Fat FIRE: Why I Want It (Not for the Reason You Might Think)

Fat FIRE.  I had a taste of it and I want it.  I felt that my year-long maternity and parental leave was, in a sense, a little mini-retirement.  I lost track of the days (a common thing I said was “It’s Friday again?”), I did not miss work, I got to make pancakes during a weekday, I got to run errands during non-peak traffic hours, and also go for a stroll whenever the baby pleased.

I also got to take advantage of birthday freebies for myself and my husband without having to take a vacation day or sick day from work.  Most importantly, on my mini-retirement maternity leave, I lived on a limited income for six months.

Why I Want Fat FIRE

After living on a limited income (employment income paid out as parental leave for about six months, which equated to about $2000 a month) I have come to a conclusion about early retirement.

I came to the conclusion that I will need more cushion in retirement (when that day comes).  Things were getting a bit tight there with my mortgage payment, personal spending, contributions to our joint account, dog emergencies ($500 for treatment of hemorrhagic gastroenteritis, thankfully my dog didn’t need surgery since blood was coming out of both ends (sorry TMI)).

I had over 6 months of spending saved up but it still felt uncomfortable to not be able to save (maybe it was my angst about the Motherhood Penalty).  I usually am able to squirrel away a chunk of money to save but wasn’t able to given the lack of cash flow in the latter part of my parental leave.

Being well into my 30’s, I know myself and know what makes me comfortable and what I need in my life, so that’s why I think I would want to order up some Fat FIRE in retirement.

What is Fat Fire?

If you haven’t heard of FIRE, in the financial independence community and as part of the FIRE movement, FIRE stands for Financial Independence Retire Early.  You may have heard of the term Financial Independence.  Financial Independence is often about fire extreme saving now to get to a wonderful sense of delayed gratification and freedom, later.

Commonly, FIRE (Financial Independence Retire Early) is further broken down into two subtypes, Lean FIRE vs Fat FIRE.

What is leanFIRE?  Lean FIRE references the standard 4% safe withdrawal rate type of retirement, where if you save 25 times of your living expenses in an investment portfolio, you should be able to make your nest egg last for 30 years, as long as you withdraw not more than 4% from your portfolio every year.  This term, the safe withdrawal rate was coined by Bill Benger.  When you achieve the Crossover Point, or lean FIRE, you don’t need to rely on your active income to cover your monthly living expenses.

For example, if your annual expenses are $28,000, you will need to save a liquid net worth and investable assets of:

$28,000 x 25, which is equal to $700,000.

Once you’ve achieved that you will reach Lean FIRE.

The leanest cut of steak according to Men’s Journal is the Sirloin Tip Side Steak, with 5.4g of fat.  Lean FIRE is like eating Sirloin Tip Side Steak.  You got to make sure you don’t have problems chewing and will definitely need some water or something to wash it down and make the leanFIRE go down smoother.  Some leanfire examples include having enough but not having enough for a super lavish retirement- no exotic travel, just staycations or local places, and not being able to eat out all the time.  You might have to supplement leanfire with barista FIRE which means working at the local Starbucks to supplement your lean retirement income.

LeanFIRE doesn’t have much wiggle room.  No wiggle from for $7000+ a month long term care needs when you’re 85 and unable to take care of yourself in your own home, for severe illness, for post secondary education savings for the kids, or for $5000 trips to see Mount Kilimanjaro.  To me, Lean FIRE just covers the basics on a monthly basis (shelter, food, local entertainment like movies occasionally, gas, transportation etc.).

Related:  The 4% Safe Withdrawal Rate (SWR) vs Never Touch Your Principal (NTYP)

What is Fatfire?  For the Fatfire definition, on the opposite side of the meaty spectrum is Fat FIRE, is the Rib-Eye Steak, which has a whopping 37.6g of fat.  It tastes good, is good for the keto diet (which is all the rage now, by the way), and makes you feel fuller longer.

Related: End of Life Planning Checklist in Canada

How Much Does FatFire Cost?

