5 Reasons Why We Decided to fatFIRE

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Last week, I explained What The FIRE Movement Is All About In One Word.  As promised in that post, today I’m publishing Part 2 in the series titled “5 Reasons Why We Decided To fatFIRE”. I’ll explain the difference between fatFIRE and leanFIRE, as well as continue with lessons those who are pursuing a more traditional retirement path can learn from the FIRE Movement.

Today, I explain our decision to fatFIRE, as well as sharing 8 lessons we can all learn from the FIRE community. Click To Tweet

Below is a summary of the 3 lessons included in Part 1:

  • Lesson 1:  If you’re behind in retirement savings, use the same tricks as the FIRE movement to catch up.
  • Lesson 2: Take responsibility for your personal finances, including saving for your retirement.
  • Lesson 3: Recognize that some sacrifices are required today in order to achieve Independence in the future.

As I explain why we decided to fatFIRE, I’ll add a few more lessons for those pursuing a more traditional path.  I hope you’re enjoying the approach of “bridging” the FIRE community to the “traditional” retirement community.  We all have a lot to learn from each other, which is my goal for these posts.

Before I can explain why we decided to fatFIRE, it’s important to understand what I mean by the term.


What’s LeanFIRE Vs. FatFIRE

While last week’s post highlighted the macro themes of The FIRE Movement, today’s post will get into a bit more nuanced look at the FIRE Community as well as explaining the path we chose for our retirement.

For starters, FIRE is not FIRE is not FIRE. There are as many different variations of FIRE as there are different approaches to traditional retirement.  One of the primary differences in the FIRE Movement is “leanFIRE” vs. “fatFIRE”.   To put to rest any Politically Incorrect concerns (btw, I really dislike PC Police):

FAT Does Not Mean Obese.

LEAN Does Not Mean Skinny.

Since we’re talking about personal finance, the prefix of “Lean” vs. “Fat” refers to the targeted spending level one chooses to target for their “RE” lifestyle.  The best article I’ve seen on the differences between these choices was The Newbies Guide To Understanding FIRE Finance, by my friend Ty at CampFIREfinance.  Rather than reinvent the wheel, I’m sharing (with his permission, thanks Ty) his excellent summary of “Lean” vs. “Traditional” vs. “Fat” FIRE below:

I love the graphic produced by CampFIREfinance.  It’s a very comprehensive, yet simple, explanation.  If you want to spend $100k in retirement, you’d be in the upper range of “normal FIRE”, and you’d need ~$2.5M to fund that expense using the 4% rule.  Simple, yet elegant.

This graphic from @campFIREfinance is the best I've seen at explaining leanFIRE vs. fatFIRE. Click To Tweet

The point is this:  Regardless of what type of retirement you choose, it’s critical to ensure you have sufficient resources to fund your chosen lifestyle.  The chart allows folks to easily see how much money they should target based on their desired spending level in retirement.  Another excellent article on the different types of FIRE, if you’d like to dig further into the topic, is fatFIRE vs. leanFIRE by Smelling Freedom.


What Type Of Retirement Do You Want?

Retirement is an interesting concept, and there are as many different approaches to Retirement as there are personality types.  You need to answer for yourself, “What type of retirement do you want?”  As I mentioned in Part 1, I appreciate the fact that the FIRE community is, generally, a non-judgemental group.  They appreciate that different folks prefer different strokes, and recognize that it’s the right of the individual to choose their own path.

For example…

Do you want to go “leanFIRE”, like my friend Steve at ThinkSaveRetire who retired at Age 35 and lives in an Airstream.  He’s retired, right?  But not all retirements happen at Age 35, and not all retirements are “lean”.

Maybe you prefer fatFIRE, like my friend Physician On Fire who has intentionally downshifted his career to allow more Freedom while he continues to build his nest egg for a fatFIRE retirement sometime in his 40’s.

And, there’s nothing wrong with a more traditional retirement, like my Dad, a guy who dedicated 38 years of his life to the education of college students on the importance of History.  (He’s written a few books, too.  Seems writing runs in the family.  Yeah, I’m proud of my dad).  He retired in his mid-60’s and has lived a modest and comfortable 20-year life in “normal” retirement.  He may not have taken the “FIRE” route, but he’s retired, too, right?

