# Fat FIRE

Fat FIRE means financial independence at a high level of spending. How the number is built, and what the label does not decide.

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.

## Questions

### How much is Fat FIRE?

There is no official dollar line. Writers often illustrate it with annual spending well above a typical household, sometimes $150,000 to $300,000 or more, in today's dollars. The useful definition is personal: spending high enough that the household is not trying to be lean, divided by a withdrawal rate. At 4%, $200,000 of spending is a $5 million portfolio before any pension or Social Security.

### Is Fat FIRE just a bigger Lean FIRE?

The arithmetic is the same. The life is not. Higher spending raises the portfolio target in a straight line and usually lengthens the working years unless income and the savings rate rise with it. Taxes, housing, and healthcare are a larger share of the error bar, because a luxury budget has more optional lines and more tax friction.

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