Fat FIRE according to Lily at The Frugal Gene (who is well on her way to FIRE, actually I think she is already FIRE’d in my eyes) is having about $100,000 in annual income (and spending up to that amount) in retirement.  Personally I think that’s too much for one person (but for a family $100,000 is plenty enough for Fat FIRE).

Basically, the premise of Fat FIRE is that you don’t have to scrimp or change your current lifestyle to meet the demands of your retirement spending.  So whatever you are spending now or whatever lifestyle you have now, you will continue it in your early retirement years.

For a $100,000 annual income, one would need to save up $2,500,000 in liquid investable assets.  It’s definitely easier to save that much when you earn more.  We are talking about minimum six figure earners since your early 20’s to be able to achieve this level of financial independence.

Yeah, that’s a lot of money to reach financial independence but that’s the sacrifice that those with high earnings and in Fat FIRE pursuit will take.

Related:  The Ultimate Recipe for FIRE: Financial Independence Retire Early

How much money do you need to be financially independent?  Well, like all personal finance, that’s personal and if you live a rib-eye lifestyle now, you will likely not be used to a sirloin tip side steak lifestyle later.

In my world of Fatfire Canada, I don’t need $100,000 in annual income in retirement but I do want to be able to support myself and continue saving (even if it’s a little).  As I mentioned in a previous post on the safe withdrawal rate and never touch your principal, I don’t want to be touching my principal when my time for financial independence comes.

It’s Not to Galavant Across the WOrld

I would love to galavant across the world and take a luxury cruise, stay in an overwater bungalow in the Maldives, and finally go to Santorini.  There are definitely lots of things I would do if I found $1,000,000 somewhere.

I would definitely love to do these things but wouldn’t need to do them to an excess- I don’t need to stay in a $1500 a night overwater bungalow place but would definitely like to see the Maldives.  I don’t need $100,000 in passive income to do this.

What Would You Do with a Million Dollars?

How much is enough for retirement?  To be honest, I really don’t need too much but the reason why I don’t want to be withdrawing from my nest egg is an irrational one.

Irrational but Powerful Compulsion to Save

The reason why I want to have Fat FIRE is that I want to be able to save.  It doesn’t make sense, I know.  It’s irrational.  But I have this powerful compulsion to make sure I am saving (even if it’s a little bit).  The last thing I want to be doing is taking money out of my nest egg and see it dwindle slowly by 4% per year.  I like to see my portfolio grow and I like to see the dividend payments get bigger.

The Fatfire number that I would aim for is something like a fatfire income of $35,000 in annually on a passive basis (or about $3000 monthly after the mortgage is paid off).  Even $2000 after a mortgage is paid off is doable too (which is roughly a $700,000 a nest egg).  For a $3000 monthly income, that’s $36,000 annually, or a nest egg of $900,000.

I know it doesn’t seem like much, but that’s my version of FatFIRE since my husband and I have separate and joint finances.  This would be in addition to our family spending.  This would cover my separate spending such as trips with my friends, dinners out, gifts, and other personal spending.

So yes, the reason why I want FatFIRE is to alleviate my anxiety about having enough money in retirement.

I need some cushion in retirement.  Nonetheless, my version of fatfire Canada probably doesn’t need that much cushion, what with our government pensions, my defined benefit pensions and Canadian government’s universal healthcare.  However, I don’t want to rely on government pensions and healthcare because you never know what policy might be in place 50 years down the road.  That’s a long time from now.  We just got universal healthcare for Canadians relatively recently.

For more fat fire inspiration and ways to early retire and not compromise your lifestyle, check out the thread on reddit fatfire.

Hustlin’ and the Internet Retirement Police

Which brings me to why I think there are so many FIRE bloggers making money from their fire movement blogs in addition to their nest egg.  It is human nature.  Many of us are wired to want to produce and be productive and connect with each other and create.

My mother in law likes to hustle even though she’s been retired for over 10 years.  She likes to have international homestay students- she cooks for them, does their laundry, and she gets paid per day or per month depending on how long they stay with her.  I highly doubt she needs the money but she likes to hustle anyway and likes the social engagement with the students.

