sufficient assets to cover any unexpected costs during retirement.
In addition, fatFIRE also offers you peace of mind that your assets don’t need to generate a certain level of return to maintain your level of retirement. Once you reach fatFIRE, regardless of the return on your investments, your current assets should generate enough return to give you a long and conformable retirement.
Cons of FatFIRE
It takes longer to achieve
One of the most obvious downsides of fatFIRE is that compared to other retirement strategies, it will take you longer to achieve. In some cases, achieving fatFIRE might take twice as long as a leanFIRE strategy.
If you held your savings and investments constant, it could take you twice as long to reach FIRE with a fatFIRE strategy. For example, with a leanFIRE strategy, your target spending could only be around $60,000 annually; with a fatFIRE strategy, that target could be $120,000 or greater.
Heavily reliant on investment returns
Another downside of fatFIRE is that to reach the level of assets you need for fatFIRE, you will rely heavily on the returns of your investments to reach your goals.
This means that downturns in the market or poor performance on certain assets can delay your fatFIRE goals.
In contrast, investment returns in a leanFIRE strategy would be icing on the cake rather than necessary. Many physicians, for example, could save their income to reach leanFIRE and wouldn’t have to rely so heavily on investment returns.
This level of reliance on investment returns adds a certain level of uncertainty to the fatFIRE strategy that they can’t control.
Less flexibility during the accumulation phase
The financial assets that fatFIRE requires may force you to live a much more restrictive lifestyle than you would with a leanFIRE strategy. Also, you will likely have to live this restrictive lifestyle longer than a lean FIRE strategy.
This prolonged level of restrictiveness may be too intense for some and can cause people to give up or be unhappy.
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
“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
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:
You can join these discussion groups to discuss with other like-minded individuals trying to reach FIRE and fatFIRE.
fatFIRE Facebook Group (join us!)
You can also check out our FIRE Crossroads Interview series, where we interviewed different people and their approaches to achieving FIRE.
Below are some additional websites that discuss FIRE and how you can reach it. Check them out for additional information.
If you liked this post, you can check out more of our content on Financial Independence here.
- Actuary on FIRE
- Biglaw Investor
- Can I Retire Yet
- Crispy Doc
- Dr. Cory S. Fawcett
- Early Retirement Now
- ESI Money
- Financial Samurai
- Financially Alert
- Go Curry Cracker
- Joshua Kennon
- Military Dollar
- Physician on FIRE
- Table for One
Frequently Asked Questions
What is the FatFIRE Net Worth?
The FatFIRE net worth is between $2.5 Million and $3.0 Million. The FatFIRE net worth assumes these are the total assets you must use during early retirement. At this level of assets during retirement, this would allow you to spend between $100,000 and $125,000 per year and follow an annual 4% withdrawal rate.
What is Chubby FIRE?
Chubby FIRE is a retirement strategy plan that falls between leanFIRE and fatFIRE. Chubby FIRE is a strategy that allows you to live a comfortable retirement without needing a simple, lean lifestyle. With this strategy, you live a modest retirement life without the excessive expenses that fatFIRE retirees might have.
Chubby FIRE is subjective, but if you consider a leanFIRE around $40,000 per year in expenses and fatFIRE around $100,000 in expended yearly, Chubby FIRE falls around $65,000 to $75,000 yearly. At this level of expenses, you would need around $1.625 Million and $1.875 Million of assets to retire.
What is the Difference Between FIRE and FatFIRE?
FIRE is an acronym for Financial Independence and Retire Early. FatFIRE is a type of FIRE.
The main idea of FIRE is to earn enough money so that you can save enough to have financial independence and retire early. To FIRE means to save enough money to live a comfortable life while taking steps to be frugal and cost-effective during retirement. If you want to learn more about the FIRE movement, check out our article: The Basics of FIRE.
FatFIRE is one way you can approach FIRE. With fatFIRE, the goal is to have enough money in retirement not to diminish your standard of living and worry about unnecessary expenses.
What Are Some FIRE Variations?
FIRE is the general idea of reaching financial independence and retiring early, but there are multiple variations that you can take when trying to achieve FIRE. Each variation takes on a different approach to how you will live your life during retirement. Some of the most common
FIRE variations are listed below
- LeanFIRE: With leanFIRE, you would live a simple and cost-effective life during retirement. This would allow you to reduce the amount you need to retire and help you achieve FIRE faster while earning less money.
- FatFIRE: With fatFIRE, the goal is to earn as much money as you can to save enough to live a comfortable and enjoyable retirement without cutting costs or diminishing your standard of living. FatFIRE would require you to save more money before retiring than other FIRE strategies.
- Barista FIRE: Barista FIRE falls somewhere between leanFIRE and fatFIRE. With Barista FIRE, the idea is to save enough money to retire early, but you would work a part-time job for supplemental income and save money on health insurance.
- Coast FIRE: Coast FIRE is the idea of saving enough money to retire early but not necessarily enough to cover your entire retirement. The idea is that the money you have saved will continue to grow over time, and you will coast into retirement and eventually have enough money to complete your retirement. With Coast FIRE, you would determine the amount you need to save that would allow you to retire early while growing enough to maintain you throughout your entire retirement. Coast FIRE often includes having a part-time job for supplemental income and reduced healthcare costs during the early stages of retirement.
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?