Coast FIRE vs. Fat FIRE

Fat FIRE means your investments pay for a large budget, usually $100,000 a year or more, and you stop working for good. Coast FIRE aimed at that same budget means you’ve invested enough that the money will grow into your fat FIRE number by a chosen retirement age, so you can stop saving while your jobs keep paying the bills.

Coast FIRE comes first on any savings plan, but how far ahead depends on how hard you save. For the couple below, who invest $84,000 a year, coasting toward 60 comes only 6 years before fat FIRE itself. At that point Coast FIRE is more useful as a safety net than as a goal.

One couple, both plans

Hugo and Beatriz are both 37. Between their 401(k)s, IRAs and a brokerage account they have $450,000, and they invest $7,000 a month. They spend about $130,000 a year, taxes included, and want to keep that lifestyle in retirement. The numbers use 7% returns and 3% inflation, in today’s dollars.

They can coast toward 65 from 46, or toward 60 from 50. Full fat FIRE at a 4% withdrawal rate comes at 56. Coasting toward 55 doesn’t work at all. They can’t get ahead of that line before 55 itself, and fat FIRE arrives at 56 anyway.

Why are the dates so close for big savers?

A Coast FIRE number leans on time. The earlier you get there, the more years of growth do the work, and the smaller the number looks. Someone saving $1,000 a month usually hits that line long before they could ever pile up a full FIRE portfolio.

Hugo and Beatriz put in $84,000 a year. At that pace their own deposits close the distance to the full target quickly, and the head start that makes Coast FIRE attractive shrinks. Coasting toward 60 from 50 means working 10 more years without saving, while simply saving 6 more years would let them stop working altogether.

That’s the honest case against treating Coast FIRE as a goal for fat FIRE households. It’s still worth knowing the date, because from then on a bad stretch at work no longer threatens a comfortable retirement at 65, as long as returns roughly hold up. I’d treat it as a floor, not a finish line.

What does coasting look like on a fat budget?

Say they reach the Coast FIRE line for 65 at 46 and stop investing. Their jobs still have to cover $130,000 a year plus the taxes on it, so this isn’t the point where one of them quits unless the other earns enough alone. What changes is that the $7,000 a month is no longer spoken for. They could take jobs with less travel, lower pay and saner hours, or one of them could go part-time.

Compare that with the fat FIRE path, where they keep investing $7,000 a month until 56 and then stop working entirely. That’s 10 more years at full intensity, in exchange for 9 years of retirement before 65 on a large budget.

Both are reasonable. The coast version suits a couple who’d rather ease off in their late 40s. The fat version suits one that wants a clean break in their mid-50s and doesn’t mind pushing for it.

Is 4% enough for fat FIRE?

Not everyone thinks so for early retirees. Fidelity’s guideline for retiring before 62 is to save 33 times your expenses, which assumes a 3% withdrawal rate. For Hugo and Beatriz, that’s $4,333,333 and pushes their date from 56 to 61.

I think a fat budget can defend 4% a bit better than a lean one, because it often includes travel, dining and gifts that can shrink in a bad market year. But that only helps if you’ll actually cut when the time comes. A few other costs show up at this level. Withdrawals from traditional 401(k)s and IRAs are taxed as ordinary income, which is why their $130,000 includes taxes. Most withdrawals before 59½ carry a 10% additional tax unless an exception applies. And Marketplace health coverage before Medicare can cost full price: premium tax credits stop at 400% of the federal poverty level, now that the enhanced credits have expired, and a household drawing six figures can easily land above that. Our health insurance guide covers the options.

Coasting sidesteps the last two problems. They’d keep working until 65, often with coverage through work, and wouldn’t need to withdraw anything early.

How much does the fat part cost?

What counts as fat is a convention. The Motley Fool describes it as spending of $100,000 or more a year, and the White Coat Investor puts it at $120,000 to $200,000. The label doesn’t matter much. What matters is how many working years each extra dollar of spending costs.

Dropping from $130,000 to $100,000 moves their date from 56 to 53. If most of the difference is spending they wouldn’t miss, that’s a better trade than coasting. The chubby FIRE calculator is built for that middle range, and the fat FIRE calculator handles the top.

The combination I’d suggest for most high earners is simple. Find your Coast FIRE date for 65 and treat it as the point where a retirement at 65 is on track even if you never save another dollar. Keep saving past it, and decide in your late 40s whether the extra years are buying you fat FIRE or a slightly smaller budget sooner. The Coast FIRE calculator gives you the first date, the FIRE calculator the second, and our Coast FIRE vs. FIRE and lean FIRE comparisons show how the picture changes at smaller budgets. The types of FIRE guide has all of them in one place.