Similarly, I don’t think people should be calling out personal finance bloggers who make money from their early retirement blogs, as long as they are open about living off the business income (in addition to their 4% SWR nest egg income).

Warren Buffett The Ultimate FAT FIRE Mogul

It’s like telling Warren Buffett to stop working and live off his income, even though his work is really spending most of his time reading in his office, which he doesn’t view as work.  We know Warren Buffett can ‘retire’ at any time, he is clearly financially independent.  The key is that he is spending his time how he wants to spend it and we all know that is the key to FIRE.

Someone who is in the same boat (pun intended) as Warren Buffett, this 100 year old shipping billionaire from Singapore still goes to work every day.  He’s clearly financially independent too, but is clearly not retired.

Fat FIRE Summary

Maybe the feeling of anxiety will change once I have enough in my nest egg to be financially independent and then I won’t feel the need to keep saving and growing the aforementioned retirement nest egg.

I really don’t know the answer to that because I haven’t experienced it yet.  Hopefully, I will be able to save up to enjoy that rib-eye steak in a few years when I accomplish achieving financial independence, or my version of Fat FIRE retirement.  After I achieve that, then I can focus on the 6 things I plan to include in my daily life in hopes of retiring happy.  These are things to still have purpose in your life and daily goals.

To summarize, FIRE stands for financial independence retire early, and there are different ‘levels’ of financial independence.

  • Lean FIRE is easy to achieve and doesn’t require a big nest egg, but only meets the bare minimum of expenses (and doesn’t account for future market melt downs, future health care needs, travel, or other big life expenses).
  • Fat FIRE is more difficult to achieve and consists of maintaining (or increasing) your annual expenditures as if you did not have a limited income.  Exotic vacations to the Maldives, university education for your children, future long term care needs are accounted for.

Everyone has a different “retirement number” and everyone has different expenses they need.  Just because someone wants to retire at 28 with $24,000 in annual income, that doesn’t discount your own personal finance financial independence retire early journey, which may be to retire at 52 with $80,000 in annual income.

I want to be able to be part of the sandwich generation without feeling flattened.

Readers, how do you envision your financial independence or retirement?   

Which FIRE are you leaning towards, Lean FIRE or Fat FIRE?

For those who have reached FI, does the feeling of wanting to save ever go away?

Do you have a Fat Fire Number?

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39 thoughts on “Fat FIRE: Why I Want It (Not for the Reason You Might Think)”

  1. Hi GYM, not sure I want to keep saving but I definitely want more than LeanFire.
    To me it’s all about financial freedom. I reached financial independence but it doesn’t feel like it’s enough to feel “safe”.
    Having a little (or big) cushion would make me feel much better:) And I will probably keep having side hustles even once I get there for all the reasons you mentioned.

      • I feel like it’s a moving target:) As soon as I reach my goal, I move it up!
        Being the only parent added extra pressure since there is no backup. Now that they are getting older, the pressure is going down.

        • @Caroline- Good point about the single parent. And I worry about divorce (we are solid, but you never know these days)! Haha Another reason to worry. Maybe I am a worry wart.

    • @Angela- Right!? Also, we don’t know what expenses might come up in retirement- some private retirement facilities are over $8000 to $10,000 a month!

  2. I am at about 70% of my regular fire goal and I have been pondering about my situation too. I have this idea once I reach fire, I will try to work a year or two more to try out fat fire. The plan is two folds. First, I would not be drawing down on my principal and my savings is still growing. Second, all my income doesn’t have to go to my savings and I can spend it all. Once I get tire of work or fat fire, then I will revert back to regular fire.

  3. That’s hilarious about sirloin steak. I don’t even know what to make with sirloin anymore, it’s just too lean. I usually buy chuck nowadays. The comparison to leanFIRE is apt. It’s not much fun when you have to live that lean.
    Mrs. RB40 has the same mentality as you. She is compelled to save more. I don’t think that will ever go away for her. For me, I’m fine as long as we don’t draw down our retirement accounts. I want to wait until we’re in our late 50s to do that. Not saving more is okay for me because our investment will keep growing as long as we don’t withdraw too early.