Retirement doesn't equal Retirement. #leanFIRE, #fatFIRE, or #NoFIRE. They're all retirement. Choose retirement for yourself. Click To Tweet

Each of us takes our own paths, and that’s the beauty of retirement.  We’re free to decide for ourselves how we want to live our lives in retirement.  Your choice is likely different than Steve’s, or Physician On Fires, or my Dad’s, or mine.  You know what?  That’s ok.  Choose your path, then get on with getting on.

Lesson #4 From FIRE:  Each of us is free to decide what type of retirement lifestyle we’d like to live.  That decision will drive the amount of resources required to save to fund our retirement expenses.


I retired this past June at the age of 55.  My wife and I decided to fatFIRE, with a modest but comfortable lifestyle.  In over 250 posts on this site, I’ve never taken the time to outline the decision we made with regard to our retirement lifestyle.  It’s time to explain why we decided to fatFIRE.


5 Reasons We Decided to fatFIRE

Ours wasn’t an obvious choice.

By 2011, when Mr. Money Mustache fanned Vicki’s ember into FIRE (see Part 1), I was 48 years old and well past the age of those who leanFIRE at an early age. I couldn’t be happier with our “early” retirement at Age 55.  Ironically, while this may seem “late” by FIRE standards, I prefer to view it in light of our society at large, where it clearly qualifies as an “Early Retirement”, perhaps even a lateFIRE (Hey, did I just coin a new term?)My “lateFIRE” puts me in a unique position to be a bridge between the FIRE community and the Traditional Retirement community, and I enjoy acting in that role.

I choose lateFIRE, and I chose fatFIRE. Today, I explain why. Click To Tweet

Fortunately, we’d always lived well below our means and were in a position to begin thinking seriously about retirement by our late 40’s.  Prior to that age, I’d never really seriously considered “when” we would retire.  My primary focus was to ensure we were being responsible in our savings, hoping that by building sufficient savings we’d be in decent shape to make our decision on retirement when the time came.

Lesson #5 From FIRE:  Early in your career, focus on maximizing your savings and increasing your income.  The specific timing on your retirement can wait until your net worth reaches a significant size.  With sufficient assets, you can choose to retire early.  Without those assets, that option is off the table.  FI comes before RE for good reason.  Early on, focus on getting to FI.

Here, then, are the 5 reasons we decided to fatFIRE:


Watching our daughter learn to surf in Hawaii? Priceless.

1. We’ve Enjoyed The Journey Through Life

My wife and I were very conscious about “enjoying our journey” through life.   We took all of our vacation time every year and enjoyed traveling the world while we were young enough to truly enjoy the experiences.  Every year we thought about what country we’d like to visit next, and it’s been a very enjoyable part of our lives.  We’re pleased that we gave our daughter a childhood of great memories.  We made an intentional decision to be content with our lives, and always felt like we had the right “balance” between saving for tomorrow while enjoying today.

Sure, we could have saved more aggressively and retired earlier, but we felt the “sacrifice” we made in saving for retirement at the level we did was appropriate for our life.  We increased our savings rate every year as my salary increased, and we avoided lifestyle creep.  We lived in nice homes, though I always made a long commute to allow us to buy “more house for the money”.  We paid for our daughter’s college, just like my parents did for me.

Our balance felt “right”, and we have no regrets about the years gone by.  I sometimes worry whether those who are obsessed with an early FIRE make too big a sacrifice during their journey.  Take some time to enjoy The Moment, and make sure the balance fits with your longer-term plans.  Live a life of no regrets.  For us, that ruled out an early “leanFIRE” approach.

Lesson #6 From FIRE:  Balance the sacrifices you make as you work toward retirement.  Don’t “over” save, and live a life of regret today.  Don’t “under” save, and live to regret it tomorrow.


2. We weren’t aware of FIRE in our 20’s

If someone wants to pursue a truly “young” leanFIRE experience, it’s difficult without starting very aggressively at a very young age.  When I first started my career, I signed up for the 6% 401(k) contribution to “get the match”.  We didn’t save anywhere near the double-digit rate that’s required for a truly “early” retirement, but we saved enough to retire early enough.

