Fat FIRE

FIRE is financial independence: a portfolio that can pay for life without a paycheck, under some withdrawal rule. Fat FIRE is the same idea with a high budget. The name is community slang, not a statute. People use it so a $70,000 spending plan and a $250,000 spending plan are not argued as if they were one goal.

Build the number from spending

Pick the annual spending, in today's dollars, that includes housing, healthcare, taxes you will still owe, travel, and support you intend to give. Divide by a withdrawal rate. At 4%, every extra $10,000 a year of spending adds $250,000 to the portfolio target. That is why small lifestyle lines, repeated, move the date more than a clever fund pick.

Then ask what income continues. A pension or a Social Security benefit you have looked up reduces what the portfolio must produce. Do not subtract a benefit you invented. The Coast FIRE calculator is the place to type a benefit and see the bridge if it starts later than you stop working.

What usually gets left out

• Healthcare before Medicare, especially in the United States, where leaving a job can reprice insurance.
• Taxes on withdrawals from traditional accounts, which make a $200,000 spending need larger than $200,000 of withdrawals.
• Sequence risk. A high spender has a higher dollar withdrawal in the first bad decade. The constant-return calculator will not show that.
• Lifestyle creep on the way there. Fat FIRE fails quietly when the spending target moves every raise.

A $5 million illustration is arithmetic, not a suggestion to accumulate it or a view on whether that spending is wise.