Reader Case Study: FatFIRE – Affording a six-figure retirement lifestyle in Sydney

Today’s case is from a Sydney family with a high income and big plans for the future. Their goal is to reach fatFIRE – the less frugal and more lifestyle-focused version of financial independence. Enjoy!

Note to readers: If you would like your own case study, please get in touch with me! * 

High income, high expenses

Meet Aaron and Linda**, a married couple from Sydney. They are in their late 30s and have two young children. I’ll let Aaron summarise their story himself:

“Moved to Australia from Europe earlier this decade, with no assets and no savings.  Got a good job, found a great wife, combined our powers of focus and discipline, and spent the next 4 years saving hard, culminating in buying a family home in Sydney 2 years ago. With two children also now in tow we’re juggling priorities between paying down the mortgage and investing for early-stage financial independence.”

Aaron works full-time in a demanding and high-paying corporate job while Linda is a stay-at-home mum. Linda is not planning to go back to work anytime soon and they will likely rely on Aaron’s income for the next 5-10 years.

Their main goal is to be great parents and to be able to offer their kids opportunities in whatever they show interest in.

Their focus is on paying off their mortgage as soon as possible. Homeownership is very important to Aaron and Linda and they can’t wait to own their house outright. All of their income that isn’t needed for their living expenses currently goes towards their mortgage (or the offset account). This is their “forever home” and Aaron and Linda are not planning on moving or downsizing.

Once their house is paid off, Aaron and Linda want to start building a fast-growing share portfolio. Eventually, they would like to have the choice of how much or whether they want to work. They would like to reach Financial Independence over the next 10 years. Aaron would be comfortable working part-time post “retirement”. His main goal is to step out of his high-stress career and spend more time with his family. He pictures a part-time job in an area that he is passionate about once they reach FI.

As you will see below, Aaron and Linda have a much larger household spending than many others in the FI community. They are very comfortable with their current lifestyle and it is important to them to maintain a similar lifestyle in retirement in terms of wanting to take the same holidays and being able to eat out etc. However, Aaron predicts a drop in expenses once their kids grow up and move out.

Aaron and Linda are hoping to get some answers to the following questions:

  • Do you think we’re doing the right thing by focusing 100% on the mortgage – i.e. are we missing out by not yet investing?
  • How soon do you think we can reach FI/ Flamingo FI based on our position?

The numbers

Let’s have a look at Aaron and Linda’s numbers:

Annual Salary (Aaron): $144,660 (AFTER tax)
Annual Bonus (Aaron): $65,000 (also after-tax)
Total after-tax income per year: $209,660

Annual employer Super contributions (Aaron): about $30,000 (gross) = $25,500 (after Super tax – 15%)
Total after-tax income (incl. Super) per year: $235,160

Assets (investments):
Super (combined): $193,400
Offset account: $153,423
Total: $346,823

Their family home in Sydney is worth around $1,012,000

Mortgage: $383,448, interest rate 3.99%


A few notes on Aaron and Linda’s expenses:

  • Aaron mentioned that they had high one-off medical expenses due to the birth of their youngest child last year. So I think it is safe to assume that their typical annual spending would be around $100,000 and I’ll use that number in the calculations below.
  • I asked Aaron about the “Retail” category in their budget. He told me that it is a “catch-all” category for “stuff”.


This is an interesting case, isn’t it? Obviously, Aaron and Linda are doing very well financially and Aaron has a job that pays more than most people could dream of. At the same time, their expenses are very high, especially compared to what others in the FIRE community typically spend.

I could, of course, talk about their expenses and the outrageous cost of owning a pool for the rest of the article. I could tell them about how they could retire in no time at all if they cut their spending dramatically. But Aaron made it very clear that their lifestyle is important to them and that their goal is to maintain it in the future, so I will not suggest different budget amounts for them in this case study.

Their annual expenses and desired retirement lifestyle officially put their goal in the fatFIRE category. As the Physician on FIRE summarises, “fatFIRE is early retirement for the entrepreneurs and high-income professionals that choose not to fully embrace frugality or give up certain creature comforts that have become customary. It’s financial independence for the well-heeled.”