    • @Joe- Haha! I am so bad knowing what cut of meat to buy, and I often do end up getting sirloin and it doesn’t taste as good and we have to chew a lot. Beef chuck is good! That’s probably the reason why Mrs. RB40 is still working even though you guys are totally FI.

  4. I agree with you entirely! I just have a hard time deciding how much the cushion really should be. We decided this year that our FI number really should include a house and not just our apartment that has been driving us crazy. So in reality, our FI number is couple with house = not couple with two condos. I’ll work on the buffer sorting out later after my husband decides he actually wants to stop working! There are still too many unknowns like how much help will we give parents, so I just track % to FI with current knowns to track some progress. Buffer is so expensive but the peace of mind can be worthwhile.

    • @Leigh- I find being FI with a paid off house more comforting than FI with an apartment, only because it’s hard to control whether there will be upgrades or assessments to pay for. That’s a great tip about tracking % to FI. I haven’t thought of that. Peace of mind is worth every penny!

  5. we’re about where caroline is at this point. we could probably pull the trigger and stop working but our work is not ruining our lives at this point. we don’t have any natural heirs (children) so i aim to spend down the whole thing if possible. that’s easier said than done and i’m still working for 10-15k worth of luxuries a year in retirement. i wasn’t put into this life just to survive it. we just had a conversation last night about maybe saving and investing less and enjoying more income now as part of the glide path into saving something near zero. maybe just put away enough for the company match. i’ll keep you posted if we make any moves.

    • @freddy smidlap- Cool, looking forward to see what you guys decide. My dream would be to reach FI and just work part-time until I was 55 or so or maybe 50. It must be very liberating starting a Monday at working knowing that you don’t NEED to be there.

  6. Hi GYM,

    Good idea with fat FIRE. I think the issue with PF blogs is that many readers want to replicate their numbers but realize that the PF blogger has the cushion of an online income. So no matter what number is quoted, the uncertainly exists since folks wanting to replicate do not usually possess the extra income streams.

    OTOH I keep wondering why anyone would take a finincial plan off the internet since everyone’s lives would be very different.

    The best part of the whole PF blogs should illustrate the fact that there are so many different roads to FI. No one really needs to copy anyone else’s plan. Therefore why bother judging it? (Aka internet police)

    • @Dr. MB- I think it’s human nature to voyeur. I love reading about everyone’s FI progress even though I know we are all in different circumstances. No one needs to copy anyone else’s plan but I think people want to! Case in point- Mr. Money Mustache’s popularity and the FIRE movement.

  7. I seriously want a Rib-Eye Steak now after reading this piece. I keep thinking what is my exact FAT FIRE number is. Currently being single makes it hard to pinpoint it. I have decided to just shoot for $40K-$50K in passive income from my investments and pension. I do plan to work after I FIRE just in a profession that I enjoy doing every day. So I figure if I include money from my W-2 job when I’m FIRED I might hit a crazy high number and will be able to keep saving money. Which I also plan to still put money into investment once I FIRE. I will also donate a lot more money to causes I believe in. My goal is 6-9 years hit FIRE.

    • @David- Me too! Do you enjoy your current job- is this something you plan to do after you FIRE or are you planning to do something else? Your plan sounds SOLID!

  8. That’s a solid mentality to have! When you reach that goal of fat FIRE but feel that you need to save more to have that nice cushion, I think many people would think that way too if they we’re in that situation. Also keeping yourself busy with something you really like to do is natural because no matter your financial situation, you want to fill that need of working in a career you really love.

    • @Kris- I think that’s why people who have purpose do well or live longer. Human beings are naturally drawn to being purposeful. I’ll let you know when I hit the FI goal whether I feel the need to have the cushion.

