FAT FIRE Calculator: Are You Ready to Start Saving?

If you worry about how much money you’ll need to retire comfortably, you’re not alone. In fact, there are many people out there who focus on getting out of the working game sooner than they’d usually expect – which is going to mean a lot of investment and careful management!

The FIRE movement centers around being able to retire early and enjoy financial freedom before you’re of retirement age. In this guide, I’ll discuss one type of FIRE planning – Fat FIRE.

If you already understand how Fat FIRE works, then please use this calculator to see how it works for you. If you need more context, keep scrolling further below and we’ll dive in to the details.

Fat FIRE Calculator

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Usage Guide

We’ve updated this calculator with new functionality! Here’s a quick guide to using the calculator and what each input needs.

There are two tabs – Simple and Advanced. As the names suggest, you get a simplified or the full blown version of the calculator.

Simple Mode

Let’s go through the inputs for the Simple mode first:

1. Currency: Simply choose the currency you intend to save and withdraw in (e.g., USD, GBP, CAD, AUD, EUR, or INR).
2. Current Age: Nice and simple – how old are you right now (in years)?
3. Retirement Age: The age at which you wish to begin your retirement.
4. Current Portfolio Value: Do you already have a portfolio for investments, stocks, shares, or bonds? Be sure to enter your savings amounts here – and only include those amounts you can freely use to invest with.
5. Annual Contribution: How much do you save or contribute each year? This must be a figure you know you’ll invest without fail. It’s assumed that these payments are made each year until you retire. If you want a little more control, check out the Advanced tab.
6. Annual Return (%): How much do you roughly expect to make from your portfolio each year? I’d recommend entering 6 to 8% if you’re unsure.
7. Annual Expense: The amount of money you expect to require in your retirement.

Note that the Simple mode defaults to an inflation rate of 2%. Income taxes are assumed to be 0%. If you’d like to account for those, please used the Advanced mode.

Advanced Mode

The Advanced tab features more inputs and more functionality. Here are the key things to know about the inputs on this tab:

1. Annual Contribution and Stop Contribution Age: These two inputs work in conjunction here. You can enter a specific age up to which you wish to continue contributing to your portfolio. See the discussion below for more clarification.
2. Initial Return (%): This is the return on your portfolio during your wealth build-up phase. Typically people prefer a more aggressive allocation, you could try a higher number like 8% here.
3. Retirement Return (%): Once in retirement, people generally skew to a more conservative portfolio, so you can model that using a lower return figure – say 6%.
4. Inflation Rate (%): Enter in your country’s current inflation rate if you know it. A good figure for a developed country may be, for example, 2%.
5. Stop Contribution Age: At what age do you want to stop paying into your savings or portfolio? This value can be any year between your Current Age and your Retirement Age.
6. Annual Expense (Post-tax): In today’s currency terms, how much money will you need in your retirement phase? Don’t worry about inflation – the calculator will take care of this for you! Simply enter in a number based on current inflation rates and your results will be adjusted. Also remember you will very likely have to pay income taxes in your retirement as well, so your withdrawals from the portfolio will actually be higher to account for income taxes.
7. Supporting Income (Pre-tax): Do you expect to receive any supporting money from a pension plan, social security, or a side-hustle? Enter the gross amount here.
8. Expected Average Income Tax Rate (%): You don’t have to fill this field in – but if you know how much you expect to pay in average income tax on your combined income streams, enter in a number. If you don’t know a number, a low-figure, usually between 10% to 20% will serve as a reasonable placeholder.

A quick note on the ages: The idea behind any retirement calculator is for you to specify you current age and the retirement age. Our calculator includes an additional input called the Stop Contribution Age. Let’s look at this through an example:

Olivia is currently 35 years old and wants to retire at the age of 55. Her savings portfolio is currently worth $150,000. He would like to save up front for the next 10 years, so she can contribute $35,000 per year for the next 10 years, or until the age of 47. In this example, Olivia would entire her Current Age as 37, the Stop Contribution Age as 47, and Retirement Age as 55.

Olivia could alternatively use a Stop Contribution Age of 54, if she intends to keep adding to her portfolio right up till the very end. Alternatively, she could also use 36 if she just wants to contribute for 1 year.

There are many different options! Please do try out a few different options to see what fits best.

