Chubby FIRE is considered the upper middle class of the FIRE movement (Financial Independence, Retired Early). With a net worth between Lean and Fat FIRE, Chubby enables you to retire early and enjoy life with some luxuries.
Retirement looks different for everyone, and it would be easy to argue that you don’t need a specific net worth to qualify for Chubby FIRE. In fact, guidelines for being Chubby can vary greatly depending on where you live.
If you’re in a low cost part of the world, you can live very comfortably on less than $50,000 a year. While if you’re in a high cost area (like New York or London), living on $100,000 a year may feel like just getting by.
That said, you’re here for some numbers, and we’re happy to provide them.
In the United States, Chubby FIRE is retiring with between $2.5M to $7.5M in net worth. This is a starting guideline, and as mentioned, these amounts can be adjusted up or down depending on your situation.
Retiring early with $2.5M and a 4% withdrawal rate will enable you to spend $100,000 per year. And a net worth of $7.5M with a safe withdrawal rate of 3% allows you to spend $225,000 per year. In general, spendable amounts above and below these are typically considered a different category of FIRE.
Five types of FIRE
The FIRE movement is not only big, but also very personal. One person’s early retirement could look very different from another’s. Saving amounts vary. Cost of living varies. Life expectancy varies. And there are many other factors that differentiate one’s retirement from another. These kinds of differences lead to natural formation of different types of FIRE.
Below are five subsets of FIRE that exist today. Listed by level of difficulty to obtain (easiest to hardest), these types of FIRE range from Coast FIRE to Fat FIRE.
Coast FIRE refers to someone who no longer needs to save for retirement. This person has accumulated enough savings at an early age that they can stop saving for retirement and still reach financial independence by age 65. Coast FIRE provides an individual with the ability to spend as much as they earn.
One step past Coast FIRE is Barista FIRE. Here a person has enough savings that they can effectively leave their job for one with less stress and less pay (possibly becoming a barista). This person has the ability to not only spend every dollar they make, but also draw down on their savings.
A person following Lean FIRE has retired and maintains a very strict budget enabling them to not have to work. The Lean FIRE lifestyle is a frugal one that usually only accounts for basic living expenses, like housing, food and transportation. Things like family vacations and dining out are considered luxuries and are usually not a part of a Lean FIRE lifestyle.
Folks who pursue Chubby FIRE retire early and in comfort. They usually own a home, mortgage free, in a middle to high cost of living area. They’re able to draw down on their savings to live a comfortable lifestyle that includes luxuries like vacations and evenings out. This is often considered the upper middle class of FIRE.
Fat FIRE is for the wealthy. In today’s world, where “rich” means having a new worth of $10M to $1B, this level of FIRE includes a broad range of luxuries. From flying first class and private to owning several million dollar homes, it’s safe to say that people at this level of FIRE live a different lifestyle than over 99% of the general population.
Why aim for Chubby FIRE?
While it’s not easy to obtain the level of wealth required for Lean FIRE, it’s even harder to get to the Chubby FIRE level. Many Americans never obtain financial independence, and doing so in the Chubby zone is a lofty goal.
Benefits of aiming for Chubby FIRE include:
- Being able to retire early in comfort
- Maintaining a financial cushion for the curve balls life throws at you
- Providing more opportunities for your children by supporting their education
- Making the world a better place by giving to charities you believe in
- Leaving an inheritance for your loved one
Being able to retire early in comfort
There’s a big difference between Lean FIRE and Chubby FIRE. People following lean (or Barista) FIRE often live extremely frugal lifestyles.
Take Mr Money Mustache for instance. He is a very popular Lean FIRE blogger, who left his job to retire young. How did he and his wife do this? And with a young child to boot? They accomplished this by only spending about $25k-$30k a year.
In other words, they lived near poverty. (I say “lived” as his blog is so popular now that it probably earns 6 figures a year. I highly doubt his family is still living on only $30k a year, but they once did.)
Yes. Lean FIRE often means living like you’re broke. If you review Mr Money Mustache’s expenses during his early retirement years (before he’s blog took off), you’ll see “the Mustaches” never ate out, they consider his wife’s fitness classes a luxury, and they only spent $300-$400 a year on shoes and clothing for 3 people.
The Chubby FIRE lifestyle is quite different. Eating out is a normal occurrence. Gym memberships for the entire family are standard. And spending $300 on new clothes could occur during a single trip to the mall.
It’s these types of comforts that make Chubby FIRE worth striving for.
Do you want to pay someone to mow your lawn, so you can enjoy more time with your family? Well, that’s Chubby.
