Why FatFIRE Might Be My Only Way Out

Freedom is fantastic, and Fat FIRE is one way to make your dreams come true.

What is Fat Fire or FatFIRE?

Fat FIRE is a term that describes an early retirement lifestyle with a higher spending rate and, as a result, a higher net worth. Usually, Fat FIRE folks have a net worth of several million and spend close to $100,000 or more every year. 

Exactly how big a net worth? If you're a follower of the Trinity study, a yearly spending rate of $100,000 yearly means your net worth is probably in the neighborhood of $2.5 million. 

What we're talking about here is financial freedom. 

When you reach financial freedom (or independence), you break through the “time” chains that bind you. Fat FIRE is a version of financial independence that allows more flexibility in how much is spent during retirement.

Having to go to work at a particular time and complete specific tasks during the week restricts how you can use your available time. You've got bills to pay, and you might have a family to feed. You might not have a choice.

What if you could reach a spot where you could quit your job if you wanted to? Would you do it? How would you spend your time?

I've been thinking about what to do if I no longer had a typical 9-5 job. It's an exciting thought because there is a lot I love about what I do now.

I started to hear the term Fat FIRE recently. The idea is to build up a large enough nest egg not to have to cut back on spending and live in a very urban environment. After thinking about this concept, I realized what I want to do will not be cheap. I think what we are working towards is Fat FIRE.

Can Fatfire Help What You're Doing Now

Think about what brings you enjoyment and makes your heart flutter like a hummingbird. It's a healthy way to determine what you will do when you reach financial independence.

Below are some things I enjoy doing right now:

  • Solving problems
  • Spending time with my family
  • Planning the future, which can include activities, vacations, and finances
  • Building stuff
  • Having focused time to work on passion projects (like this blog)
  • Reading
  • Spending time with friends I connect with
  • Being active: working out, riding my bike, walking, etc.
  • Cooking

What Would I Do With Financial Freedom

Reaching financial independence would mean I become the master of my time and have 100% say in how I use it.

In addition to focusing on things I already like to do now, there are other things I would like to pursue. Some are not activities, per se, but they are changes nonetheless.

  • Not having to worry about getting paid
  • Traveling the world
  • Moving to a more walkable city
  • Not owning a vehicle
  • Downgrading our house and having less shit
  • Eating out more
  • Giving lovely gifts to family and friends
  • Completing Zelda: Breath of the Wild
  • Reading more
  • Learning to enjoy nature and relax

And that is probably just the tip of the iceberg. And I hope to pursue some of these things before reaching financial independence.

Each of us has an inner dragon. What would this dragon do if it was unleashed?

Financial Independence Will Be Expensive

Looking at this list, I'm surprised at how much this will cost. Some of these things cost nothing (or very little), but there are some oversized dollar bill items on this list.

Traveling the world doesn't necessarily have to be expensive, but plane tickets aren't cheap. Moving to a city in a walkable urban environment will probably mean a higher cost of living. Going out to eat more means spending more on dining out. Purchasing more gifts for family and friends will drain my wallet.

All of this makes me wonder. Will our living expenses increase once we reach financial independence? How much of a nest egg will we build to generate income supporting this lifestyle?

Fatfire vs. Leanfire: Defining Comfort

As I said, Fat FIRE is a term that describes a higher net worth and a higher level of spending lifestyle. LeanFIRE, on the other hand, is the opposite. Lean FIRE retirees spend significantly less yearly than their Fat FIRE counterparts and have a lower net worth.

A common element I noticed once I started writing these thoughts down was that we're reducing the number of things we own and the size and focusing more on what will bring us value during this time in our lives.

Maybe we decide to move around or find a spot that acts as our base for long-term travel. Or perhaps we move closer to our kids to help them out temporarily.

But the point is being able to change our plans when we want and having enough money to support our lifestyle.

There is a time to be frugal and cut spending, but I dream about loosening up our budget when reaching financial freedom. The larger our nest egg, the more options we will have. I don't want to be financially wasteful, but I also don't want to feel like I am bound to be super frugal in everything we do.

I don't want extra space to store crap I will never use. We already have a large house full of shit we don't utilize. We are beginning to change our habits, but I would like to simplify our lives even further once we reach financial freedom.

Let's Look at The Numbers

If we assume we won't have any debt, including a mortgage, the money we need to live on will be less than we make now.

But how much money will we need to live this lifestyle?

That is a tricky question. A big part of the equation is where we decide to live. If we can find an urban environment where we can be happy without costly real estate, we could live comfortable lives for much less money. But that is a big IF. Our options might open up if we look into cities outside of the US.

