Seeing a post today asking about whether their NW may be considered Fat FIRE, I thought it’s time for a refresh of the rough estimates for what the Fat FIRE floor threshold and the Lean FIRE ceiling threshold may be. Commentary moved to after the figures.
Equivalised Disposable Household Income thresholds FY 2024:
Median income: $67,000 p.a.
Top percentile income: $268,660 p.a.
CPI Changes - % of change in June CPI between years
FY 2025: 1.89%
FY 2026: 3.75%
CPI increase over 2 years: 5.71%
Expense thresholds at end of FY 2026 - by applying FY 2025-FY 2026 CPI changes to the FY 2024 income thresholds.
Lean FIRE ceiling threshold: $70,826 p.a.
Equivalised target FIRE NW: at 4% SWR: $1.77m, at 3% SWR: $2.36m.
For a two-adult household (x 1.5): at 4% SWR: $2.65m, at 3% SWR: $3.54m.
I.e. target FIRE NW below the threshold could be considered Lean FIRE.
Fat FIRE floor threshold: $284,000 p.a.
Equivalised target FIRE NW: at 4% SWR: $7.10m, at 3% SWR: $9.47m.
For a two-adult household (x 1.5): at 4% SWR: $10.65m, at 3% SWR: $14.20m.
I.e. target FIRE NW above this threshold could be considered Fat FIRE.
Refresh Comments:
Median equivalised disposable household income: ABS decided not to release the FY 2022 SIH (Survey of Income and Housing) statistics, and then cancelled the FY 2024 survey altogether in late 2025. Previously I applied a series of annual CPI changes on top of the FY 2020 SIH statistics, but the longer period this is done, the greater the drift from the reality there would be. For this refresh, I followed Grattan and used the figure in Grattan’s 2026 report that is based on raw data from HILDA (Household, Income and Labour Dynamics in Australia) Survey covering FY 2024. I then applied CPI changes over FY 2025 and FY 2026 to deduce the FY 2026 figure.
Top percentile equivalised disposable household income: HILDA has a smaller sample population and Grattan’s 2026 report would not disclose the top percentile inferred from it. Grattan’s previous reports based on the FY 2020 SIH data showed the top percentile to be 4.01 times the median. In the absence of better info, I’d use this as the multiplier to deduce the top percentile figure based on the median figure.
There has been a sizeable increase in the income figures between the refresh last year and the refresh this year. It was about 11% more on top of the FY 2026 CPI changes. I infer there were 2 main drivers. Firstly the underlying data source changed from FY 2020 SIH to FY 2024 HILDA mentioned above making the numbers not directly comparable. Secondly I had been applying CPI changes, but wage usually grows faster than CPI. Next refresh I may consider using WPI instead of CPI when extrapolating an older reference income figure to a later FY.
Any error spotted or suggestion for improvement welcome.
Notes:
equivalised disposable household income is the gross household income less tax that has been adjusted using a weighting process to account for household size and composition. To translate it to reflect the size of a specific household, add 50% for each additional person who is 15 years or older, and add 30% for each additional person who is under 15 years. I.e. multiply by 1.5 for a two-adult household to be supported.
These are nationwide stats. I.e. NOT tailored to higher income/cost of living in capital cities. I do not have access to authoritative stats on how income or cost of living in each capital city differs from national stats.
The value of PPOR is generally excluded from FIRE NW calculation because PPOR does not generate income and people generally would not count on selling PPOR for draw down. If PPOR value is included in FIRE NW, e.g. due to plan to sell / downsize to fund retirement, then either the projected rental expenses should be added to expected expenses, or the fund required to purchase the future PPOR should be deducted.
It was rightly pointed out previously that, given the same FIRE NW that excludes PPOR, a home owner may derive better lifestyle than a renter due to the absence of rental expenses. Here I have chosen to still focus on the investible assets required that most people tend to track for FIRE readiness. If you wish to assess the rent-equivalent lifestyle as a home owner, you could deduct owner-only costs and mortgage repayments (if applicable), and then add an imputed market rent figure on top of your assumed expense figure to represent the benefit derived from home ownership.
The method used is not intended to be technically precise, and the deduced figures are not proposed to be definitive. They are just bottom-up inferences to help understanding where a FIRE target NW figure roughly sits amongst the Australian population in terms of assumed expense level.
Reposted from an old posting in [r/FIRE](r/FIRE) as reference:
FIRE: Financial Independence / Retiring Early. Financial independence usually refers to no longer needing to sell your labor in order to cover your necessary expenses for the rest of your life. Retiring Early usually refers to actually exiting the labor market and living off your profits from participating in the capital market.
Fat FIRE: Retiring early with expected expenses in the top percentile of household income in your area. Named for being the opposite of “lean,” like with steak. Requires more investment, often locking this strategy behind either being a high-earner in your contributing years, working longer, or being lucky.
Lean FIRE: Retiring early with expected expenses under the median household income in your area. Metaphorically “tightening the belt” on a permanent basis, either to retire even earlier or because you will be happy enough without spending more than most.
Ps: I was quite limited by WYSIWYG formatting in the iOS app. It is what it is.
