Fat FIRE
Financial independence at a spending level that requires no reduction in lifestyle.
Fat FIRE targets independence without lowering the spending level, which puts the number at $2.5M for $100,000 of annual spending and upward from there.
Reaching a target that size generally requires a high savings amount rather than a high savings rate, since the rate alone cannot close a multi-million dollar gap in a working lifetime. In practice that means high income, equity compensation, or a business sale.
The structural advantage is absorption. A budget with substantial discretionary spending in it can shed 20% during a bad market sequence without touching anything essential, which is the flexibility that makes dynamic withdrawal strategies workable.
Worked through
A $150k lifestyle, fully funded
Dual income, $150k of annual spending including travel, schooling and giving.
- Annual spending
- $150k
- Target at 25x
- $3.75M
- Portfolio
- $4.1M
- Effective withdrawal rate
- 3.7%
Being $350k past the target pulls the withdrawal rate to 3.7%, which is where the extra margin actually shows up.
See your own fat fire
Promi computes this from your linked accounts, with the definition one click from the number.
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