FAT FIRE with Maximum Investing and Savings

FAT FIRE with Maximum Investing and Savings

Is it Possible to Retire Early, in Luxury?

Fat FIRE (Financial Independence, Retire Early) followers say, “absolutely, yes, you can have it all.”

This growing movement of committed investors aims to retire decades before most people do. But they don’t want to scrimp and save in their early retirement— they plan to live their best lives.

Early retirement means complete financial freedom and security in the Fat FIRE movement. It means you can spend as much on travel as you want. It means never having to worry about how much you’re spending.

But, How do they do it?

What does it take to achieve Fat FIRE?

In this article, we’re going to walk through the basic framework of Fat FIRE, so you can see exactly how Fat FIRE practitioners achieve financial independence and retire early.

We’ll also cover what you need to know before you start because Fat FIRE isn’t an option for everyone. But don’t worry if it’s not— because we’re also covering alternative routes to financial independence that can help anybody retire early.

What is Fat FIRE (Financial Independence, Retire Early)?

Fat FIRE is a variation of FIRE, but with all the numbers cranked up.

Those who require an annual passive income of $100,000 – $200,000 are considered Fat FIRE practitioners.

This is a higher-than-average income, and it’s necessary for those who spend more than average.

“$100,000 a year isn’t a steady diet of caviar and champagne,” says Leif Dahleen, an anesthesiologist who achieved financial independence and pulled the trigger on early retirement at 43. “but with a paid-off mortgage and no work-related expenses, $100K can go a long way.”

Dahleen illustrates how the typical Fat FIRE practitioner doesn’t believe they’re living in the lap of luxury. Rather, Fat FIRE practitioners believe that this income is the minimum amount required to live comfortably.

Calculating Your Fat FIRE Number

Calculating your Fat FIRE number is no different from calculating any other FIRE numbers, like Lean or Regular FIRE.

Calculating a Regular FIRE Number

The easiest and most comprehensive way to calculate a FIRE number is to use a FIRE Age Calculator. Doing so can help you get a truly accurate picture of when you could realistically achieve financial independence and retire early.

But there is a simpler way to roughly calculate your FIRE number. This is merely napkin-math, but it can be a handy and quick tool to begin exploring your options.

The foundation of this method is built upon, is called the 4% rule.

The 4% rule dictates that you can withdraw 4% of the money you’ve invested each year after interest accrues and never be at risk of your wealth deteriorating.

4% x 25 = 100%

The value of your 4% withdrawal rate must be enough for you to live off of. So, if you know your annual living expenses, you can quickly determine what value 100% of your investments must have.

Long story short, the typical method for calculating a FIRE number is:

Annual Expenses x 25 = FIRE Number

Using this formula, we can napkin-math that if we want a passive income of $100,000 per year, our FIRE number is $2.5 million.


Fat FIRE practitioners have a net worth of between $2.5 million and $5 million.

But our calculation doesn’t stop there. Fat FIRE requires a slightly altered formula.

Calculating a Fat FIRE Number

Fat FIRE is difficult to achieve.

$2.5 million is a lot of money. More than most people can save. Fat FIRE practitioners often use other, more profitable income streams for supplemental income.

The most common of these profitable income streams is renting out a property.

If you factor these additional income streams into your equation, you can significantly reduce your Fat FIRE number. Your new equation becomes:

(Annual Expenses –Annual Non-Investment Income) x 25 = FIRE Number

This leaves you with the amount of money you need to have invested in bringing your total passive income up to your desired annual income of $100,000-$200,000.

For example, let’s assume your annual spending is $100,000, and you rent out a property for under $3000 per month (let’s call it $35,000 per year). If we plug in the numbers, we get this:

(100,000 – 35,000) x 25 = 1,625,000

Your net worth is still the same as before, but you’ve brought your FIRE number down from $2.5 million to $1.625 million.

Many consider a rental yield of 7% realistically achievable, making it a little more efficient to supplement your nest egg with other income streams like rentals.

Calculating a Fat FIRE Number

Who is it for?

Fat FIRE is the hardest way to achieve financial independence and retire early. It simply isn’t an option for everyone.

To generate more wealth than the average person can, you must have some advantage.

This could mean having a high salary. “You’re going to need a six-figure salary.” Says Leif Dahleen on the topic. “Preferably an income in the multiple six figures. fatFIREees are likely to be doctors, lawyers, engineers, small business owners, and entrepreneurs.”

It could also mean that you have existing wealth to build upon. For example, you inherit a property that you can rent out, or you have a strong support network of family or friends who provide you with significant financial aid.