  9. Awesome post. I am hungry after though. Care to donate a steak?

    I actually believe in accumulating as much wealth as I can . So I don’t really have a number for fat fire. In that case, will I be fattest of the fat fire?

    Knowing that you have enough nest egg has a great effect on the ability to pursue other interests. That’s my goal to reach it as soon as possible. After that, it’s fun time to see how high I can go.

    You are right about the FIRE bloggers. Many has multiple stream of income including blogging, it is tough to know where they really draw the line in terms of how much is enough.

    • @Drbreatheeasyfinance- I don’t have that goal (to accumulate as much as I can- because I want to stop working one day haha). Starting businesses sounds like the way to go for accumulating wealth where it is ‘sky’s the limit’.

  10. Love the visualization! I like the leaner cuts of steak, but in the FIRE world I want the fat. I don’t think I would feel comfortable without a safety net. I also imagine I will fit in your scenario, I will want to keep creating even if that doesn’t mean in the traditional w-2 role.

    Thanks for sharing!

    • @Allyson- I like the fat (my husband doesn’t like fat and I usually eat his fat from his steak) it tastes so good. Now I am hungry 🙁 Thanks for reading and stopping by. Here’s to stopping the W-2 roles soon!

  11. We are definitely targeting fatFIRE for two primary reasons: 1) Like you, I want to be able to live comfortably and still feel like we have a surplus that can be saved or given away as we see fit; 2) Flexibility to do as we desire—whether that be more travel some years, or treating ourselves in some way.

    The idea of leanFIRE is not appealing to us, and based on a book I am reading right now (Work Less, Live More) I am looking at how a semi-retirement might work for us. Right now we could cover about half of our fatFIRE total via SWR, and I’d like to build my DGI portfolio to cover about half (or more if possible) of the remaining amount. The last portion would be covered by income from potential PT jobs or personal passions.

    There’s a good group on Facebook dedicated to the pursuit of fatFIRE as well if you’re interested.

    • @DivvyDad- Cool, that sounds like an interesting strategy- to use two portfolios. I don’t have Facebook but thanks for sharing! I plan to do something similar too but not as well executed or thought out like that haha.

  12. Lol Ms. FAF just published a post about how maternity leave is like FIRE just now too! =) I never thought of it like that before. I figure maternity leave = lots of new baby work.

    The retirement polices do absolutely little good for our community. I got flack once for that and it just sounded absolutely bitter, poor soul.

    I encourage freedom to hustle and connect. It doesn’t have to be money. I told my husband if he finds no passion for anything then to give back and volunteer full time while I work on my life goals (so he can leave me alone sometimes hahaha).

    I like the idea of Barista FI actually, if it wasn’t for my husband who has the same saving compulsion as I do…that’s what I would choose. Barista FI is probably my personal favorite.

    (Gracias for the shout out. Did you know about morbidly obese fire? Hahaha)

    • @Lily- Thanks for sharing! I headed over to FAF right away to check it out. I would love Barista FI (not so much for having to deal with people and irritable customers who are anxious for their coffee– but to be able to KNOW that you don’t have to work there and are doing it just to supplement). Also, it’s stress-free work. Heck, you can spell people’s names wrong on their coffee cup, it doesn’t’ even matter.

  13. Hi GYM, what you said makes a lot of sense. It’s always nice to have a big cushion. It reduces the financial worries, and we can enjoy the life more. It feels good to save, even just a little bit. I guess the spenders may not feel that way.

    • @Helen- Maybe it’s something that I take for granted or that I don’t even notice because it is ‘natural’ to me. Thanks for pointing it out.

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  15. I love that you say even in retirement you still want to save. I really think we might be twins separated at birth because that is how I feel. Saving is in my blood. At age 40 I can now see that I like watching things grow. Whether a garden or a dividend portfolio, I like to see it grow and produce results. I will probably be at “fat fire” before I can be comfortable enough to realize I have crossed the finish line.

    • @Shawn- Haha we are ALMOST twins separated at birth, I don’t run as often as you and I don’t make delicious pizza like you do. Watching a dividend portfolio grow is so satisfying!!

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