And we might decide to live in a cheaper location that isn't super walkable to save money. It isn't like there is any rule that says we can't compromise.

For this article's sake, bringing home $100,000/year before taxes should give us enough options. Again, this assumes we are 100% debt-free. We might be able to do what we want for much less, and I hope to calculate a more exact number as time goes on.

The most significant risk I see is how expensive real estate is in larger cities. Prices quickly get into the $1m price range. $100k per year may be insufficient to live where we want to settle down. We'll have to have a giant nest egg, live in a smaller place, or find a different location.

Rule of 33

An article on Financial Samurai inspired me, titled “The Ideal Withdrawal Rate For Retirement Does Not Touch Principal.” He is probably a little more conservative with his retirement funds than me. A comment on this article talked about the “Rule of 33”.

In this context, the “rule of 33” is about multiplying the amount you want to pull each year by 33, and that is the size of your nest egg you want to shoot for.

You'll often read about the 4% rule, and this is more conservative than that. Especially if you are retiring early, I think fudging lower on your estimates is smart.

$100,000 x 33 = $3.3 million

I haven't overthought how the different retirement funds, plus “hopefully” having some income from social security when we reach that age, play with each other. But generally, with our after-tax investment accounts, we are shooting for this amount.

Combined with pre-tax retirement savings, hopefully, we will have more money saved up than $3.3 million.

$3.3 million is a large amount of money. But if we want to pursue everything on our list, I think this amount (plus a good amount in retirement savings) would provide us with many options, plus the ability to leave an inheritance to our children.

I would instead set a higher number and face the situation where we don't spend as much as we think rather than run out of funds and go back to work. If I'm going to retire, I never want to have to enter the workforce unless that is what I want to do.

The Passive Aggressive Investor has a great article reviewing how large your retirement fund needs to be to pull in a certain yearly income with different percentages. I found it helpful to see how changing the annual withdrawal rate changes the amount we should save. As pointed out in the article, you can constantly adjust how much you pull out every year.


The above amount is based on current dollars. But as time goes on, inflation will decrease the $1. In other words, the $3.3m amount above does not account for inflation.

 Let's assume we aim to retire in 20 years, that inflation will be 3 %/year, and that we hope to bring in $100,000/year. Here is our equation:

$100,000 * 1.03^20 = $180,611 (rounded)

If we want to live on what is about $100k today in 20 years, we should shoot for $181,000/year. Using the Rule of 33 above, this now comes to almost $6m! Using the 4% rule instead of the Rule of 33, that value comes to $4.5m. This changes the numbers quite a bit.

These numbers make my head hurt. How the heck are we going to get anywhere near this amount? I'm not 100% sure, as we are just starting our FIRE journey. But I will continue considering this as our net worth increases this year.

What if We Can't Reach Our Goal

Life happens, and priorities change. If we can't hit our goal, are we doomed?

It might require us to change our plans. Or it might mean we have to work a regular job for longer. But it won't be the end of the world. We are still early in our FIRE journey and don't have a goal date set.

But there is a good chance if we continue to push hard, we might be able to hit our goal faster. Reaching our goal earlier could be from job raises or increasing our income from side hustles. Also, when our nest egg starts approaching large numbers, we can go heavy into real estate or invest in other passive income streams.

If, for example, this blog takes off (big IF there), that might generate additional income.

At this stage, we are still trying to figure out ways to increase our income, and we aren't intimidated by this large number. We are motivated to reach FAT FIRE.

Setting a general goal, even if you aren't sure you can hit it, can help motivate you to optimize your time.

Life Is More Than Money

A recurring idea that keeps popping up in my articles is that pursuing our financial goals shouldn't sacrifice what matters most to us.

And money is not the most valuable thing we have.

This idea is an area I'm constantly fighting. I'm passionate about making this blog successful through pure grit, but it is not more important than my relationship with Andrea and my two girls. I would do anything for them.

Sometimes I need to stop what I'm doing and do a “time check” to ensure I'm not too focused on my passion projects. I'm very passionate and can get lost in what I want to focus on at a given moment. This passion works great when pursuing goals, but I can also sacrifice what matters most.

Sacrificing my relationship with Andrea and my girls is not worth reaching my financial goals.

What do you think about my plan to pursue FAT FIRE? Am I shooting to spend too much during retirement?

Chris is a financial blogger who loves to be transparent about money-related issues. He’s paid off massive amounts of credit card debt and is the blog author of Money Stir. His main focus on Money Stir is talking about how money relates to our relationships, personal development, and how to plan for the future we want. He’s been quoted on Market Watch, The Ladders, and other publications.