FatFIRE: Financial Independence for High Earners

FatFIRE offers strategies for high net worth individuals to build wealth and live a financially independent lifestyle. It’s a community built around scaling FIRE strategies to fit the unique needs of those with high income or who are managing considerable wealth.

“FIRE” stands for Financial Independence and Retire Early. In case you want to learn more about these financial philosophies in general, there is a “wealth” of information on our blog here at Biglaw Investor and also throughout the internet. To summarize briefly, financial independence is about not needing to work, while retiring early, which is built on that financial independence, is the decision to no longer work. FIRE comes in many shapes and sizes, and the term “fatFIRE” was adopted by FIRE communities to distinguish a certain kind of FIRE for high income and high net worth individuals. By scaling the FIRE principles to levels of muti-millionaires—and infinitely richer people in theory—unique advice and experiences may be necessary. FatFIRE is both a FIRE strategy and also its own community for like-minded FIRE members.

Some fatFIRE communities online include the subreddit and the Facebook group. Other types of FIRE communities also exist for the likes of leanFIRE (a very frugal retirement), coastFIRE (letting existing savings grow but not saving), and baristaFIRE (working part-time) just to name a few.

Why distinguish fatFIRE?

As previously mentioned, scaling the same FIRE principles to apply to ultra-high net worth can create a need for unique advice and strategies. Just a few examples of the topics that the fatFIRE community might commonly discuss (which are conversely uncommon in the regular FIRE community) are: first-class travel, owning a lucrative business, expensive real estate, large windfalls, expansive rental properties, stock options and IPOs, personal chefs and maids, private education, trust funds, country clubs, and even wealth managers (which happen to be notoriously advised against for the majority of FIRE members).

If a FIRE community is flooded with the multi-millionaires, frugal retail workers, and everyone in between, the goal of achieving FIRE is still valid for all, but the relevant advice and shared experiences will face a lack of harmony. Strategies for when to get a financial advisor do not apply the same to someone who does not intend on saving tens of millions of dollars. It can be risky to mix and match the discussions of similar goals that operate best under different strategies.

For example, the majority of FIRE members are better off not actively managing their stock market investments and spending relatively little effort with their retirement planning. FatFIRE members will oftentimes need a wealth manager or can benefit from unconventional strategies that deviate from a plain passive income strategy.

In addition, there are psychological reasons to distinguish fatFIRE from other FIREs. Because the FIRE movement is in large part founded on the idea of no longer having to depend on working to sustain a living, fatFIRE is often not well received by other FIRE members who plan their finances with fewer digits.

If person A with an annual income of $50,000 has a goal of eventually FIRE-ing with a net worth of $2 million, it becomes easy to be envious or resentful of person B who has an income of $500,000. If A had B’s income, A’s goal could be reached in under a decade, maybe even under 5 years! However, B might have the goal of FIRE-ing with a net worth of $100 million, and B’s FIRE journey now appears to be more difficult and longer to complete than A’s.

Many FIRE members live on principles of frugality, sacrifice, and patience in order to achieve their goals. However, fatFIRE members are no different. A common phrase in the FIRE community is to “build the life you want, then save for it.” There are no boundaries as to what kind of a life one is allowed to want, build, and save for. FatFIRE is for those who want to build and save for the life of a high net worth individual, not just people that have no idea what to do with extra money. Each person’s standard for “enough money”—a sufficient nest egg—can and should be different. Because this can often become a reason to criticize motives (i.e. appearing to unnecessarily prioritize money rather than financial freedom), a separate community for fatFIRE existing can feel like a “safe space” to be open about one’s income and net worth free from judgment.

How do I fatFIRE?

The usual FIRE equation is a rather simple calculus of savings rate versus income. Wealth can be built either by increasing your savings rate (spending less) or increasing your income (earning more). While the savings rate is still crucial for fatFIRE success, there is a heavy emphasis on increasing income because one simply cannot fatFIRE without earning a high income. A high income is not only a necessity for fatFIRE, but making it higher is the most efficient way to reach your goals. Aside from winning the lottery, receiving a ridiculous inheritance, discovering oil reserves in your backyard, or other ways to come across a huge amount of money, most people get high income through their jobs. Once you have a job that earns you a lot of money, your savings rate then determines how quickly you can reach your goals.

What jobs allow people to fatFIRE?

Some professions such as lawyers and doctors have careers in the upper-echelon of outcomes that allow fatFIRE. 

  • Biglaw salaries now begin above $200,000 and scale up from there.
  • The medical field, depending on the practice, can provide lucrative salaries as well.
  • Entrepreneurship is another option and has a higher reward ceiling with a higher risk of complete disaster.
  • Accountants who work up to Partner/Principal positions in the Big Four accounting firms will often earn close to a million dollars (or more) annually, sometimes even paired with a forced retirement age.
  • Investment banking pays out very handsomely at the highest levels.
  • Becoming an executive at any large corporation is often a very well compensated position.
  • In recent years, many tech companies have been the catalyst for brand new multi-millionaires.

These are some of the common ways that people find themselves with the opportunity to fatFIRE because of their high income.

Saving and spending rates

Your savings rate is going to determine how efficiently your income can get you to your destination. Ultimately, you need your annual expenses to fall significantly below your annual take-home income. A multitude of factors will affect your savings rate.

Living expenses should not increase drastically just because you earn more money than before. The cost of living can be very high, as many professionals congregate in expensive cities (e.g. Silicon Valley for tech or New York City for law). Lowering your spending rate, especially as your income increases, is going to do wonders for hitting your fatFIRE number as soon as possible.

Having high income and spending below your means with a moderate or aggressive savings rate is not the end of the fatFIRE strategy. The wealth must be preserved and spent with discretion. As mentioned earlier, the strategies and advice for a high net worth can be very different from the classic recipe of keeping $2.5 million in index funds with a SWR (safe withdrawal rate) of 4% each year. fatFIRE members may, on average, be more concerned with creating and preserving generational wealth and larger financial legacies.

FatFIRE for lawyers

Many people put themselves through a legal education with the end goal of earning lots of money. Biglaw is one of the more consistent (though not easy) approaches to start earning high income, given the salary scale and bonus schedule. Making partner at a law firm will definitely put a lawyer in a place to pursue some serious fatFIRE. However, because working in biglaw is not always the most sustainable career, already has a very competitive path to get there, and often involves some serious student loans, one should not expect a biglaw job to just fall into their laps. However, those who are already in biglaw should be aware that fatFIRE is readily available as a diligent and responsible approach to finances. Thankfully, readers of Biglaw Investor are already well-equipped to manage their personal finance wisely!

Having your own law firm is a mix of being a lawyer and an entrepreneur. Personal injury attorneys, for instance, are known for having an earning potential that is higher than biglaw attorneys, but the increased risk and less stability is a very real threat. You undoubtedly eat what you kill, but finding clients, representing them well, and winning cases to earn that money is no elementary hustle. If you are a lawyer with a very entrepreneurial spirit, are ambitious, and are not very risk averse, then having your own practice could be worth considering in order to fatFIRE.

A legal education is a tool that can be used in so many different ways. Just because Biglaw or a successful solo practice is not for you, there is no need to worry. JDs can be found in just about any profession, as society is deeply intermingled with the law, and earning lots of money can happen in ways you might not ever be able to predict. Strive for the best career you can have and if you ever find yourself with lots of money, consider saving money for early retirement while pursuing fatFIRE.

Joseph Kim is a 3L at Notre Dame Law School. Joseph grew up in California where he developed an interest in working with music, powerlifting, and bowling. He’s been a member of the FIRE community since before law school and plans to pursue FatFIRE following graduation.

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