Even had I known about FIRE in my 20’s, I’m not certain that we’d have decided to save at the levels required for a retirement in our 30’s, or even our 40’s.  As I mentioned in #1, we made a decision to enjoy the journey, and I don’t think we’d have made it any differently had we thought about FIRE at a younger age.


3. Our Health Insurance and Tax Burden will be expensive

Before we buy our first meal in our monthly budget, we’re looking at ~$50k of expenses which we have to cover.  That burden alone kicks us out of the leanFIRE range outlined in the CampFIREfinance chart above. Here’s a quick rundown:

Health Care:  As I outlined in Health Insurance In Retirement:  Unsolved, we’re estimating $24k per year in health care insurance premiums.  Add another ~$7k in deductible, and we’re looking at $30k in expenses before insurance covers a dime.

Taxes:  I, like many others, made a mistake through my working career by possibly over-saving in my pre-tax 401(k) accounts.  As discussed in Our Retirement Investment Drawdown Strategy, we’ve got 56% of our assets tied up in before-tax accounts, and the tax burden to access these funds will be significant.  We plan on using the New Tax Law Loophole to pull a significant amount of these funds over before we get hit with the Required Minimum Distribution at Age 70 1/2.  Unfortunately, the tax burden will be expensive and will drive up our post-retirement costs.  Since fatFIRE is defined by all retirement expenses, including taxes, this was a factor in pushing us into the fatFIRE category.

Lesson #7 From FIRE:  Don’t forget to include tax expenses when calculating your post-retirement living expenses.  Just like everything else in retirement, these expenses will need to be paid from your investment resources.


4. It’s Time To Live Like No One Else

As we thought about what we wanted our retirement to be, we knew that we didn’t want to have to worry too much about money.  Sure, we could have retired 5 years earlier on a smaller budget.  However, we felt that the tradeoff of working a few more (peak earning) years was worth the benefit of being able to Live Like No One Else once we retired.  In spite of The Looming Bear Market, we sleep well at night because we know that our fatFIRE expenses can be reduced without too much effort.  Better to hedge a bit on the high side (e.g., fatFIRE expenses) and have room to cut, than to plan on the low side (e.g., leanFIRE) and get hit with a nasty surprise.  On that point, I will give credit to Suzy Orman’s criticism that many folks are unrealistic about the potential of some negative surprises over the course of one’s retirement.  In our case, we’re planning for fatFIRE, but we know we can survive if times get lean.

Using fatFIRE as our planning model for retirement allows us to spend our entire retirement paycheck without having to worry about running out of money.  Living like no one else, indeed, and exactly how we wanted our lives in retirement to be.


5. It Fit Our Priorities

While folks may jump to the conclusion that “fatFIRE = Materialism”, I can assure you that in our case that’s not the case.  We’ve never been materialistic, and I would argue that if, indeed, we were focused on “Stuff”, I wouldn’t have retired at Age 55.  Rather, we’d probably be living in one of those $2 Million mansions in Buckhead, driving a fancy new sports car, and working until a more traditional retirement age.  It was an option for us, and I know a lot of people who are living life that way.  I’m ok with that, if they’ve been intentional in their decisions.

Instead, we’re living in a comfortable $200k cabin in the mountains with our 4 dogs, and enjoying retirement at a relatively young age.  Our life has never been about work, and our life has never been about “stuff”.

Money reflects Priorities, and ours is no different. 

fatFIRE fits our priority of not wanting to worry about money in retirement, and we don’t.  We have a comfortable buffer between our retirement income and our spending requirements, and we’re sleeping well at night with our conservative approach to investing. Had we pursued a leanFIRE approach, by definition there would be less of a buffer in our plan.  We worked to hard to get to this point, and chose to target fatFIRE rather than spend the 30+ years in retirement worrying whether we had enough money to last our lifetimes.

We’re also generous by nature and believe in giving with a generous heart (see The 10 Commandments of Retirement, #1).  Sure, we could reduce our spending below “fatFIRE” levels, but a significant portion of that spending is money we’re giving to others, and it’s a priority for us.

Lesson #8 From FIRE:  Focus on your priorities first, then build a retirement plan around those things that are important to you.


