When will you reach FI? (Financial Independence).

[WealthyDoc]

The term Retirement gets defined differently by different people.  It may even be a generational thing.  FI however has a pretty clear definition, at least I think so.  FIRE lumps together FI and RE and creates a lot of arguments usually because of the differing views on "retirement."  If the passive and/or portfolio income from your assets produces enough income to cover your living expenses you have reached FI (Financial Independence).  Are you there now?  If not, do you know when you will make it?  In Your Money or Your Life they recommend plotting out your current expenses and your passive income (this could be 3-4% of your financial assets).  If your expenses are flat or decreasing and your passive income is increasing [due to savings] at some point in time the two lines will cross.  That is your FI point.  You are then free to have more flexibility with how you want to spend your time.  It doesn't necessarily mean you need to quit all productive work or even paid employment.  I have reached FI.  Do other people here know when their lines will cross?  And if so, what will you do differently when they do?

[jfoxcpacfp]

Wouldn't you define FI more broadly than portfolio- and/or passive income-based? My definition of FI is when you reach the point at which you work because you want to, not because you have to, no matter what your balance sheet is made up of. Retirement may not even be part of the equation. It's an interesting exercise but impossible to know without some semblance of a flexible plan as you are not measuring a static state of existence.

[PhysicianOnFIRE]

This is something I contemplate quite often. I write about FIRE, but I think of FI and RE as two individual concepts. They are not mutually exclusive; one does not necessarily beget the other, but it's a good idea to be FI before following through with RE.

My definitions of FI is similar to yours. Take a safe withdrawal rate (SWR) that you prefer, and you are FI when you have roughly (100/SWR)*(annual expenses) invested in assets that could be utilized as income in retirement. Like retirement, passive income is a nebulous term, and many who "retire" are putting a fair amount of time and effort into earning "passive income" in active ways, such as landlording and blogging.

I've reached my FI point. I made it a goal to be debt-free by 40, and when it happened a few months shy of my fortieth birthday, I realized I could call myself FI based on a SWR of 4%. I haven't retired for a variety of reasons, but I don't expect to be a full-time physician in 10 years, probably not in five, either.

I'm waiting for the intersection of two different lines, the likelihoods of regret. One line slopes downward; it's the likelihood I'll regret retiring too soon. It's fairly high right now. The other is the likelihood I'll regret staying in clinical medicine too long for money I don't need. My gut tells me they'll cross somewhere around age 45, but I'm not there yet, so we'll see. There are a number of things I'll miss when I retire, but many that I won't.

Best,

-PoF

 

 

[The White Coat Investor]

My original "number" was $2M in retirement savings in 2006 dollars. The original plan was to reach that in my early 50s. The income from WCI has accelerated that significantly, but I'm still probably 4-5 years away. Plus that lifestyle creep thing is there. Which is fine, since I'm still enjoying my work. FI is nice, but there are some costs to it. Moderation in all things.

[VagabondMD]

I am 50 and by most accounts would be considered FI. I reached FI in the last couple years--no debt, enough stashed away to put two kids through college and beyond, and enough to live with $200k/year indefinitely. I am actively planning to disengage from the full time practice and expect to do so by Oct. 1. I am looking for employment or contract work opportunities, as I would still like to be active and engaged in some worthwhile pursuit but no longer have the appetite for a full time busy job with call responsibilities every other weekend. I might just keep the current job but drop the call and work two weeks per month for a year or so...or try something completely different.

While I have been heading in this direction for some time, last month I lost one of my friends from fellowship, and this has had a significant effect on my outlook. We were a very close group of six, and now two of the six have died of cancer. While those random, isolated, and unfortunate events may have no direct bearing on my life and longevity, it does make one examine one's priorities and vision for what remains of one's own life.

One caveat is that my wife (51), a corporate attorney, (mostly) likes her job, and is strongly incented to work to age 55. There are a couple escalators in retirement benefits that kick in at that age. By her continuing to work and me cutting back, our transition from full on employment for two to retirement for two is on a glide path that will take at least four or five years to implement, as we will take it in steps.

[WealthyDoc]

jfoxcpacfp wrote:

Wouldn’t you define FI more broadly than portfolio- and/or passive income-based? My definition of FI is when you reach the point at which you work because you want to, not because you have to, no matter what your balance sheet is made up of. Retirement may not even be part of the equation. It’s an interesting exercise but impossible to know without some semblance of a flexible plan as you are not measuring a static state of existence.

Click to expand...

I'm not sure.  I think you are more of an expert at all this than I am.  I thought FI had a clear definition but maybe not.  I have always "worked because I want to" but I haven't always been FI so I guess they are different in my mind.

[WealthyDoc]

The White Coat Investor wrote:

My original “number” was $2M in retirement savings in 2006 dollars. The original plan was to reach that in my early 50s. The income from WCI has accelerated that significantly, but I’m still probably 4-5 years away. Plus that lifestyle creep thing is there. Which is fine, since I’m still enjoying my work. FI is nice, but there are some costs to it. Moderation in all things.

Click to expand...

I think it is only a matter of time before that # of 2M creeps up.  I know that happened with me for sure.  My wife and I are very frugal (compared to other doctors at least - which granted isn't saying much) but I have become more risk averse with investing.  A crash of 40-50% really cramped my style and one of 60-80% is within the realm of possibility with equity investing.  For an early "retirement" income from a mix of stocks and bonds I'm using more of the 3% rate or 33 x expenses.  That combined with inflation and the hedonic treadmill all contribute to increasing numbers.  I still love my work -fortunately- and will continue.  You have the option of cutting back further with your ER shifts or even giving up clinical medicine completely if you ever want due to your WCI success.  It is always great to have options.

