Have you dreamed of achieving financial independence and retiring early, but with a more lavish lifestyle? That's the goal of Fat FIRE. It’s Financial Independence, Retire Early with a "fat" nest egg that supports higher spending, and a Fat FIRE calculator can help you map out your path to this ambitious financial milestone.

Calculate Your Fat FIRE Number

There is no special Fat FIRE calculator. Your Fat FIRE number is just your FIRE number!

The quickest way to approximate your FIRE number is to use the 4 percent rule. Write down your target retirement age, expected annual return on investments, and how much you plan to spend annually in retirement. Then, multiply annual spending by 25 to get your FIRE number.

FIRE Number = E x 25

Where E is your expected annual expenses.

What will make this number “fat” is the annual expenses figure. In Reddit forums, FatFIRE was sometimes defined as having $100,000 or more in expected annual expenses ($8,333 a month), which would mean a FIRE number of $2.5 million or more.

Fat FIRE goes beyond the typical FIRE goal of covering basic living expenses in retirement. It aims to provide enough passive income to fund a higher standard of living. This might mean luxuries like international travel, expensive hobbies, or a large home. But it could also mean wanting to become work-optional while still raising kids, or taking care of elderly loved ones.

Where Fat FIRE Originated

The FI movement itself traces its roots back to the 1992 book Your Money or Your Life by Vicki Robin and Joe Dominguez. This book laid out a philosophy of reducing expenses, maximizing savings, and investing to generate enough passive income to retire early. Throughout the 2000s and 2010s, online communities helped accelerate these ideas.

Financial independence often involves cutting expenses substantially. And for some, this goal isn’t realistic or desirable. FI is just math: The more money you have, the bigger your budget can be when you stop working. As such, Fat FIRE enthusiasts began to break off into their own subgroups where they could relate to one another’s unique situations.

Since then, Fat FIRE has gained more mainstream exposure. One article in 2022 from Sophie Mellor at Fortune positioned Fat FIRE as the opposite of quiet quitting, which I found interesting and pretty accurate.

Fat FIRE people are busting their butts to stack the cash, and they’re often unapologetic about their hustle.

Why Fat FIRE Matters

Achieving any version of FIRE delivers immense benefits, including freedom, flexibility, reduced stress, and the ability to pursue your passions. But Fat FIRE elevates those rewards to include more creature comforts and enriching life experiences along the way. It expands your options.

Striving for Fat FIRE encourages hitting an aggressive saving rate, then investing to build substantial wealth. Even if you fall short, you'll likely still end up with a sizable nest egg. And if your priorities change, that high savings rate gives you a buffer to change course.

What’s a Fat FIRE Age?

Your Fat FIRE age depends on your financial assets, so it’s unique to your situation. It’s the threshold at which you have sufficient savings and investments to sustain a comfortable lifestyle without the need to work.

Fat FIRE accommodates greater flexibility, freedom, and a more luxurious lifestyle. This means having the financial means to maintain a higher standard of living, including fine dining and travel.

Examples of Fat FIRE Calculations

Consider a 35-year old couple earning a combined $300,000 per year and spending $120,000. With a 60% savings rate, they could amass a $3 million portfolio by age 45, assuming 7% average annual returns.

Under the 4% rule, a $3 million portfolio could sustainably provide $120,000 per year for a 45-year retirement. That matches their existing $10,000 monthly spend for a seamless Fat FIRE transition.

Or take a mid-career professional earning $150,000 annually, with $80,000 in yearly expenses. Saving half their income, it would take 16.5 years to accumulate a Fat FIRE portfolio of $2.4 million, based on 8% average returns. At a 3.33% withdrawal rate, that portfolio could support $80,000 in annual retirement spending, factoring in the income growth rate over time (for timelines of 30 years or less).

A Fat FIRE calculator illuminates the tradeoffs. Suppose that the same professional is willing to work part-time and delay full retirement to age 55. Now they would only need to save 30% of their income to stay on track, which allows more discretionary spending along the way.

Fat FIRE offers an appealing vision of early retirement without sacrifice. By running your own numbers, you can start charting your own path to a fabulous financial future, and your Fat FIRE fantasy may be closer than you think. ⬥