Even with such advantages, retiring early takes longer with Fat FIRE than with other variations. Most Fat FIRE practitioners don’t fully retire until after 40.

  • Fat Fire VS

If you’ve read this far and realized Fat FIRE isn’t for you, don’t fret. Plenty of other options make financial independence and early retirement realistic goals anyone could achieve.

Let’s compare a few of the most popular FIRE variations with Fat FIRE to see how they differ, and who they’re for:

  • Fat FIRE vs. Lean FIRE

Fat FIRE and Lean FIRE are polar opposites.

Lean FIRE requires a lower saving rate and is suitable for those with annual expenses of $40,000 or less. Your Lean FIRE number would be between $500.000-800,000.

Lean FIRE is far more achievable and far more quickly than Fat FIRE.

However, Lean FIRE requires you to minimize your spending and fully embrace frugality to make your living cost as low as possible.

This makes it more suitable for those on a low income, couples without kids, or those who want to hit retirement as early as 30 years old.

  • Fat FIRE vs. moFIRE

If you find even Fat FIRE figures won’t cover your spending, you might need to moFIRE.

The FIRE community has used the terms “obese” or “morbidly obese” to separate the highest earners from one another. MoFIRE stands for “morbidly obese FIRE,” which refers to those who require a passive income of over $200,000 per year during retirement.

Usually, that amount isn’t just for the cost of living- it allows you to continue to build wealth and have a safety net no matter what happens.

moFIRE practitioners have a FIRE number of at least $5 million. It goes without saying that to achieve this. You need to have a very high savings rate.

Whether moFIRE is real or not is unclear, but online FIRE communities are beginning to adopt the term, and there are members of the FIRE community who reached FIRE this way.

  • Fat FIRE vs. Barista FIRE

Barista FIRE is when you leave full-time employment but continue to work part-time. It’s a semi-retirement where you’re no longer progressing in your career, but are still working. Achieving FIRE this way requires a much smaller amount of money invested than Fat FIRE or Traditional FIRE.

Only working part-time gives you more time to focus on what matters in your life. But that’s not the only benefit of Barista FIRE.

In the U.S., a part-time job can give you access to health insurance. If you were in full retirement, you’d have to pay for this, and it’s a major expense.

By letting a part-time job cover expenses related to healthcare, you can dramatically reduce your annual expenses. Some Barista FIRE practitioners also vouch for the social benefits of part-time work— not everyone wants to be fully retired.

If you don’t necessarily want to stop working but prefer a more hands-off job, then Barista FIRE might be a good choice.

  • Fat FIRE vs. Coast FIRE

Coast FIRE is a different and slightly more complex beast than other popular variations of FIRE.

The idea is to front-load your investments, ferreting away as much as possible as quickly as possible. Once you reach a certain figure, you can leverage the power of compound interest to grow your wealth and stop contributing yourself.

For example, let’s assume you have $1 million in investments and earn 5% interest yearly. After 20 years, you’d have over $2.7 million, thanks to the power of compound interest. And don’t forget that for the 20-year “coasting” period. You didn’t have to save or invest a single penny. You can spend all of your spare income.

If you knew you wanted to start a family, Coast FIRE gives you a framework to front-load your investments, come off the gas and relax a little when you start a family, then have the option of retirement as soon as your kids head off to college.

It takes a lot of forethought and planning to make that work, but it’s a great way to hit savings goals while only saving a fraction of that amount over a lifetime.

Uniting All Financial Journeys: Reducing Debt

Whether you’re going down the path of Fat, Lean, Barista, or Coast— there’s one critical step that kicks off any FIRE journey:

Aggressively paying down debt.

That means loans, mortgages, and credit cards.

Most debts accumulate interest, which will continue to eat into your wealth until the debt is wiped out.

High-interest debts should be paid down first, like most credit cards. Low-interest debts like student loans are far less urgent, but it can still benefit you to cut them down.

All FIRE success stories begin with eliminating debt as quickly as possible, so make that your first goal.

Once all of your debts are paid, you’ll likely be accustomed to the FIRE lifestyle, and you’ll be able to hit the ground running with your saving and investment strategy.

Invest in Your Future Today: 6 Strategies to Achieve Financial Independence and Retire Early (F.I.R.E)

  • Start Saving Early 

Front-loading your investments isn’t only a strategy that Coast FIRE practitioners can use. Thanks to compound interest, the more you do now, the less you’ll have to do later.

Also, the earlier you adjust to the FIRE lifestyle, the easier it will be.

  • Invest In Personal Development 

To Fat FIRE, you need to have a high income. Investing in yourself to give you access to higher income brackets is a legitimate long-term strategy that you shouldn’t undermine.

