Imagine having $250,000+ to spend every year during retirement. That’s what FatFIRE is all about. It’s like regular retirement, but instead of budget airlines, you’re flying first-class, and there’s no stress about spending.
You know those finance blogs that tell you to cut expenses, eat ramen, and save 70% of your income? That might work for some, but what if you want more?
What if you look at retirement and think, “I want to enjoy life, not just get by?” (I know I do)
That’s where FatFIRE comes in. It’s all about financial freedom—but the kind that lets you help your kids buy their first home, travel in comfort, or live in an expensive city without stressing about every dollar.
KEY TAKEAWAYS
FatFIRE isn’t about flaunting wealth. It’s about having options. Think of retirement like a meal. Regular FIRE (Financial Independence, Retire Early) is cooking at home. LeanFIRE is living on a tight budget. FatFIRE? That’s eating wherever you want, whenever you want, without checking prices.
In 2024, a typical FatFIRE goal is between $5 million and $10 million in investments. Sounds like a lot? It is. But it’s not impossible. I’ve seen software engineers, business owners, and doctors hit this goal—some by 40, others by 55. The path might be different, but the goal is the same: real financial freedom.
Curious how they did it? Let’s dive into what FatFIRE really means and how you can get there.
Table of Contents
What is FatFIRE?
- FatFIRE stands for Financial Independence, Retire Early—with a goal of luxury.
- It requires a substantial portfolio, often aiming for $2.5 million or more.
- It’s designed for spending $100,000+ a year for a richer lifestyle.
FatFIRE is all about financial independence, but without the strict budgeting. Instead of focusing on cutting every expense, FatFIRE is about building a big enough nest egg to enjoy the finer things in life—like extended travel and nice dinners out.
Examples of FatFIRE
People going for FatFIRE usually have a certain lifestyle in mind. Take someone who wants to retire in their mid-50s with an investment portfolio that provides $150,000 a year. They can enjoy a comfortable lifestyle without worrying about every expense. Using the 4% rule, they’d need at least $3.75 million invested to make this happen.
People Living the FatFIRE Dream
Imagine a couple retiring early in the city, loving all the perks of urban life—like theaters, fancy restaurants, and international vacations. They want to spend about $120,000 a year, including housing in a great neighborhood and lots of fun activities. To pull this off, they’d need around $3 million, based on the 4% rule, to make sure they’re financially secure.
Typical Financial Goals with FatFIRE
FatFIRE isn’t just about stacking cash—it’s about making sure your money can support a lavish lifestyle. Think of it as covering lifelong expenses, having an emergency fund, and being ready for unexpected costs like health care or family support. A $5 million portfolio is often a solid target, allowing for at least $200,000 in yearly expenses. And adjusting for inflation is key to keeping that lifestyle sustainable long-term.
What are the Different FatFIRE Strategies
FatFIRE can be achieved in different ways, depending on your personal and financial style:
- High Income Strategy
- Entrepreneurial Approach
- Investment-Focused Strategy
Type 1: High-Income Strategy
Maximizing income through a high-powered career is one way to get to FatFIRE. Think lawyers, tech professionals, or finance experts. The big salaries mean you can save a lot quickly.
But the downside? Stress and burnout are real, and there’s often not much time for anything else. As Jordan Taylor says, “Spending less and investing more is just basic ‘time value of money’ stuff.”
Pros and Cons of High Income Strategy
The big pro here is the money—you can hit your goals faster. But the catch is managing stress and not letting lifestyle creep eat up your earnings. Long hours and high stress can take a toll on health and happiness.
Action Items
- Save Efficiently: Put a big chunk of your earnings into investments.
- Manage Stress: Make work-life balance a priority.
- Avoid Lifestyle Creep: Don’t let spending rise just because your income does.
Dive Deeper
- “The Millionaire Next Door” by Thomas J. Stanley
- “Your Money or Your Life” by Vicki Robin
- Financial Independence Forums
Type 2: Entrepreneurial Approach
Starting a business is another path to FatFIRE. Entrepreneurs might aim to build and then sell a successful company. The risks are high—many businesses fail—but the rewards can be just as big. Plus, entrepreneurship gives you a certain kind of freedom you can’t always get in a traditional job.
