Fat Flamingo FI

Last updated: April 20, 2023

I recently came across a comment on a Mad Fientist post that referenced something called “Flamingo FI”.

Now I’ve been following the Financial Independence (FI) community since around 2015, and I’d never heard of such a thing.

So of course I had to investigate!

What is Flamingo FI?

A quick google search found the answer very quickly (as usual): it was coined by some Australian folks blogging about FI at MoneyFlamingo.com.

And I really like their idea. In a simplified nutshell, the Flamingo FI strategy is:

1. Pursue FI like most others on the traditional road to FI, including hopefully a savings rate of 50% or higher.
2. When you reach 50% of your FI number (e.g., 12.5 times your expenses, with the standard 4% rule), then you cut back to part-time work that covers your current expenses.
3. Wait about 10 years for your investments to double (assuming a 7% real annual ROI on your investments), and BOOM, you’re at standard FI.

The term “Flamingo FI” comes from two things:

1. Flamingos often stand on 50% of their legs (one leg), which is the defining number of this FI flavor: saving hard until you reach 50% of your FI number, then waiting only 10 years for full FI.
2. To quote MoneyFlamingo.com: “The word ‘flamingo’ comes from the Spanish and Latin word ‘flamenco’ which means – you might have guessed it – fire.” (And check out this nice etymological explanation as well.)

A central part of their argument for Flamingo FI is that it’s extremely unlikely you’ll do nothing that earns money the rest of your life after FI, especially if you’re disciplined enough to achieve FI relatively early in life, and thus we shouldn’t ignore that in our FI planning. ESPECIALLY if you have a hectic life with young kids and/or other demands and could really use the extra time when you’re younger and haven’t hit full FI yet. I fully agree with this argument.

Overall Flamingo FI is a bit further down the FI spectrum from Coast FI (saving enough earlier in life such that you can contribute nothing more towards traditional retirement and still be FI when you hit traditional retirement age) to Traditional FI. It’s a nice balance that gets you to FI in a reasonable amount of time, while freeing up a ton of time earlier in life.

What is Fat FI?

The term “Fat FI” or “Fat FIRE” became the most popular name for the opposite approach of “Lean FI”, which means achieving FI with a lower (sometimes much lower) than average cost lifestyle.

I.e., being Fat FI means you can safely spend quite a bit more in your retirement than average.

Fat FI is defined many different ways of course, but one definition I’ve seen a number of places is having a portfolio of $2.5M that can support $100K in annual spending with the 4% rule. 

Of course some folks are more conservative and prefer to use 3.5%, which ups the needed assets to $3M.

Personally, I tend to think of Fat FI as “double traditional FI”. So if you can live a reasonably comfortable life at $50K, which would require $1.25M in savings using the 4% rule, then Fat FI for you would be $2.5M (matching the $100K in supported annual spending seen in the references above).

Of course, this “double” rule is mostly arbitrary on my part – a wide variety of other larger values would also be Fat FI for other folks. But I just find it a nice rule of thumb that’s easy to remember and easy to use in calculations. And it would be Fat FI for the vast majority of folks I think.

Regardless of how different people will define it though, Fat FI nearly always requires much more savings than traditional FI (and every other flavor of FI). 

What is Fat Flamingo FI?

With Fat Flamingo FI, instead of stopping your high savings rate at 50% of Traditional FI, you stop it at 50% of Fat FI.

And if we use my definition of Fat FI, hitting 50% of Fat FI means you’re also at Traditional FI, which is really nice. 

Of course your Fat FI definition could be quite different. But for the vast majority of folks, I suspect Fat Flamingo FI will lie somewhere around Traditional FI or a bit higher.

However, just like with Flamingo FI, Fat Flamingo FI is about more than hitting a particular number.

So, the three steps for Fat Flamingo FI are:

1. Work and save hard until you reach 50% of your Fat FI goal, which can involve a savings rate of 50% or higher.
2. When you reach that “50% of Fat FI” number (Fat Flamingo FI), then you cut back to part-time work that at least covers your current expenses.
3. Wait about 10 years (or less if your savings rate is still above zero) for your investments to double, and you’re at Fat FI.

Thus Fat Flamingo FI also encompasses the part-time work you’ll do after achieving the 50% milestone to get to your ultimate goal (Fat FI).

In other words, if Flamingo FI typically lies between Coast FI and Traditional FI, then Fat Flamingo FI usually lies between Traditional FI and Fat FI. It’s essentially the same concept, just further down the FI spectrum.

Here’s a nice diagram showing these spectrum of FI flavors:

Our Fat Flamingo FI Status

I think this Flamingo FI idea really jumped out to me because it’s essentially what Mrs. EYFI and I have done / are doing – just a fat version of it.

