Fat FIRE Calculator

What Is Fat FIRE (Financial Independence, Retire Early)?

Fat FIRE, an acronym for "Financial Independence, Retire Early," represents a more comfortable and lavish approach to early retirement compared to its leaner counterpart, Lean FIRE. In Fat FIRE, the goal is to amass a substantial amount of wealth that allows for a higher standard of living during retirement. This approach provides more flexibility, fewer financial constraints, and the ability to enjoy life to the fullest without worrying about money.

How Does FIRE Work?

Two key components of FIRE are saving aggressively and investing wisely. By starting saving your income early and investing the sums, compound interest can accelerate the journey to Financial Independence and Retire Early.

How to use Fat FIRE calculator?

Portseido's Fat FIRE Calculator is the free tool that helps individuals to plan for their financial independence and retire early. We will explore how to effectively use this calculator to project your financial future, set realistic goals, and make informed decisions.

Understanding Your Investment Inputs:

1. Time Horizon (Years):

This is the duration over which you plan to achieve your financial goals. Whether you're aiming for early retirement or saving for a specific milestone, input the desired number of years.

2. Current Net Worth:

Enter your current financial standing, including savings, investments, and any other assets. This provides the baseline for your future projections.

3. Expected Annual Return:

Specify the anticipated annual return on your investments. This figure helps the calculator estimate the growth of your portfolio over time.

4. Additional Contribution:

Input any additional funds you plan to contribute regularly. You can choose the frequency, whether monthly or annually, depending on your financial habits.

5. Contribution Growth (Percent and Frequency):

Define the growth rate for your additional contributions. This feature allows you to account for salary increases, bonuses, or other financial increments. Choose whether this growth occurs year over year or month over month.

How to Calculate Fat FIRE Goal?

Calculating your Fat FIRE goal involves determining the required retirement net worth. To achieve this, you need to understand two key components: retirement annual spending and withdrawal rate.

1. Retirement Annual Spending

Retirement Annual Spending is your estimated spending for any given year during retirement. This involves creating a detailed budget that takes into account all your future expenses, including housing, healthcare, travel, hobbies, and any other costs you expect to incur. It's important to be realistic and thorough in this assessment to ensure your retirement years are financially comfortable.

2. Withdrawal Rate

Withdrawal Rate represents the percentage of your net worth that you anticipate withdrawing annually to cover your retirement expenses. A lower withdrawal rate implies a safer and more conservative approach to financial independence, as it reduces the risk of outliving your savings.

The widely accepted safe withdrawal rate is typically between 3% and 4%. This means that for every $1 million in your retirement portfolio, you can withdraw $30,000 to $40,000 annually, assuming a 3% to 4% withdrawal rate.

Executing the Calculation:

Once you've entered all the necessary information, click on the "Calculate" button. The Portseido Free Online Fire Calculator will process your inputs and generate a comprehensive set of outputs to guide your financial planning.

Understanding the Outputs:

1. Final Goal:

The calculator will display the projected final goal amount in dollars. This represents the target amount you aim to achieve within the specified time horizon.

2. Portfolio Projection Graph:

Visualize your portfolio's projected growth over time with an easy-to-understand graph. This graphical representation provides a quick overview of your financial trajectory.

3. Portfolio Projection Table:

Explore a detailed table that breaks down your portfolio progression over the specified time horizon. The table includes multiple tabs for "Value," "Contribution," and "Return," allowing you to analyze each aspect of your financial plan.