Nobody will fight as hard for your future as you, so don’t scrimp on your education, health, and experience.

  • Trade Stocks or Invest in Crypto

Trading stocks on the stock market can be one of the most lucrative side hustles, and anybody can learn how to do it. Investing in cryptocurrency can be similarly lucrative.

However, both of these strategies put your capital at risk. Be mindful of where you get investment advice.

  • Invest In Real-Estate 

Real estate is an option that many Fat FIRE practitioners opt to explore. As a landlord, you have some responsibilities, but renting a property can often yield higher returns than investing in index funds or typical retirement funds.

  • Start a Business 

Getting paid a salary for your work is one of the least efficient ways to translate your efforts, successes, and talents into cash.

Most of the time, consistently excellent performance results in mediocre bonuses and salary increases each year.

On the other hand, starting your own business effectively removes your earnings ceiling. Your successes and efforts translate into more money in your pocket immediately.

  • Invest In Gold, Silver, and Other Precious Materials 

Precious metals have intrinsic value and are immune to the effects of inflation since there’s a finite supply. Among investors, they’re considered a good way to reduce the volatility and risk of your portfolio.

When it comes to investing, it’s better to have a diverse portfolio. This is even more important with Fat FIRE because you’re investing much more money.

Invest in Your Future Today_ 6 Strategies to Achieve Financial Independence and Retire Early (F.I.R.E)

Fat FIRE Pros

  • Luxury Lifestyle

With the amount you’d be earning, you can live with an increased discretionary spending budget. You can afford to live in the most expensive cities in the world. You can spend more on holidays and luxury goods. You can enjoy a standard of living that most people can’t afford.

  • No Need to Compromise on Momentous Occasions

Many early retirees forsake major life events like elaborate weddings and having children because of the associated costs.

Fat FIRE practitioners don’t need to make such compromises.

  • Very Financially Secure

Should unexpected events occur and force you to reduce your passive income— you’d still be earning more than the average household.

During times of hardship, you might have to forsake some luxuries temporarily, but your finances and lifestyle are generally unshakable.

You also have a lot of wiggle room in your budget, so you’re immune to a little lifestyle inflation.

Fat FIRE Pros

Fat Fire Cons

  • It Takes Much Longer to Hit Your FIRE Number

Most Fat FIRE practitioners retire after 40, much younger than the typical retirement age, but it’s not low enough for some people.

Even with a high income and a good investment strategy, it will take you longer than your FIRE peers to retire fully.

  • Only Suitable for High Earners

Fat FIRE may not be a realistic option for you if you’re not a high earner or otherwise privileged.

Pursuing Fat FIRE on a low income would likely lead to sacrificing too much of your time and energy for the early retirement dream.

  • Requires Heavy Investing

If you want to Fat FIRE, you probably appreciate the finer things in life. The challenge is that to hit your FIRE number. You will need to invest or save as much money as possible.

This is even harder to do if you also try to maintain a luxury lifestyle. You might need to sacrifice to maintain a high savings rate and generate enough wealth to hit your goals.

Fat Fire Cons

Before You Take the Plunge into FatFIRE: Things to Ponder

Before beginning your Fat FIRE journey, you should ask yourself a few questions:

Is it necessary?

Do you need this kind of income and this kind of lifestyle?

Remember that Fat FIRE is designed to earn you more passive income than the average person earns as a salary. That means most people can get by, live life, and be happy with less money than you.

Is it realistic?

Fat FIRE is the hardest way to retire early. You’ll likely need a salary well into the six figures or another major financial advantage.

Is it realistic for you to live a FIRE lifestyle of heavy investing and saving for as long as is required to reach FIRE?

Playing with the equations above, and plugging different numbers into a calculator, can help you wrap your head around whether this is a feasible option for you.

Does Fat FIRE align with my values?

To earn enough money for Fat FIRE, you may have to focus on profits and returns above all else. You might need to take bigger financial risks, and you might need to resort to what could be considered “exploitative measures.”

Supersize Your Savings with Fat FIRE

If you’ve mulled it over and you’re sure this is your path, then it’s time to use a calculator to figure out a comprehensive plan to reach your FIRE number.

FIRE is a lifestyle, so embrace it as such. Join FIRE communities on social media and connect with other people pursuing FIRE. Be inspired by their stories and encouraged by their successes.

FIRE is a marathon, so don’t be discouraged— your FIRE number will be high, and the path will be long. But many Fat FIRE practitioners before you have proven that it is possible. Follow the formula, save money, and you will get there.

With Fat FIRE, you can live however you want without compromising. You’ll have to fight for it, but it will be worth it.

Learn How to Retire Early