We got serious about pursuing FI in 2016, and with an average savings rate around 70% and stellar market returns, we hit our traditional FI number around 2020 / 2021. Then eventually we both made our way into part-time roles. 

Of course we always have the option of increasing our work hours in the future, especially if we’d like to work more as the kids get older. That would get us to Fat FI even faster. And of course one or both of us could stop working completely as well, which would slow down our journey to Fat FI (but I’m pretty sure we’d get there eventually).

Given how financially conservative both of us are, we really like the idea of achieving Fat FI. So for this reason and many others, our part-time work setup really suits us well and provides fantastic life balance.

If we stick with our current half-time roles and the savings rate they provide, then we’ll probably hit Fat FI in 5 to 7 years, assuming average historical market returns and no changes to our income. 

And of course even if we hit Fat FI, if we’re still enjoying our jobs then we’re probably going to just keep doing them! There are many other benefits of part-time work.

Pros and Cons of Fat Flamingo FI

Here are a handful of pros and cons for Fat Flamingo FI. I’m sure there’s a ton of additional pros and cons I’m leaving out, but these can get us started.

Pros

1. Just like Flamingo FI can enable many elements of the FIRE lifestyle long before you achieve traditional FI (far more free time and power over your life, plenty of money for extra expenses after you hit your 50% goal), Fat Flamingo FI can let you experience the Fat FI lifestyle long before you hit FI (especially if you still make more money than your required expenses with your part-time work).
2. But if anything ever happens with your part-time income, you’re still traditional FI mostly likely, and you can pare down your expenses to fit within traditional FI. This is a great benefit over standard Flamingo FI.
3. You can significantly reduce sequence of returns risk (SORR) by maintaining an income after FI.

Cons

1. You’re definitely going to have to work and save harder and longer to hit Fat Flamingo FI than standard Flamingo FI – giving you much less time for raising kids, doing passion projects, etc.
2. It could easily be too conservative, especially since you’re likely to keep working anyways, and likely to end up with way more money than you’ll ever need with just standard FI (vs Fat FI).
3. Other cons of part-time work after FI.

Fat FI without Fat Spending

Now all the above discussion about Fat FI implies more savings and thus a higher possible safe withdrawal rate.

But I want to make a very important distinction: just because Fat FI enables higher spending, that doesn’t mean you will spend more. You’re just able to spend more.

We find that being able to buy things but not actually buying them the vast majority of the time brings us much greater fulfillment. 

So even though we’re Fat Flamingo FI, and well on our way to Fat FI, the odds of us greatly inflating our lifestyle in the future are really low.

We prefer to buy something else with all that extra money: more margin of safety. 

And as countless pundits have described, happiness drops off pretty quickly after a certain level of spending anyways. Thus I’m pretty sure we’ll be happier with a lower withdrawal rate than higher spending, because that basically guarantees we never have to have an additional income, which we value more than new stuff.

Of course, as with nearly anything in life, you can go too extreme here, saving a completely ludicrous amount of money for Fat FI and then never taking advantage of that at all. Perfect financial safety is an illusion that traps many people into wasting much of their life.

And that’s another reason I really like Flamingo and Fat Flamingo FI: they are a fantastic balance between the extremes of too much or too little time and money. 

Fat Flamingo FI Example

Finally, let’s lay out a simple example to see how this Fat Flamingo FI idea can work.

Fred and Felicity Flamingo save 70% of their income, so it takes them 8.3 years to get to Traditional FI from a net worth of $0. Good job Fred and Felicity!

Their expenses during this time are $50K per year and they earn around $167K per year (combined), which provides their 70% savings rate. That puts them at the 83rd percentile of the 2022 US Household Income Distribution – not a small chunk of change, but less than about 20% of households across the country.

BUT, Fred and Felicity are actually interested in Fat FI – they want to be able to spend up to $100K a year, which means they need $2.5M using the 4% rule (even if they don’t actually intend to spend that much – see “Fat FI without Fat Spending” above).

So, instead of completely quitting their jobs, they decide to go down to half-time instead, which drops their income from $167K to $83.5K.

Now at this point they could increase their spending from $50K to $83.5K, and getting to Fat FI (which would support $100K/year) would take another 10 years. Easy. And that could be a way for them to ease into a higher cost lifestyle (if they want that).

Or, they could keep their spending at $50K, which would enable a 40% savings rate. If they stick with that savings rate, then they’ll be at Fat FI in about 8 years.

Here’s a simple back-of-the-envelope spreadsheet you can use to play around with your own numbers. Note: download a copy of this read-only version first, and then tweak as desired.

But whether they spend $50K or $83.5K or something in between, Fred and Felicity are likely to have a dramatically better balance of work and life over the next decade, and then they’ll be Fat FI!

What do you think?

Does this “Fat Flamingo FI” idea appeal to you?