1. What is FAT FIRE?

FAT FIRE (Financial Independence, Retire Early) is a movement where individuals aim to accumulate significant wealth to retire early with a luxurious lifestyle. It typically requires a larger nest egg than traditional retirement planning.

2. How Does the Calculator Work?

The calculator uses the FAT FIRE formula:

Where:

• \( Expenses \) — Monthly expenses in dollars
• \( 33 \) — Multiplier based on the 3% safe withdrawal rate

Explanation: This calculation is based on the 4% rule (Trinity Study) but uses a more conservative 3% withdrawal rate for FAT FIRE, providing a larger safety margin for a luxurious retirement.

3. Importance of FAT FIRE Calculation

Details: Calculating your FAT FIRE number helps you set clear financial goals for early retirement with a comfortable lifestyle, accounting for higher spending needs and market volatility.

4. Using the Calculator

Tips: Enter your estimated monthly expenses in retirement. Be realistic about your spending habits and include all categories: housing, travel, healthcare, entertainment, and contingencies.

5. Frequently Asked Questions (FAQ)

Q1: Why the 33x multiplier instead of 25x?
A: FAT FIRE uses a more conservative 3% withdrawal rate (33x) instead of the traditional 4% (25x) to provide a larger safety margin for a luxurious lifestyle and market fluctuations.

Q2: Should I include taxes in my expense calculation?
A: Yes, taxes should be included as an expense in your retirement calculations, especially since withdrawal strategies can have significant tax implications.

Q3: How does inflation affect this calculation?
A: The 3% withdrawal rate is designed to account for inflation, but you should regularly reassess your numbers as your expenses and economic conditions change.

Q4: Is this calculation suitable for all ages?
A: While the principle applies to all ages, younger retirees may need to be more conservative due to longer retirement timelines and sequence of returns risk.

Q5: What investment return assumptions underlie this calculation?
A: This calculation assumes a balanced portfolio that can sustain a 3% withdrawal rate over a long retirement period, typically expecting ~7% annual returns before inflation.