Conclusion

I hope you’ve enjoyed this two-part series on the FIRE community, and the lessons it can teach those who are pursuing a more traditional path.  While we’ve chosen the fatFIRE approach, the more important point of these posts are the lessons we can pull from the broader FIRE community, summarized below:

8 Lessons From The FIRE Movement:

  • Lesson 1:  If you’re behind in retirement savings, use the same tricks as the FIRE movement to catch up.
  • Lesson 2: Take responsibility for your personal finances, including saving for your retirement.
  • Lesson 3: Recognize that some sacrifices are required today in order to achieve Independence in the future.
  • Lesson 4: Each of us is free to decide what type of retirement we’d like to live.
  • Lesson 5: Focus on achieving FI.  Your decision on when to retire depends on it.
  • Lesson 6: Balance the sacrifices you make as you work toward retirement.  Live today, but save for tomorrow.
  • Lesson 7: Don’t forget to include tax expenses in your post-retirement spending plan, they’re significant.
  • Lesson 8:  Focus on your priorities first, then build a retirement plan around what’s important to you.

What About You?

Take a few minutes to look over the lessons, and think about how you can apply them in your personal journey to retirement.  Then, jump in with your comments.  Are there lessons which stand out to you, or other lessons I’ve missed from the FIRE community?  Are you going fat, normal, lean or are you following a more traditional path to retirement?  Why?

Let’s chat…

53 comments

  1. Even though I haven’t fully exited the W2 working world yet, I’m using my part time status to pad the stash. As well as my side hustles. I’m not in the FatFIRE category yet based on my spending but ideally I’d like to get there, for many of the same reasons you cite. Especially healthcare.

    1. Healthcare is certainly a biggie, Dave. It’ll be very interesting to watch developments in this space over the coming year, but no doubt it’ll be one of the major expenses anyone pursuing early retirement has to consider seriously before pulling the plug.

    2. Yes, healthcare and taxes can be tricky. I prefer to err on the side of caution and would also prefer to fatFIRE instead of leanFIRE. Life tends to get more expensive in the future. Forgoing present pleasure for future prosperity is the way to go.

      Thanks,
      Miriam

  2. Really great explanation, Fritz! As we draw closer to the day we’d like to pull the trigger, it’s content like this that helps drive the goal forward. As always, thanks for sharing.

  3. Another great summary Fritz.

    I am late to the Financial Independence and FIRE movement but we have lived it all these years! We saved and invested with the goal of retiring before the average person. I have always looked up to my dad, who retired at 57. Until recently we did not come up with a specific date, we just kept the goal of retirement as a priority.

    Lesson 6 is THE most important to us right now. We have led a good life, enjoying vacations, spending time with the family, however, as we look back we may have sacrificed some fun for the future (no regrets though).

    Living in the present is much more meaningful to us due to Mrs. r2e’s ongoing battle with cancer. We are fortunate that due to our financial independence we are able to focus on her health.

    1. Mr. r2e, no doubt in my mind that “balance” and “living in the moment” are two of the most important lessons we’ve learned on our journey. So sorry about Mrs. r2e’s battles, but important reminders of the importance of enjoying every day. None of us know how many days we have, and it’s a pity if we waste them away sacrificing everything for “tomorrow”. I’ll keep you and Mrs. in my prayers.

  4. Nicely said Fritz. FatFire is the life for me to… I suspect I will be working well through my 40s to get there, plus who says we need to retire completely. We can always find paying gigs along the way (like this blog) and enjoy some income along with the savings we have accumulated.

    1. DDD, for some reason, the theme of Green Acres popped in my mind when I read, “FatFire is the life for me”…it fits well with the music! Too bad I’m not good with video, that could made a hilarious YouTube voice over! No doubt, developing things that are passions, but also provide an income, is a good way to approach “RE”, whatever that means to each of us.

  5. Fritz, thanks for sharing the thoughtful summary of your decision process. This process is like traveling… each one of us might take a different path, travel at a different pace, and have different obstacles to overcome to get to our destination… and that’s okay.

    One thing I did to prepare ourselves for an early retirement was to take advantage of our “income shovel” to fill up cash/taxable buckets. Similar to you, I was diligent over my career to fill up my 401k, mainly in pretax with a shift to Roth more recently. As I have reflected on my journey I wish I would have been more intentional at this level of diversifation earlier in my career to provide additional flexibility.