Challenges and Rewards of Business Ownership
Running a business means a lot of time, effort, and sometimes significant upfront costs. The upside? If you succeed, you can set your own income limits and possibly make a lucrative exit.
Action Items
- Plan Thoroughly: Do market research before jumping in.
- Manage Finances Wisely: Keep your personal and business finances separate.
- Network: Connect with mentors and other entrepreneurs.
Dive Deeper
- “The Lean Startup” by Eric Ries
- “Zero to One” by Peter Thiel
- SCORE Mentoring Services
Type 3: Investment-Focused Strategy
This approach is all about building a diversified investment portfolio that brings in passive income. Think stocks, bonds, real estate—the goal is to grow wealth steadily while managing risk. This strategy gives you a lot of flexibility and helps smooth out any bumps in the market.
Importance of Diversified Portfolios
Diversification means spreading risk across different types of investments. It’s like not putting all your eggs in one basket. This helps protect you from big losses and makes your overall plan more secure.
Action Items
- Diversify Investments: Spread your money across different asset types.
- Stay Informed: Keep up with market news and trends.
- Rebalance: Adjust your portfolio periodically.
Dive Deeper
- “The Intelligent Investor” by Benjamin Graham
- A Random Walk Down Wall Street by Burton G. Malkiel
- Bogleheads Guide to Investing
Benefits of FatFIRE Retirement Planning
- Better living standards and more freedom.
- More choices compared to traditional retirement.
- Early, secure financial independence.
Financial Freedom, but With More Fun
FatFIRE means freedom without compromise. Unlike regular retirement where every dollar counts, FatFIRE lets you enjoy the lifestyle you want. Instead of cutting back, you get to keep doing the things you love—traveling, hobbies, whatever makes you happy—without stressing about the cost.
Reaching FatFIRE also means your financial plan is solid enough to handle market ups and downs, which brings a lot of peace of mind. Books like “The Simple Path to Wealth” by JL Collins can help you understand the basics, while “Your Money or Your Life” by Vicki Robin dives into how to rethink your relationship with money—a key part of making FatFIRE work.
FatFIRE vs. Traditional Retirement: What’s the Difference?
Regular retirement often means living on limited income sources like social security or pensions, which can be restrictive. FatFIRE gives you more flexibility—you’re not stuck trying to make ends meet on a fixed income. Instead, you have the financial freedom to make changes and take opportunities as they come.
“The Millionaire Next Door” by Thomas J. Stanley shows how building wealth is about consistent habits, not just income. It highlights why having a larger financial cushion, like with FatFIRE, can lead to a happier, more secure retirement.
Better Quality of Life, More Satisfaction
With FatFIRE, you have more choices. You can afford better healthcare, education, and more travel. It’s not just about covering needs; it’s about enjoying wants too. That kind of financial freedom often leads to greater happiness, as you don’t have to choose between what you need and what you want.
Of course, getting there isn’t easy. It takes time, effort, and sacrifice, which can be stressful. Finding a good work-life balance is important so you can still enjoy life while saving for the future.
Chase Your Dreams Without Financial Constraints
FatFIRE gives you the chance to try new things, even in retirement. Want to start a business, travel extensively, or explore a new hobby? You can, without worrying about the financial impact.
Platforms like The FIRE Movement offer stories and tips from people who have made FatFIRE work, giving you a peek into what’s possible with this level of financial freedom.
Leave a Legacy and Stay Secure
FatFIRE means more security for the long haul. You have enough to cover emergencies, healthcare, and even support future generations. While many retirees worry about outliving their savings, those on the FatFIRE path are in a much better position to not only sustain their lifestyle but also leave a legacy.
Books like “Beyond Wealth” by Alexander Green help connect the dots between wealth and living a meaningful life, which is important for those looking to achieve FatFIRE. It’s not just about money—it’s about making sure the wealth you build makes your life richer in every way.