Do you want to go camping or to an all inclusive resort? If you’re Chubby, you can afford to do both!
How about joining the local country club? That one’s a littel more nuanced and probably depends on the where you live and club you’d like to join.
Anyway I think you get the point.
Maintaining a financial cushion
Aside from living comfortably, this is probably the second greatest benefit to obtaining Chubby FIRE.
Let’s face it. Life isn’t easy, and sometimes the unexpected occurs. Unfortunately, when the unexpected does happen, most Americans can not afford to an additonal $1,000 expense, and 40% can’t afford one over $400.
This is nothing new. Americans have struggled with savings and debt for decades. The underlying causes for our general lack of savings are often theoretical and very complex, so we’re not going to get into these details here. The main takeaway is that most people are miles away from financial independence.
Fortunately for those pursuing Chubby FIRE, you have a financial cushion, and a big one at that. This is a big difference between Chubby and Lean/Barista FIRE. You can easily afford unexpected expenses.
Some recent, large and unexpected expenses that happened my life were:
- Replacing the furnace and central air conditioner ($10,000)
- My daughter having an appendectomy ($7,000 after insurance)
- Unexpected car maintenance ($3,000)
- Needing a new refrigerator ($2,000)
These types of expenses could break a family (or individual) planning to live off $40,000 per year (4% of $1M). Meanwhile a family pursuing Chubby FIRE should be able to either absorb these expenses as a part of their normal budget, or they can dip into their substantial savings to cover these kinds of one-time costs.
Supporting a child’s education
College is expensive. Graduate school is expensive. Law school is expensive. Medical school is expensive.
Most people take out student loans and rely on scholarships to finance their higher education. Graduating without debt is a true luxury in today’s world. Parents (or other relatives) who fund their children’s education set them up for a world of personal finance success.
On average, most students with debt graduate with between $25,000 and $50,000 in loans, and these ranges vary greatly by individual. Some students may graduate with no debt while others loans could extend into the hundreds of thousands.
In today’s political climate, there is a lot of discussion on how to make higher education more affordable. One surefire way to accomplish this for your loved ones is to help them pay for college and any postgraduate school they attend.
Donating to charity
There are many benefits to supporting causes you believe in. First, donating money (and time) can have a large impact over time. Even small donations add up, and the more you give, the more impact you’ll make. Secondly, donating often makes you feel good. It’s nice to know that you’re making the world a better place, and people who regularly perform acts of kindness are more positive and have less anxiety. And of course, who can forget about the tax benefits that come with charitable giving? Most US taxpayers can deduct up to $300 in donations a year, and can deduct a lot more if they itemize.
Leaving an inheritance
Depending on your situation, passing assets down to your children could be of little concern or extremely important.
Some folks who FIRE, want to die with nothing left. In fact, a book titled Die with Zero is very popular with some in the Chubby FIRE community. As you can probably tell from the title, this book promotes the idea of spending all your money, so that you die with none left. I think this would be very hard to do in practice, as you would need to time exactly when you’re going to die in order to pull this off perfectly. Personally I would feel a lot better dying with money in the bank, just in case I unexpectedly lived a couple more years.
The opposite of this is intentionally leaving an inheritance to your family. People over a certain net worth may find it almost impossible not to leave an inheritance, but for most people reading this article, that’s probably not a concern. Instead you want to focus on how to best pass money on to your heirs, especially if it’s needed to secure a family business.
Life insurance is one method. Another good one is leaving a Roth IRA, as your heirs will not have to pay income taxes on withdrawals and can let the money grow tax free up to 10 years after your death.
Regardless of whether you plan to leave an inheritance or not, the ability to do so is a luxury that people following Chubby FIRE should be able to afford.
It’s good to be Chubby
While it may be hard to get to the level of net worth that’s needed for Chubby FIRE, many people consider it to be a worthwhile effort. Retiring early with this level of wealth allows for a number of luxuries Lean FIRE retirees simply can’t afford.
In addition to living a more comfortable lifestyle, the psychological and emotional benefits of having a large financial cushion and being able to support your children are significant benefits. It’s hard to put a price on these things, and with Chubby FIRE money, you don’t have to.
Dedicated to Chubby FIRE
chubbyfire.io is a space dedicated to the Chubby FIRE lifestyle. We’ll touch on and discuss other types of FIRE, but usually only in relation to how they compare to being chubby.
We’ll also dive into topics of specific interest to those of the Chubby FIRE community. Items like retirement planning, health insurance subsidies, net worth calculations and more will be featured over the next several months.