    1. It sounds like we took a similar approach to our 401(k)’s, Dave. I, too, was heavy on pre-tax through most of my career, though I really hit the ROTH hard in my later years to attempt to get some tax diversification prior to retirement. Necessary, but not sufficient. I’ll be working on topping off the tax brackets over the next few years to move as much of the pre-tax over to ROTH as possible under the new (lower) tax brackets.

  6. I prefer these completely made up definitions of lean/regular/fatFI:
    >4.5% WR = LeanFI
    <3.5% WR = FatFI
    Between the two is RegularFI.

    It puts the conversation into amount of risk tolerance and away from absolute portfolio value. A $2m portfolio could be plenty for a DINK couple in a LCOL area, where it wouldn't be enough for a couple with three kids in a HCOL area.

    1. Interesting thought, James. I would argue, however, that someone living on $30k with a 3% Withdrawal Rate would still clearly classify as LeanFI, based on their spending level. How would you think about someone with that profile? I struggle to label them as FatFI if they only spend $30k?

      1. I’d still consider them FatFI for them. I map these names to a person or couples need to draw down their capital. If they’re comfortable living on $30k a year forever, then they’re operating Fat.

        I’m not sure how else to classify these buckets. People use BaristaFI to describe the >4.5% WR, but I don’t think there’s a “name” for the lower risk WRs.

  7. Fritz, very nice reminder about the tax burden that savers and investors in pre-tax accounts will experience. The Roth conversion ladders require a great deal of planning and runway to utilize the time before one starts taking social security. A 24% tax bracket is a real bargain under this new tax law, and the clock is ticking. Either way, we are going to have to take medical insurance and tax hit on the chin so consider yourself warned if it’s not in your FIRE plan.

    1. Taxes are a tremendously important part of the retirement planning process, and I think they’re not covered with the level of content they should be. Most folks focus on spending vs. income, etc., but as we moved closer (and in) to retirement, the importance of tax planning became increasingly clear. Thanks for reiterating their importance.

  8. With Obama Care being struck down last week I think there is a valid concern that people with pre-existing conditions may become uninsurable in two or three years (predicted time to get though Supreme Court) which could be a problem. I’ll be on Medicare by then, but retiring at 55 you will still have some exposure. I’m fast fire as well though mostly because I was having to much fun at work to retire after I became FI.

    1. That was a major court decision last week, Steve, and I suspect we’ll be seeing a lot of coverage in the health care area over the coming few years. That’s a good thing, because it’s clearly “broken” and needs to be addressed. I’ll be watching closely…

    2. Look closely at the ruling from last week. I noticed that the statement requiring people to have health insurance or pay a fine was the component that made the law unconstitutional. That’s the only part the Fed Judge had issues with.
      You’re right, by the time Washington gets around to fixing it, two-three years will have elapsed.

  9. Just like so many, I also have most of my retirement savings in a pre-tax 401k and also an IRA that was funded when our company pension plan was closed. Living in NY, the tax advantages of the loophole is a bit different than yours. I just retired at 60 so I’m a later FIRE but was glad that I ramped up savings over the last decade so that I could retire this year rather than at 62 when I originally planned to. Although I loved my job, the commute became unbearable when my company moved and the journey went from 3 to 5 hours a day. The freedom that comes with FI made this possible. One huge advantage that I have is I was grandfathered in for subsidized retiree health from my job and my husband’s civil service job not only provided him with a modest pension but also retiree health. Now planning the best way to minimize taxes before and after RMD knowing that rates may go up as the political winds change. We expect our very high SALT will be much lower when we move out of NY in a few years. I’m glad we saved enough in cash accounts so I can hold off on pulling from my retirement account with the market in so much turmoil. Lots of moving parts keeps me busy tracking things!

    1. Pat, fascinating story, sounds like you’ve had an interesting ride. You’re fortunate to have the health insurance covered, now you just have to move out of state to get rid of your SALT problem! Good point about needing to ensure you have lots of cash to bridge retirement until the 401k funds can be accessed. Thanks for stopping by.