Outputs

The calculator presents the results in 4 different ways:

1. Descriptive: This section just provides a simple text based summary with the basic numbers around whether you’ll be able to achieve Fat FIRE or not, based on the inputs that you have entered.
2. Chart 1 – Portfolio Value & Annual Investment Income: The black line shows how your portfolio value (left y-axis) will behave over time. The vertical bars show the annual investment income generated by your portfolio. Note that this income will be a combination of capital gains (share prices going up) and dividends.
3. Chart 2 – Annual Cash Flows & Returns: This chart shows the cash added to the portfolio during initial years and the cash withdrawn from the portfolio in the retirement years. These are in orange. The blue bars show the annual investment income from the portfolio.
4. Table: If you select “Yes” in the dropdown box, the results will be shown in a tabular format for each year.

There’s a convenient button to Share your results too. You can save the link and come back to the calculator to reuse the inputs that you previously entered as well.

What is Fat FIRE?

Fat FIRE is, as many people note, a fairly extreme version of FIRE – in that its purpose is to support luxury living standards while retiring early.

While models such as COAST FIRE allow you to continue living comfortably, Fat FIRE dials things up to 11. In fact, the ideal Fat FIRE system should provide you with $100,000 every year to live on in retirement. 

That means, effectively, you’re going to need at least $2.5 million in total investments to generate $100k annually. On top of that, you’ll need to follow a safe withdrawal rate (SWR) of around 4% – meaning you won’t be able to cash in any of your investments beyond 4% on your way to retirement.

What you need to calculate your Fat FIRE

While we’re dealing with a few eye-popping numbers here, there are ways you can calculate your hypothetical Fat FIRE and still enjoy a comfortable lifestyle. You don’t even have to stick to the $100k a year model – it can be whatever you feel is most adequate in line with your income and spending.

Though my Fat FIRE calculator above takes care of the math side of things for you, it’s worth considering what you need to save and spend under this type of FIRE.

Ultimately, you’ll need to know what you want to spend every year once you retire. That means you need to work out living costs, basic expenses, and how much you’d like to spend on luxuries and higher standards of living when you stop working for good.

Try not to cut your ideal expenses total too short. This is a figure that shouldn’t need you to compromise. The Fat FIRE system demands that you save or invest a little more than expected as it’s the luxury model – so don’t be afraid to go a little higher if you’re just playing around with numbers.

Ideally, your Fat FIRE total should be 33 x the amount you wish to spend each year in retirement. If that’s $75k, you’re looking at a Fat FIRE of $2.475 million. Once you reach this number in capital, you can retire and withdraw up to 4% per year to live comfortably.

From here, you need to consider the potential gap between your savings and investments and your Fat FIRE. If you have an invested portfolio of around $500k, for example, you need to find another $2 million before you retire.

That means you’ll need to work out how much to save and/or invest per year to get to such a number. That should tell you when you can reach Fat FIRE – and again, my calculator at the top of the page should help you reach those dates.

What are the benefits of Fat FIRE?

Fat FIRE is one of the more appealing types of FIRE model around, largely because it boosts your retirement spending potential to the max. Here are a few of the bigger benefits of trying out Fat FIRE for yourself.

It’s complete financial freedom

For many people, the idea of $100k per year is complete financial freedom. Of course, your idea of freedom depends on where you live, and your current tastes and lifestyle. Having passive income of $100k per year puts you in an elite league, as even a household income (active salary income) of $100k per year would put you in the top-20% of US households.

That said, once you reach that magic Fat FIRE total, you are, as they say, “set for life.” Just don’t withdraw more than 4%, and you can keep enjoying your wealth, early, for many years to come.

It’s a new luxurious standard of living

Many of us dream of lavish lifestyles, and for several who have made Fat FIRE work, it’s a huge reward for a life spent working hard and on the breadline.

The transformation in lifestyle may be fairly sudden – meaning that you could go from everyday expenses to luxury yacht vacations in a matter of years. It all depends on what you can save and what you’re able to invest in at short notice.

It’s time for you to do what you want, when you want

The whole idea behind FIRE is that you shouldn’t have to wait until your 60s to really start enjoying the money you make. While the FIRE systems do carry some risks and may not even be feasible in some cases, they’re great for simply opening up a wealth of time and opportunity for you to simply do whatever you wish.

Without work and financial restraints hanging over you, you could take the time to travel the world, try new hobbies, and experience life to the fullest.

We only get one full life (as far as we know for sure), and for that reason, it’s well worth making the most of. That, and – again, as they say – you “can’t take it with you!”

What are the drawbacks of Fat FIRE?

For many of us, Fat FIRE can seem a little extreme, or even fanciful! We all have dreams of living lavish lifestyles, and while this system is great at helping you achieve complete freedom quicker, it’s going to take some work. Here are a few drawbacks to Fat FIRE you’ll need to keep in mind.

