Fat FIRE: Enjoy the Finer Things in Retirement

Steve Cummings


Fat FIRE offers the chance to enjoy a higher standard of living with more financial security than other kinds of FIRE. Here's how to make it happen.

Financial independence is a dream for many people. The idea of quitting your job and doing what you want with your life is incredibly appealing. But once you start researching how FIRE works, you might notice that it involves quite a bit of sacrifice — even after you achieve financial independence and decide to retire. 

While that may be true for Lean FIRE and regular FIRE, Fat FIRE offers the chance to enjoy a higher standard of living with more financial 

security than other kinds of FIRE.

Let's Review: What is FIRE?

FIRE is an acronym for “Financial Independence, Retire Early.” The basic idea is to save a large percentage of your income and invest it wisely to eventually reach a point where you no longer need to work to support yourself.

The key to FIRE is to make sure your expenses are low enough to support you. For most people, this means living below their means and making some sacrifices in the short term to enjoy a much more flexible lifestyle in the long term. But with Fat FIRE, you can look forward to much more financial flexibility than other kinds of FIRE.

What is Fat FIRE?

Fat FIRE is simply a version of FIRE for people who want to retire to a more luxurious lifestyle than they currently live. You need to save an even more significant percentage of your income and develop an extensive portfolio of investments relative to other kinds of FIRE.

While it can be a challenge, it's possible to achieve Fat FIRE if you're willing to make sacrifices in your lifestyle and invest in riskier situations with a higher potential return on investment.

Fat FIRE is the opposite of Lean FIRE, a more austere lifestyle in which you might retire early but live very frugally. While Lean FIRE still allows you to achieve financial independence, it requires a minimalist lifestyle that might not leave much room to enjoy your retirement.

On the other hand, Fat FIRE allows you to retire early and live a relatively luxurious lifestyle. However, to achieve it, you must be prepared to save a more significant percentage of your income and invest in higher-risk situations with a higher potential rate of return.

Fat FIRE chart

How Do You Achieve Fat FIRE?

Achieving Fat FIRE may seem out of reach, but anyone can succeed if you plan and make sacrifices. The sad fact is that most people only save around 7% of their total income in America, but if you're hoping for fat FIRE, you'll need to aim for a much higher savings rate.

With other kinds of FIRE, saving 30% of your income might be sufficient, but for Fat FIRE you need to be prepared to stock away 50% or more of your annual income, depending on your timeline for retirement.

Saving for retirement and practicing frugality are a few ways to make Fat FIRE possible. Here are a couple of ways to achieve Fat FIRE.

1. Start By Evaluating Your Current Expenses.

You need to prepare to save as much money as possible by living well below your means and investing your money wisely. If you don't already have a clear picture of your spending habits, look into apps like Mint or True Bill to help you understand where exactly your money ends up going every month.

2. Calculate How Much You Need to Fat FIRE.

Once you're ready to FIRE, you'll need to have a solid plan for how much money you can safely withdraw without running out prematurely. Fidelity suggests that a 4% – 5% withdrawal rate is the most sustainable while adjusting for inflation.

To determine how much you need to have tucked away before you can comfortably achieve fat financial independence and retire early, you must first calculate the baseline amount you need in your portfolio.

You can find this number by multiplying your desired monthly expenses by twelve and dividing that number by your withdrawal rate of 4%. So, for example, if you want to spend $6,000 per month to enjoy things like travel, fancy dinners, and entertainment, you would need to have $1.8 million saved up to enjoy Fat FIRE.

3. Make a Plan to Cut Back.

Once you understand your big financial picture and set your Fat FIRE goal, it's time to look for places to start cutting back. Of course, the best way to cut back for most people is to live in a smaller home or even with roommates (yes, parents technically count as roommates).

Achieving Fat FIRE also means cutting back drastically on your lifestyle expenses. Depending on the kind of lifestyle you're currently living, achieving Fat FIRE could mean eating out less often, driving a cheaper car, or taking fewer vacations.

When you consider that every frivolous purchase you make only sets you further away from your goal of financial independence, it changes the relationship you have with your money. Is that five-dollar cup of coffee on the way to work worth waiting a whole extra year to live your Fat FIRE dream?