  10. Thanks for the good content Fritz. It feels weird to think about living a fatFIRE life in retirement, spending MORE than you did while working!
    We’ve always lived below our means, to invest for the future. As a result, our monthly investment dividends are now over 3X our monthly paychecks!
    Next year I’ll turn 55, and we plan to pull the trigger in early 2020 (2/20/2020 @ 2:20:20 PM is my exact day to leave work behind!)…I wanted a retirement date I could easily remember! Haha.
    But as strange as it may sound, it’s hard to think of that being our new spendable income, and we’ve done mock budgets to project what it might involve. We plan to travel, which is expensive. We expect grandchildren in the future, and want to fund their education. We’ve always given to charity, so it will be fun to find new ways to bless others.

    1. 2/20/2020 @ 2:20:20. Yep, that’s simply GOT to happen! We’ll ALL remember your retirement date! It sounds like you’re well prepared, enjoy the final 14 months until retirement! (You’ll like a post I’m writing for early January – 20 steps to take in your final year before retirement. How ironic that I chose 20 items, right!?).

  11. Great post, Fritz! Although we’re planning to move to Panama with just over $1M, I don’t really think of us as LeanFIRE. Although our initial plan was to cut expenses, we’ve built our strategy around our current expenses so we can move back to the U.S. if we want. In a way, we’ll probably be closer to FatFIRE while in Panama, but regular FIRE if we move back. 😛

    7 more workdays left until I join the FIRE ranks! Have a great Christmas!!

    — Jim

    1. 7 Days. Wow, that went fast. BTW, you’re moving to Panama!? Wow, you should write a blog about that….

      Merry Christmas, my friend. We’re heading to MI tomorrow, then on to OH. We’ll be close to your neck of the woods, but spending our limited time with family. Sorry we’ll miss you, may have to make that trip to Panama some day to see you! 😉

  12. We just retired this summer, and while our investments don’t exactly mesh with the CampFire graphic, I include my pension, our SS payments which will start in 2019, and some real estate income, which would throw us into the Fat Fire category. If we HAD to (and we may if the market continues on this trajectory) we could probably live on our monthly incomes and a 1%-2% withdrawal rate from our investments, at least until things right themselves. We did follow your Bucket Strategy recommendation, but being a retirement newbie, this market volatility makes me nervous. Hoping I get used to it! 🙂 Great post, by the way.f

    1. Congrats on your retirement, Lou! It sounds like you’ve got things well set up for a great retirement, I hope you’re enjoying yours as much as I’m enjoying mine. I’m humbled that you followed my Bucket Strategy, it’s working well for us. Don’t let the market volatility bother you, it sounds like you’ve got plenty of cushion to absorb a few bumps in the road.

  13. Health care costs are the primary reason that I recommend people overshoot their projected spending needs. Like James says, it may not be that someone has more than 2.5 million in net worth, but is <3% or so withdrawal. This is especially true the younger the person is. The future of health care costs is the biggest unknown and I really don't see how people can accurately figure a percentage SWR here in the USA when we really don't know the future structure of our health care system.

  14. I’m hoping to continue to ease my way out of a 40 hour work week while hubby chooses to continue on for a while. At 50 and 51, we are past “early” retirement, but may be able to only work on things of our choosing within a couple more years. The whole health insurance thing after giving up regular employment is my biggest concern. Maybe there will be better options by the time we reach FI.

  15. Great article. Like you I found MMM several years before I retired at 52.
    He helped me to avoid and reverse the modest lifestyle inflation we adopted.
    That, along with becoming empty nesters, put us in the category of ‘enough’. We are within your fatfire range.
    We can continue to live as we have without requiring full time work. Which, like you, includes contributing to family and community needs.
    I actually kind of hoped that once i didnt have to work that i wouldn’t want to stop.
    But the freedom to do what I want, that lives my values, and uses my skills was irresistible.

  16. I am definitely on the fat side! My reasons are

    1) I did not know what FIRE was until after I retired. However, my Dad died young in 1989 when I was in my early twenties and I made a decision way back then that I would retire at age 50. At the time this was the youngest you could take corporate pension benefits in the UK and it never occurred to me to aim to retire earlier than this. This decision meant that I subconsciously did all the things you need to do to get to FI early.