It’s going to take time

Even if you have a fairly valuable portfolio, reaching that fabled Fat FIRE number will still likely take you years. Therefore, it’s wise to keep healthy expectations. 

There are different versions of FIRE that can help you to retire even earlier, but Fat FIRE focuses entirely on the luxury aspect. That means you may need to spend up to 20 years making shrewd investments and saving meticulously.

For some people, this time spent living semi-frugally and intensively saving may go against the object of retiring for complete financial freedom. The counter-argument may be that saving intensively now is hardly living – and why wait the two decades when you can live happily within your means while you’re young?

It’s going to take millions of dollars

You need to be a millionaire a few times over if you want to make the most of a Fat FIRE system. That’s not unachievable, of course, but for those who work blue collar jobs and who struggle to find well-paying opportunities, earning millions is a bit of a dream scenario.

That said, investing wisely can help you to reach seven-figure sums sooner than you imagine. I never like to say “never” when it comes to savings goals – hence the name of the site, Project Financially Free.

Yes – aiming for Fat FIRE will take huge financial investments on your part – but invest wisely and learn about the markets, and you never know what you might achieve.

Is Fat FIRE worth the risk?

Fat FIRE is only risky if you invest more than you can afford. Even then, depending on how you invest and/or save, it should be simple enough for you to withdraw and back out at any time.

I feel that Fat FIRE is worth trying if you have a very strong portfolio and want to retire sooner rather than later. There’s no telling what you could achieve through this type of system, so why not use my Fat FIRE calculator and start making plans?

Alternatively, there are other FIRE systems that may seem a little more achievable – take a look at my guide to COAST FIRE, for example.

What is Chubby FIRE?

If you feel Fat FIRE is too much of a commitment, then perhaps the lighter version of Fat, that is Chubby, might be a reasonable alternative.

This is a term that’s less common but has been gaining traction within the FIRE community. It’s a middle-ground between Lean FIRE, which encourages living as frugally as possible to retire as early as possible, and Fat FIRE, which is about retiring early with a more luxurious lifestyle. The key here is that if you would want to retire with an annual income of $200k in Fat FIRE, with Chubby, you could settle for $100k.

Chubby FIRE, therefore, represents a lifestyle where one is seeking to retire early but not at the expense of enjoying the journey. It strikes a balance between saving enough to retire early, and spending to enjoy life along the way.

By hitting the middle ground, perhaps not unlike Coast FIRE, you are able to optimize both your present and your future wellbeing. You can therefore use the calculator on this page also as a Chubby FIRE calculator.

Chubby FIRE vs Fat FIRE

Let’s look at a situation for Chubby FIRE vs Fat FIRE.

The first chart below shows a hypothetical situation for Olivia. Let’s say Olivia is a high income earner and can save a lot of money. Her Fat FIRE objective is to withdraw $200k on a pre-tax basis when she starts her retirement at the age of 51. She’s 35 now, has a portfolio of $150k and expects to generate 8% returns.

In order for her to meet her goals, she will have to save at least $115k per year. That’s no easy task! You can use this link, which I generated with the Share Result button, to play around with the assumptions that we have used for Olivia.

Instead, if Olivia chose to adopt a Chubby FIRE approach and was content with generating $100k of annual income, she would just have to save $50k per year. That is a massive difference! Try these assumptions here.

In both cases, her portfolio would theoretically support her till the age of 113. Or in other words, there’s sufficient buffer in her portfolio that she doesn’t have to worry about running out of money in her 90s.

Of course in Chubby FIRE the portfolio value doesn’t go up to the same value as it would in Fat FIRE – but that’s by design. You have a smaller portfolio as it doesn’t need to generate a higher level of returns, which means you need to contribute/save a lower amount of money now.

Before You Go…

Hopefully you found this information useful. Please do let me know in the comments if you have any feedback, comments, or questions!

Our whole blog is dedicated to help you get on the path of financial freedom. Feel free to browse around and read through the articles.

In a nutshell, the fastest way to achieving FIRE is to cut your debt, minimize unnecessary expenses, so you can save and invest your money! Do check out our guide to vested balances and 401Ks, should you choose to go that route!

There are alternative variants of FIRE to consider as well. Take a look at Barista FIRE if you want to explore an option that does not require you to save up a big ton of money up front.

There are plenty of investment books and podcasts that you can use as a learning resource along the way to help you reach your goal faster.