Fatfire Calculator

FatFIRE Calculator

function calculateFatFIRE() { var annualSpendingGoal = parseFloat(document.getElementById("annualSpendingGoal").value); var safeWithdrawalRate = parseFloat(document.getElementById("safeWithdrawalRate").value); var currentPortfolio = parseFloat(document.getElementById("currentPortfolio").value); var annualContributions = parseFloat(document.getElementById("annualContributions").value); var investmentGrowthRate = parseFloat(document.getElementById("investmentGrowthRate").value); var inflationRate = parseFloat(document.getElementById("inflationRate").value); // Input validation if (isNaN(annualSpendingGoal) || annualSpendingGoal <= 0 || isNaN(safeWithdrawalRate) || safeWithdrawalRate <= 0 || isNaN(currentPortfolio) || currentPortfolio < 0 || isNaN(annualContributions) || annualContributions < 0 || isNaN(investmentGrowthRate) || isNaN(inflationRate)) { document.getElementById("result").innerHTML = "Please enter valid positive numbers for all fields."; return; } var swrDecimal = safeWithdrawalRate / 100; var growthDecimal = investmentGrowthRate / 100; var inflationDecimal = inflationRate / 100; var targetFatfireNumberToday = annualSpendingGoal / swrDecimal; var currentPortfolioValue = currentPortfolio; var years = 0; var inflatedAnnualSpendingGoal = annualSpendingGoal; var maxYears = 150; // Prevent infinite loops for unrealistic scenarios while (currentPortfolioValue < (inflatedAnnualSpendingGoal / swrDecimal) && years = maxYears) { document.getElementById("result").innerHTML += "Note: Calculation stopped at " + maxYears + " years. Your inputs may lead to a very long or unattainable FatFIRE timeline."; } }

Understanding FatFIRE: Your Path to Abundant Financial Independence

FatFIRE is an advanced concept within the Financial Independence, Retire Early (FIRE) movement. While traditional FIRE aims for financial independence to cover basic living expenses, FatFIRE targets a significantly higher level of wealth, allowing for a more luxurious and comfortable retirement without worrying about budget constraints.

What is FatFIRE?

FatFIRE stands for "Financial Independence, Retire Early" with an emphasis on a "fat" or abundant lifestyle. This means accumulating a much larger investment portfolio than typically required for standard FIRE, enabling a higher annual spending budget in retirement. For many, this translates to maintaining their pre-retirement lifestyle, enjoying premium travel, dining, hobbies, and potentially leaving a legacy, all without the need to work.

Why Pursue FatFIRE?

• Enhanced Security: A larger portfolio provides a greater buffer against market downturns, unexpected expenses, or higher-than-anticipated inflation.
• Unrestricted Lifestyle: Enjoy a retirement free from financial compromises, allowing for more expensive hobbies, travel, and experiences.
• Peace of Mind: The comfort of knowing you have more than enough to cover all your desires, reducing financial stress significantly.
• Legacy Planning: A substantial portfolio can facilitate philanthropic endeavors or provide a significant inheritance for future generations.

How the FatFIRE Calculator Works

Our FatFIRE Calculator helps you estimate the financial target and timeline for achieving your abundant retirement. Here's a breakdown of the key inputs:

• Desired Annual Spending in Retirement: This is the core of your FatFIRE goal. How much do you envision spending each year to live your ideal, comfortable retirement? This figure should reflect your desired lifestyle, including housing, travel, dining, and other discretionary expenses.
• Safe Withdrawal Rate (SWR): This is the percentage of your total investment portfolio you plan to withdraw annually without depleting your principal. A common SWR for traditional FIRE is 4%, but for FatFIRE, many choose a more conservative rate (e.g., 3% or 3.5%) to ensure greater longevity and security of their funds.
• Current Investment Portfolio Value: The total value of your current investments (stocks, bonds, real estate, etc.) that are earmarked for retirement.
• Annual Savings/Investment Contributions: The amount you consistently save and invest each year towards your FatFIRE goal. Higher contributions significantly accelerate your timeline.
• Expected Annual Investment Growth Rate: Your anticipated average annual return on your investments after fees. This is typically a long-term average for a diversified portfolio.
• Expected Annual Inflation Rate: The rate at which the cost of living is expected to increase. The calculator accounts for inflation to ensure your future spending power matches your current desired lifestyle.

The calculator uses these inputs to determine your "Target FatFIRE Number" (the total portfolio size needed in today's dollars) and then iteratively projects your portfolio growth, considering your contributions, investment returns, and inflation, to estimate the "Estimated Years to FatFIRE." It also shows your "Projected Portfolio Value at FatFIRE" and the equivalent "Projected Annual Spending Power" in today's dollars once you reach your goal.

Example Scenario:

Let's say you desire an annual spending of $150,000 in retirement, plan for a 3.5% Safe Withdrawal Rate, currently have $500,000 invested, contribute $50,000 annually, expect a 7% investment growth rate, and anticipate 3% inflation. The calculator would show:

• Target FatFIRE Number (Today's Dollars): $150,000 / 0.035 = $4,285,714.29
• Based on the other inputs, it would then calculate the years it takes for your portfolio to reach this inflation-adjusted target. For these example numbers, it would take approximately 25-30 years, resulting in a projected portfolio value of around $9-10 million (due to inflation over that period) and an equivalent annual spending power of $150,000 in today's dollars.

Tips for Reaching FatFIRE:

1. Maximize Income: Focus on increasing your income through career advancement, side hustles, or entrepreneurship.
2. Aggressive Savings: Maintain a high savings rate, often 50% or more of your income, to accelerate your portfolio growth.
3. Smart Investing: Invest in a diversified portfolio that aligns with your risk tolerance, focusing on long-term growth.
4. Control Lifestyle Inflation: As your income grows, resist the urge to significantly increase your spending.
5. Regular Review: Periodically review your progress and adjust your plan as your circumstances or market conditions change.

The FatFIRE journey requires discipline and strategic planning, but the reward of an abundant, worry-free retirement can be incredibly motivating.