    2) When I got to 50 I could have retired but was still enjoying my job so went part time. This is something I would recommend as a great way to transition from work to retirement. You can sort of dip your toe into the retirement world to see how it feels and how you will fill your days. Obviously the extra pay can also give you some additional fat if you choose not to spend it.

    3) I am not at all confident of the 4% rule being adequate. Ironically, I told a friend way back in 1989 that I would need 25 times my annual spending to retire at age 50 – who knew it would become a thing! Lots written about this, for example ERNs series on SWR is awesome in my opinion. I also look at Japan index returns since 1989 and UK since 2000 for evidence that returns can be poor for a very long time. If you start with fat you can better cope if 4% is indeed inadequate.

    4) I am not interested in earning any money in the future. I could do side hustles but what I really want is the freedom to do exactly what I want to do unencumbered by work commitments. Obviously this would change if there were a market catastrophe (and, yes, although unlikely, I do believe a market catastrophe could happen.)

    5) Things change. For example from a UK perspective:
    In the UK we currently have free healthcare which I can see from USA blogs is huge – but who knows whether this will still be the case in 30 years time.
    Wealth taxes are another thing to consider. Currently these are low but I would not be surprised to see them increase.
    And so on. Better to have a bit of fat to cushion the bad news when it turns up.

    1. Great comment, PJ. We see eye-to-eye on many things. Interesting point about Wealth Taxes, not something talked about much here in the USA yet, but certainly a risk that could raise it’s head. As you say, definitely better to be “fat” and have some cushion. Thanks for the well thought out note.

  17. that’s a good point about maybe overdoing the pre-tax investing while ignoring the post tax a little. i just had a conversation with our new hire, whom i am training. my advice was to do enough to get the match and consider a roth if you have money left over. she’s in a low tax bracket right now. imagine if we had the good sense to max those roths in our relative youth and all the tax free gravy flowing freely?

    we’re trying for fat-fire because we enjoy good wine and it’s not cheap. if work started wrecking our lives we would adjust our wants either stop working or do something else. money has surely bought us that option. enjoy the xmas season, fritz.

  18. Another spot on post Fritz, Thanks!
    At 61 I’ve been done with the W-2 world for the last 4 years and nicely settled in 1099 land. I’m in the upper FIRE range and bring in enough every year to be able leave our nest egg alone, even pad it a bit. We’ve downsized our home and life to the point that we are comfortable and having fun.
    In mid-January we leave on our 3rd annual road trip from Massachusetts down the east coast. Airbnb is an affordable way to go. Each year we mix it up. In 2019 we’ll do DC, Hilton Head, Savanah, St. Augustine, and then, TBD …. maybe Sarasota, a cruise, Charleston SC, Asheville NC, Charlottesville VA, Philly, who knows!! In 8-10 weeks later, we’ll make it home and more client work.

  19. As a retired teacher in one of the few professions that actually receive a defined benefit pension, your calculations don’t exactly work for us, but I figure that with our pension income and 403b savings we fall into the regularFIRE category. We aren’t going to be able to do everything/anything we want, but we will surely have enough to live comfortably in our little 640sqft cottage on a lake in NH and a little cottage in FL as snowbirds. Our toys are paid for and we intend to use them as well as travel as we are able.
    And, Maybe one day, I will be able to make some money from my blog!

    1. Nancy, yours sounds like an idyllic retirement! And, don’t worry about making $ from the blog, focus instead on creating consistently great content, and helping your readers on their retirement journey. It’s much more rewarding that way! 🙂

  20. Nice article. You refer to amount invested and not Net worth. So what should one exclude from net worth? Primary residence?

    1. Raj, in general, I exclude anything from Net Worth which can’t be used directly to fund retirement. In my net worth statement, I have a “Retirement Investment” line which excludes house equity, car value, and “toys” (e.g., our RV). I use this line @ 3%, 3.5% and 4% to see my various investment income levels from my retirement investments.

  21. Nice article, I like look at Fat vs Thin as a percentage of net worth not income. It is more of a thought process of Safety vs Income.

    I like to think that a withdrawal rate of over 4.2% is living Fat on the hog, you probably do not have enough saved, your lifetime income is not very safe. (unless you are older, the older you are the higher your withdrawal rate can be)

    I think a rate of 3.8-4.2% is FIRE, right in the sweet spot of normal FI thinking. Withdrawal models show a very good chance of not out living your money and things should be safe.

