Fat Fire Calculator

Fat FIRE Formula:

\[ \text{Fat FIRE Number} = \frac{\text{Annual Expenses} \times 1.25}{\text{SWR}} \]

Fat FIRE Number:

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1. What is Fat FIRE?

Fat FIRE (Financial Independence, Retire Early) refers to achieving financial independence with a more luxurious lifestyle than traditional FIRE. It involves accumulating a larger nest egg to support higher annual expenses during retirement.

2. How Does the Calculator Work?

The calculator uses the Fat FIRE formula:

\[ \text{Fat FIRE Number} = \frac{\text{Annual Expenses} \times 1.25}{\text{SWR}} \]

Where:

Annual Expenses — Your estimated yearly living costs in retirement
1.25 — Buffer for a more comfortable lifestyle (25% extra)
SWR — Safe Withdrawal Rate (typically 0.03-0.04 for 3-4%)

Explanation: This calculation determines the total investment portfolio needed to support your desired retirement lifestyle while following the 4% rule (or your chosen withdrawal rate) with an additional comfort buffer.

3. Importance of Fat FIRE Calculation

Details: Calculating your Fat FIRE number helps you set clear financial goals for retirement planning. It ensures you account for a more comfortable lifestyle, unexpected expenses, and inflation while maintaining financial security throughout retirement.

4. Using the Calculator

Tips: Enter your estimated annual retirement expenses in your local currency and your chosen safe withdrawal rate as a decimal (e.g., 0.04 for 4%). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between FIRE and Fat FIRE?
A: Traditional FIRE focuses on minimalistic retirement, while Fat FIRE allows for a more luxurious lifestyle with higher spending and a larger retirement fund.

Q2: What is a typical SWR for retirement planning?
A: The 4% rule is common, but many use 3-3.5% for more conservative planning, especially for early retirement.

Q3: Why the 1.25 multiplier for annual expenses?
A: This 25% buffer accounts for lifestyle upgrades, unexpected costs, and additional financial security in retirement.

Q4: Should I include all expenses in my calculation?
A: Yes, include housing, food, healthcare, travel, entertainment, and any other anticipated expenses in your annual retirement budget.

Q5: How often should I recalculate my Fat FIRE number?
A: Recalculate annually or whenever your income, expenses, or financial goals change significantly.