[WealthyDoc]

Vagabond MD wrote:

I am 50 and by most accounts would be considered FI. I reached FI in the last couple years–no debt, enough stashed away to put two kids through college and beyond, and enough to live with $200k/year indefinitely. I am actively planning to disengage from the full time practice and expect to do so by Oct. 1. I am looking for employment or contract work opportunities, as I would still like to be active and engaged in some worthwhile pursuit but no longer have the appetite for a full time busy job with call responsibilities every other weekend. I might just keep the current job but drop the call and work two weeks per month for a year or so…or try something completely different.

While I have been heading in this direction for some time, last month I lost one of my friends from fellowship, and this has had a significant effect on my outlook. We were a very close group of six, and now two of the six have died of cancer. While those random, isolated, and unfortunate events may have no direct bearing on my life and longevity, it does make one examine one’s priorities and vision for what remains of one’s own life.

One caveat is that my wife (51), a corporate attorney, (mostly) likes her job, and is strongly incented to work to age 55. There are a couple escalators in retirement benefits that kick in at that age. By her continuing to work and me cutting back, our transition from full on employment for two to retirement for two is on a glide path that will take at least four or five years to implement, as we will take it in steps.

Click to expand...

I hear you.  Those are great points and I can relate.  I am in a similar situation.  I can continue to build my career and income but there is a diminishing return at this point.  It is so important for me to spend time with my kids and wife while life is good and I'm healthy.  More work will always be there.  Medicine will let you kill yourself trying to do more and more and never saying no if you let it.

[jfoxcpacfp]

WealthyDoc wrote:

jfoxcpacfp wrote:

Wouldn’t you define FI more broadly than portfolio- and/or passive income-based? My definition of FI is when you reach the point at which you work because you want to, not because you have to, no matter what your balance sheet is made up of. Retirement may not even be part of the equation. It’s an interesting exercise but impossible to know without some semblance of a flexible plan as you are not measuring a static state of existence.

Click to expand…

I’m not sure.  I think you are more of an expert at all this than I am.  I thought FI had a clear definition but maybe not.  I have always “worked because I want to” but I haven’t always been FI so I guess they are different in my mind.

Click to expand...

Not necessarily more expert. The doctor community introduced me to "FI" and "RE". My point was that "FI" is a moving target rather than an immovable point on a graph as your financial situation and plans change. Your point about working because you want to is a good one - I'm in the same position - but there is (to me) a subtle difference between having a career you love and having a career simply because you choose to do so.

[YYjames]

jfoxcpacfp wrote:

WealthyDoc wrote:

jfoxcpacfp wrote:

Wouldn’t you define FI more broadly than portfolio- and/or passive income-based? My definition of FI is when you reach the point at which you work because you want to, not because you have to, no matter what your balance sheet is made up of. Retirement may not even be part of the equation. It’s an interesting exercise but impossible to know without some semblance of a flexible plan as you are not measuring a static state of existence.

Click to expand…

I’m not sure.  I think you are more of an expert at all this than I am.  I thought FI had a clear definition but maybe not.  I have always “worked because I want to” but I haven’t always been FI so I guess they are different in my mind.

Click to expand…

Not necessarily more expert. The doctor community introduced me to “FI” and “RE”. My point was that “FI” is a moving target rather than an immovable point on a graph as your financial situation and plans change. Your point about working because you want to is a good one – I’m in the same position – but there is (to me) a subtle difference between having a career you love and having a career simply because you choose to do so.

Click to expand...

Because of the high burn out amongst physicians.

[jfoxcpacfp]

YYjames wrote:

Because of the high burn out amongst physicians.

Click to expand...

To what are you referring?

[brainsrus]

I am "barely" FI now - meaning have enough assests to have all my basic needs (not any wants) met with my portfolio income.

Our goal (my wife and I) is to be comfortably FI in 5-7 years, but honestly neither one of us can say we want RE. Perhaps that will change with time but we both enjoy our work (upto a point of course sans that administrative bs we are all dealing with) and do see us stopping for a long time...

 

btw current age is 40 for me and 37 for wife.

[PhysicianOnFIRE]

brainsrus wrote:

I am “barely” FI now – meaning have enough assests to have all my basic needs (not any wants) met with my portfolio income.

Our goal (my wife and I) is to be comfortably FI in 5-7 years, but honestly neither one of us can say we want RE. Perhaps that will change with time but we both enjoy our work (upto a point of course sans that administrative bs we are all dealing with) and do see us stopping for a long time…

 

btw current age is 40 for me and 37 for wife.

Click to expand...

Very similar to our situation, although my wife has done very little paid work (she works hard raising our kids and picking up after me   ).

FI gives me options. Not at all ready to retire this early (also age 40), but part-time work seems like a good option the more I think about it. WCI is cutting back on his shifts now as he approaches FI and has substantial side income.

[conniebird]

Jealous of all of you! I went to Med school late in life and am barely a year out as an attending at age 39 and made some financial bumbled along the way. Have to save very aggressively to catch to you all!

[Hatton]

I am financially independent and have semi-fired.  I still work 3 days per week but no nights, weekends, or holidays.  Sounds like a more normal life.  I just turned 59 some I guess the early part is gone now.