Still, don't forget to balance saving money and to enjoy your life — Fat FIRE won't be any fun if you don't maintain meaningful relationships with the people who bring you joy, so spend what you must to keep a healthy social life.

4. Prepare to Start Investing Big

If you have any hope for Fat FIRE, you need to have a strong portfolio of investments. Ideally, you should invest your money in assets that will generate income and appreciate over time. The most obvious way to start investing your money is through stocks, which can grow over time. You can also invest in real estate, bonds, and other assets with a high chance of appreciation.

Index fund investing has been a way for many people to have a diversified portfolio that matches the market. Many of the richest people like Warren Buffett suggest a low cost index fund like funds from Vanguard

It's important to remember that investing comes with risk. There is no guarantee that you will make any money back. It would be best if you also diversified your investments to avoid putting all your eggs in one basket, so be sure to invest in different assets to spread out the risk.

5. Create Multiple Streams of Income

If you hope to achieve Fat FIRE, generating multiple income streams is an excellent strategy for reaching your goal in a reasonable amount of time. There are many ways to create multiple income streams, but some of the most common include starting a side hustle or investing in real estate.

Being able to create passive income can help you create a life with more flexibility and time. With more income streams, your net worth will increase exponentially and allow you to retire early. 

The Pros and Cons of Fat Fire

While Fat FIRE offers you the chance to enjoy more of the fruits of your labor, there are some drawbacks to consider compared to other kinds of FIRE.

PRO: Fat FIRE Creates a Financial Cushion When The Market Fluctuates.

Since the idea behind Fat FIRE is that you've saved up enough money to live a more luxurious lifestyle, you always have the option to cut back on living expenses if necessary. 

Unlike Lean FIRE or traditional FIRE, where you may have to give up your lifestyle entirely if the market crashes, Fat FIRE gives you the flexibility to continue living a comfortable life even when the stock market takes a hit.

CON: Fat FIRE Can Be More Challenging to Achieve.

Saving up enough money to live a luxurious lifestyle is no easy feat, and it may take years of disciplined saving and investing to achieve your goal. It takes years of frugal living and sacrifice to amass the wealth necessary to Fat FIRE, so it's not for everyone.

If you cannot make Fat FIRE work, try Coast FIRE or Barista FIRE. They are more accessible paths to achieving the FIRE lifestyle. 

PRO: Fat FIRE Allows For a Flexible Lifestyle.

One of the best things about Fat FIRE is that it gives you the freedom to choose how you live your life. You can live anywhere in the world and enjoy the finer things. You'll have the means to travel and live a more nomadic lifestyle. You can do so without worrying about where your next paycheck is coming from or denying yourself opportunities because of financial constraints.

CON: Fat FIRE Can Be Difficult to Maintain.

Once you've achieved Fat FIRE, you can't just sit back and relax — you need to stay on top of your finances to ensure that your nest egg lasts as long as you need it. You'll need to monitor your spending, invest wisely, and stay prepared for anything that life throws your way.

So start saving now and make wise investment choices to avoid running out of money later in life. If you manage to do it right, you could build lasting generational wealth that solidifies a legacy for you long after you're gone.

Final Thoughts

Achieving Fat FIRE requires a level of financial discipline that most people are not used to, but it is possible with the right mindset and enough dedication. By cutting back on your expenses, living below your means, and investing your money wisely, you can set yourself up for early retirement and financial freedom.

The FIRE movement works to create a path to control our own time. With the financial freedom you have gained, you will have more time and flexibility in your life. Fat FIRE is just another path to accomplish these feats and live a more excellent retirement. 

3 thoughts on “Fat FIRE: Enjoy the Finer Things in Retirement”

    • Amen to that! The cushion in case things go sideways makes it a lot better. We can always tighten our belts in times of volatility, but if you have a Lean FIRE portfolio then it gets very hard to tighten that belt even further.

  1. Amen to that! The cushion in case things go sideways makes it a lot better. We can always tighten our belts in times of volatility, but if you have a Lean FIRE portfolio then it gets very hard to tighten that belt even further.

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