    And if you can live off of a withdrawal rate of 3.7% and below you are living a lean FIRE, easily capable of tapping more of your investments for an emergency or an extravagant vacation, and not having to feel like you have to “cut back” to make it through the rough patches.

    I do not feel safe with the 4% rule, though I am there, I feel that is too fat and does not leave a lot of room for unforeseen expenses like a huge tax increase to pay for universal healthcare or a new roof and car in the same year etc……. so we are aiming for 2 more years of work and saving and hopefully no great recession will rear its ugly head.

    We naturally live a pretty lean life, like most FIRE followers, and would hate to have to cut back even more because we stopped working a couple years early. I hope to get to a withdrawal rate of under 3.6%. And retire at the ages of (55/52) .

    Thanks for all your great article and hours of entertainment….

  22. Your humble narrator (moi) stumbled into the FIRE world by accident. At age 40 I had declared BK and retired from the US military in the same month. I was also a single parent of an angry, out-of-control, special medical needs child (Type I diabetes) who’d sabotage everything around her (including her health) in her anger. Definitely not a fun time for either of us. I was literally penniless, except the aforementioned military pension.

    I had to figure out a way to get out of the trap I created for myself. If I didn’t, my future was going to be a lot like my past. I became an OTR trucker for 4 years and created my own 401k plan. Those four years of maxxing out my annual investment, and socking away additional money over the years, allowed me to own my home free and clear and have about a quarter mill in liquid net worth 17 years later.

    Yes, I have a home full of second-hand furniture, but so what? Yes, I drive an ’04 with 175,000+ miles on it, but so what? I work PT in order to keep busy and add a little something extra to my stash every month. I’ll be 62 next March and able to draw SS, which will make the PT job even more of a way of adding to the stash until I determine the hassles of getting out of bed at 5 AM outweighs the benefits.

    The various FIRE blogs I read give me inspiration to stay the course. I’ve carved out my own little world of LEAN FI long before I knew the concept existed. I gotta do what I gotta do and the approval of random strangers on the internet isn’t going to deter me from my course of action.

  23. Nice explanation, Fritz.

    Like you, Wifey and I began saving for retirement long before the FIRE movement was a thing. Saving 40-50-60% of our income never crossed our minds. We based our savings on the 401k matches, so we were putting money away – but not nearly what we’d need to do to retire in our 30s/40s.

    Now we save 30+% of our earning and live a comfortable life as we move toward an age-59 retirement in 4 years.

  24. I am 58.5 yrs of age. I have a state govt. job. I plan on working until I am 62, and then retiring, so that I can COBRA my govt health ins for under $500 a month, until I am 65 and qualify for Medicare. I am scared to leanfire early because of the health costs. Otherwise, I would leave this summer. I will have a small pension.

  25. You can get health insurance, if u are enrolled in college. It costs about $250 per month here in Texas. You just have to be enrolled in six hours of classes

  26. I’ve been Lean FIRE for eighteen years and still going strong.
    I’d just like to ask you what your opinion is:
    Do you think the recent drop in the stock market will affect any young retirees,who may have based their FIRE on the money made from the market? This is what Suze Orman was adressing when she first heard of FIRE. Things happen. Things go wrong and unless you have $10mill cash in the bank you can’t retire till you’re 70, as per Orman.
    In other words, do you think there will be many early FIRE who are going to get a wake up call due to the recent drop in the stock market?
    Side note: my early retirement was never based on the stock market, so whether it goes up or down has no impact on my own retirement. It’s lean though!
    Thanks.

  27. Hello Fritz,
    Thanks for sharing your personal experience with how you chose what FIRE lifestyle to go with. I liked how you explained that giving is important part of your retirement lifestyle as I neared the end of the article. There is no cookie-cutter approach to retirement planning. Making “too” many sacrifices financially to get to retirement early can be very stressful. Alternatively, “not planning” for at all can be as equally stressful. As you mentioned balance is important in both your lifestyle day to day and planning your retirement! Great article!

  28. This was a great read! I like how you mentioned the fact you didn’t want to sacrifice your present too much for the future and vice versa. I agree you have to have a good balance of both!

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