Fat FIRE - Fat FIRE is about retiring early, but also still living on at least $100,000 per year as an annual income. So really, Fat FIRE is the most luxurious route to financial independence. And some argue that it is the ULTIMATE route to financial independence because it allows you to live a life with more choices. After all, the more money you have, the more choices you have in life.
Money doesn’t solve all problems, but it certainly does solve some of them.
So what does it take to be able to withdrawal at least $100,000 as an annual income from your portfolio? Well that really all depends on your withdrawal rate. If you are retiring early, you may be best suited to go with a 3% withdraws rate in your retirement to ensure that your portfolio will last throughout your entire very lengthy retirement. However, if you are retiring more at a traditional age of around 60 or so, you are probably just fine to stick with a 4% withdrawal rate.
The longer your retirement horizon the more conservative you are going to have to be.
If you are going with a 3% withdraws rate, you are going to need a nest egg of around $3,333,333, but if you are going with a 4% withdrawal rate, you are looking at a portfolio more around $2,500,000. So yes, your withdrawal rate really does matter!
Now who is Fat FIRE best designed for? Well that would primarily be high income earners - like those who have an annual income of at least $150,000 per year or more.
Fat FIRE is really designed for those who really don’t want to be all that frugal and budget every last dollar. They want to live a bit more freely on an income of AT LEAST $100,000 per year.
Being that they want to live on at least $100,000 minimum per year, you have to consider that they are going to have to have a higher income to start with if they every hope to successfully save up such a large nest egg.
And again, as I said, an annual income of $100,000 per year in retirement is generally seen as the minimum for retiring and living out the Fat FIRE lifestyle. There are many individuals who pursue the Fat FiRE route and actually plan on living on annual withdrawals of $200,000 or $300,000 per year.
Fat FIRE allow you maintain a higher standard of living in your retirement. You can living in a metropolis and enjoy all that goes along with that higher cost of living, you can travel, help your kids with college, help your aging parents, afford the very best medic care, and the biggies - you an afford to never work again if you so choose.
Fat FIRE is. definitely a unique approach to FIRE. It’s not attainable by all - but it certainly comes with a great man perks.
Disclaimer: Please note that this video is made for entertainment purposes only and not to be taken as financial advice. Always make sure to do your own research.
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