Aaron and Linda are certainly in a great position to reach fatFIRE!

Investment decisions

It is important that Aaron and Linda start investing and building their FIRE nest egg as soon as possible. I believe they should start investing in shares while they pay off the mortgage.

They currently pay $5,131 per month ($61,572 per year) towards their mortgage (almost $2,000 more than they have to). I believe this is a good number and they should keep it up. After expenses and mortgage repayments they should still have $48,088 per year available to invest. I suggest they use this money to start building their share portfolio.

They also have $153,423 sitting in their offset account. They have two options here:
Option A: They treat the money in their offset account as part of their mortgage (and put it into the mortgage at some point)
Option B: They pull the money out of the offset and invest it

There is also another option that is worth mentioning:
Option C (Peter Thornhill‘s approach***): They arrange a flexible line of credit separate from their mortgage (using the house as security) and use it to buy shares. They then use the dividends to reduce the mortgage and redraw the same amount from the line of credit to buy more shares. Over time, they will reduce their mortgage quickly and grow a share portfolio. At the same time, the line of credit will also increase, but the interest is tax-deductible because it is used for investment purposes.

In theory, option C is probably the most beneficial option for Aaron and Linda. However, since becoming completely debt-free is very high on their list of priorities, I believe they will go with option A or B. It is important that they pick an option they feel comfortable with and that lets them sleep at night. With option A their mortgage would be paid off in only about 4 years. With option B it would take them just over 7 years to pay it off.

I ran the numbers and was surprised to see that both options lead to almost exactly the same outcome as far as their FIRE date goes. So they can pick the option they are most comfortable with. I think they would likely go with option A, so I will use it for the calculations below.

Aaron and Linda’s path to fatFIRE

Aaron and Linda will need to withdraw $100,000 from their portfolio once they reach FIRE. They will have to pay income taxes on this income, of course. However, by the time they reach FIRE, their children will be teenagers (or adults in the case of Flamingo FI) and Aaron predicts a noticeable drop in expenses when they move out. So I think an annual gross income of $100,000 should do the trick for them.

According to the 4% rule, this FI number is $2,500,000 ($100,000 x 25). Now let’s have a look at their path to FIRE. Note: All the calculations below assume a 7% inflation-adjusted return per annum.

So how long will it take them to reach FIRE the traditional way?

Just over 13 years. Despite their high income, it will take them quite a while to get to FIRE the traditional way. This is also 3 years longer than Aaron was hoping. This calculation does not take raises etc. into account, so it is, of course, possible that they will get there quicker, but it will definitely take them a while to get to FI.

In this scenario, Aaron would keep working in his high-paying job until it is time to jump:

However, Aaron’s main goal is to step out of his high-stress job and he is happy to continue working part-time. Consequently, he does not have to stay in his full-time role until he reaches FI. Flamingo FI might be a great choice for him and his family.

A quick recap of Flamingo FI for new readers: With Flamingo FI, you can cut your accumulation phase short. You get to quit your full-time job after just a few years of saving hard – when you have about half your desired FIRE nest egg. You can then semi-retire while your nest egg keeps growing in the background. Once it has doubled (which should be after around 10 years if you manage to achieve 7% inflation-adjusted returns), you have reached FIRE and can stop working altogether. You can read all about Flamingo FI here and here.

Let’s have a look at Aaron and Linda’s path to FIRE with Flamingo FI:

Just over 8 years! With Flamingo FI, Aaron will be able to quit his corporate job in under 10 years (which is his goal).

During the semi-retirement phase, Aaron would have to earn what is a full-time salary for most of us. But considering the high salary, he is currently on, I am sure that he will be able to generate enough income working part-time. I believe that a freelance consulting role in his industry (in an area that interests him) could be ideal. Maybe Linda will also be interested in doing some part-time work once their children are teenagers. It would be more beneficial tax-wise if they both earned some income rather than Aaron earning and paying tax on the entire family income.