How Does FatFIRE Work?
- FatFIRE is all about having a big enough investment pool for higher spending.
- It combines strategies like high income, smart investing, and tax planning.
- With FatFIRE, you get to enjoy a luxurious lifestyle in early retirement.
How Much Money Do You Need to FatFIRE?
The key to FatFIRE is knowing how much money you’ll need. There’s no one-size-fits-all answer—it depends on your goals and lifestyle. A good rule of thumb is to multiply your expected annual expenses by 25 to 30. This comes from the 4% rule, which says you can safely withdraw 4% of your savings each year.
For example, if you want to spend $100,000 a year, you’d need between $2.5 million and $3 million invested. Things like where you live, your health, and your lifestyle will all play a role in how much you need to save.
How Much Money Do You Need to FatFIRE in the Philippines?
If you’re considering FatFIRE in the Philippines, the numbers are different compared to the U.S. thanks to the lower cost of living. Many things like housing, food, and services can be significantly more affordable, making the FatFIRE target more achievable.
A good rule of thumb is still to use the 4% rule, but with lower annual spending. For example, if you plan to spend around PHP 3,000,000 (roughly $54,000) per year, you would need between PHP 75 million and PHP 90 million (about $1.35 million to $1.62 million) invested. This is based on multiplying your yearly expenses by 25 to 30.
The amount you need will depend on where in the Philippines you want to live. Urban areas like Metro Manila or Cebu City will have higher costs, especially for rent, while more rural areas can be much cheaper. Healthcare is also more affordable compared to Western countries, but it’s important to consider having an international health insurance plan for added security.
The beauty of FatFIRE in the Philippines is that you can still enjoy a luxurious lifestyle—travel, dining, hobbies—without the enormous portfolio you’d need in more expensive countries. Plus, with beautiful beaches, tropical weather, and friendly communities, retiring in the Philippines can feel like living in paradise.FatFIRE Strategies
FatFIRE doesn’t happen overnight. It takes planning, a solid income, and smart investing. High income is a big part of it—often through careers like tech, law, or finance—because it allows you to save aggressively.
Beyond earning, investing is crucial. The goal is to build a diversified portfolio that provides passive income while growing over time. This could be through stocks, real estate, or even businesses that match your risk tolerance and goals.
Don’t forget about tax efficiency. Understanding tax laws and making the most of tax-advantaged accounts can help you save more. A good tax advisor can help you make the most of your money.
What Qualifies as FatFIRE?
FatFIRE is a bit subjective—it’s really about what kind of lifestyle you want. Generally, if you have $2.5 million to $3 million invested and plan to spend $100,000 or more each year, you’re on the right track.
The big difference between Lean FIRE and FatFIRE is comfort. Lean FIRE followers cut costs to retire early, but FatFIRE folks aim to maintain or even improve their lifestyle. Books like “The Simple Path to Wealth” by JL Collins and “Retire Early with Real Estate” by Chad Carson give insight into different ways of getting there, whether through investing or real estate.
FatFIRE Might Be Your Path to a Life of Freedom
FatFIRE is all about taking control of your financial future and living the good life. With goals of spending $150,000 or more in retirement, it requires dedication and discipline, but the reward is worth it—the freedom to live comfortably without compromise.
Whether you go the high-income route, start your own business, or focus on investing, FatFIRE gives you options that traditional retirement doesn’t. The key is to start as soon as you can and stick with your financial plan.
Remember, FatFIRE isn’t just about money. It’s about creating choices for yourself and your family—whether that’s helping others, pursuing your passions, or changing careers without stress. With a typical goal of $2.5 million to $5 million, FatFIRE can open doors that stay closed for many retirees.
So, take stock of where you are now, decide on the path that best fits your strengths and goals, and start building. The journey to FatFIRE takes effort, but the freedom you’ll get makes it all worthwhile.
The choice is yours: settle for a standard retirement, or take control and build the financial future you’ve always dreamed of.