By the end of the semi-retirement phase, Aaron and Linda’s Flamingo FI nest egg should have grown into their FIRE nest egg. Now, part-time work becomes completely optional for them.

This is what Aaron and Linda’s Flamingo FI path to FIRE would look like from an income perspective:


The math is the same for everyone when it comes to FIRE, no matter how high one’s income is. Aaron and Linda’s case really illustrates the importance of one’s expenses and the 4% rule.

They are in a great situation financially and have a lot of options. I’m sure they will choose a strategy that feels right to them. Eventually, they will pay off their house and reach Flamingo FI, allowing Aaron to leave his stressful job and spend more time with his family. They will also reach FIRE while they are still relatively young and can look forward to a long, comfortable retirement.

Good luck Aaron and Lind, I’m sure you’ll do great!

In the comments: What would you do if you were Aaron and Linda? Do you have any tips and tricks you want to share with them?



* Please keep in mind that we are not financial advisors and do not offer financial advice. Anything we write about or recommend on this site should be seen as a suggestion, not advice. If you decide to implement any suggestions we make, you are responsible for this decision and the results. 

** Obviously not their real names.

*** This strategy is described in detail in Peter Thornhill’s book “Motivated Money“.


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13 thoughts on “Reader Case Study: FatFIRE – Affording a six-figure retirement lifestyle in Sydney”

  1. I am so jealous of his situation, if it was me, I would straight away be leaving that 9-5 work wanker lifestyle to semi retire, find a part time job and spend that quality time with the family. down size their living space or move to a cheaper location and stop buying stuff they don’t need! If they did this they could already be breathing that sweet scent of freedom!

  2. I can’t get over their expenses! But I guess that’s their choice. Great income, but no usable assets. They are basically in the same situation as someone on a normal salary just starting out on the path to standard FI…..

  3. I would like to extend my gratitude to the writer for sharing a comprehensive article on retirement lifestyle in Sydney. You did in-depth research and drafted this informative piece of content.

  4. I’m not an extremely frugal person (or financial advisor) by any means, but I think they should consider cutting even 1/4 of their ‘retail’ or ‘catch all’ spending, and throw that into super, against their mortgage or invest it. Just trim the fat just a little without having to give up a lot etc and this could help shave off some further working years!

  5. It’s interesting that even with their current expenses they can achieve retirement within 13 years.

    That’s a pretty good outcome whilst not actively being too frugal. I’d love to have that income

  6. If I’m reading that correctly, their balance keeps increasing. In fact their ROI is almost double their expenses in the first year of FIRE, and then keeps increasing after that. I know there is a safety margin built into the 4% rule, but that seems really big. Couldn’t they retire once their ROI equals their expenses, after the first 10 years rather than 14?

    • They certainly could, especially if they were happy to just live a more modest lifestyle in case the market crashes. But considering their age and the fact that they want to maintain their current lifestyle I think it is prudent to keep saving until they reach 25x their expenses.

  7. Have they considered the larger expenses that come along when kids go to school and high school? School fees, uniforms (which are usually separate to fees), books, formals, driving lessons, extracurricular activities, camps, clothes. Also I wouldn’t bank on the kids moving out at 18, they live in Sydney its incredibly tough to get a financial foothold there.

    • Thanks for the comment, Caroline! This might sound naive, but I’m sure they will be able to cover most of these costs with their $100,000 per year. This is a lot more than most families’ disposable income (even in Sydney).

  8. oh yes but it didnt seem like it was thought about inthe budget and it could actually put a big dent in the future plan for example if you wanted your child to attend a private school which ended up costing $30k annually…could move your fire goal year back quite a few years

  9. Hi,

    Great Article! wanted to know how their savings jumped from 48K to 135K, their mortgage payments were 61K an year!

    I have read multiple blogs about saving money and then putting away for investment, but the real question is where?? For people like us who are recently got introduced to FIRE concepts, it makes us quite confused that where exactly we put the money for investing so that its properly diversified and get the maximum return. I know about index funds but there are so many option in that as well.

    It would be great if you can guide us about where we should invest.


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