FIRE Spectrum

FIRE is not DEAD!

FIRE is a Spectrum.

When I discovered that I could achieve Financial Independence and then Retire Early, I visualized my life split in two: the before, and the after.

I though “ok, there will be a point in time, if my wealth grows with time, when I will be able to tell that I’m FI! Before that I’m not FI. After that I’ll be FI forever!

That point in time corresponds to the instant I’d reach my monetary goal, i.e. once I have FU Money.

Of course the point in time is not fixed, because how my wealth evolves over time depends on many factors like absolute savings, and investments performances.

But there’s a very clear model, mostly based on Certainty.

Right?

Well, Not exactly.

How to pick your FU Number? Easy! You need to anticipate your future spending needs for your after FI life, which could be a decade or two in the future. And you need to pick your SWR religion: 4%? 5%?? 3.5%? pi%? 2.5%?

Even at the starting blocks of this journey you can perceive a lot of fog around your plans and your future outcomes, but you can easily dismiss it via adding extra margins of safety: “I could always cut my expenses”, “I’m not counting on social security”, “I’m planning for the worst sequence of returns possible”, “I can always go back to work!”.

Welcome back, Certainty!

Now: how to make your FIRE dream come true?

Of course with a working pattern that keeps Certainty around, i.e.:

Work work work until you reach the magic number!

Then you’re 100% free and you can enjoy life. You’re FI, you can now Retire Early and no need to work anymore!

I’ve never fully understood those who say “I aim to be FI, I don’t care about Early Retirement

What the hell do you mean? If I reach FI it’s because I’m working on a high paying job and saving a shit-ton of money… it’s unlikely the very same job that’s paying me so much is also so fulfilling that I’d work at it even if I were FI!

The only exception being entrepreneurship. If you’re working on your mission and you love it, FI or not you will pursue it. Elon Musk doesn’t give a crap that he’s FI, he’s not going to Retire Early. He’d do what he’s doing even for free. Even paying for it (which is what he actually did, since he self funded his companies).

Anyway, you and I are not Elon Musk. If you’re here on my blog, you’re probably pushing on the pedal like all of us on a job you don’t like much, or in the best case a job you won’t do for free.

So that was my model: work hard to reach FI as soon as possible, then decide. I had a long list of passions, and I knew new things were coming, new opportunities to do something better with my time, to leave an impact, to not waste my skills working for a corporation (even if earning more than a quarter of a million per year).

I loved the options FI would unlock, but sure thing I was going to quit my job and be more intentional with my life once I reached FI!

But then I started questioning the model.

Is there really a monetary amount that would make me “free”? What would I need to give up for that freedom? Like… I know I could be financially free if I move my family to Burundi, but is it what I really want?

Will I be comfortable withdrawing from my principal at that point?

Is the 4% Rule really safe?

Over time I realized that Financial Freedom is not a single event.

Financial Freedom is a Spectrum.

My mental model changed.

Of course there are situations where you can really tell that one is financially free. Bill Gates is free, for example. You don’t even need to go that far. We agree that a 2.5% SWR or a 2% SWR are reasonably safe. Hence we can say that a 40-50x multiplier of your yearly spending is what you need to be undoubtedly free.

At the same time, it’s ok to model yourself as 100% unfree if you don’t have a certain amount saved. I’m very conservative: I’d say if you don’t have 3x or 5x your yearly spending you should behave like phase 1 in the previous model, i.e. work work work save save save as much as you can.

Others could feel brave enough with just 0.5x, i.e. a 6 months emergency fund in their bank. Enough to take some actions, like quitting a job you hate to look for another one.

Anyway, I had my 5x epiphany back when I quit my job at GameCompany: I was leaving ultra cheap, 500 EUR/month, and I had accumulated ~30k EUR. 5 years of living expenses. The feeling of having 5 years of expenses saved gave me a sense of power. How likely is it that I run out of money? Whatever I do – given that I don’t squander my fortune – there’s no chance I won’t find another opportunity (or create one) within 5 years. A lot of power. Little I knew about how expenses can grow quickly over time, with a family and more needs coming…

So at 5x, or 3x, or <insert_your_slavery_killer_multiplier_here> you start feeling tiny bits of freedom.

The freedom/slavery split improves with the growth of your “savings multiplier”. once you reach 25x you’re FI according to the 4% Rule (if you spend 4% of your wealth it means your wealth is 25 times your expenses). But nothing really changes. Yesterday you had a 24.95 multiplier, and maybe after you cross the magic 25x then in a month you’re back below it because market crashed.

Ok, how to deal with this? How to embrace Uncertainty?

How to change my actions accordingly?

I had no idea.

I kept hoping the old “working model” would keep working while I figured it out.

So… inspired by Big ERN SWR series I picked a Safer WR of 3.5%, scared to lower it more even though I knew it was not safe enough.

And then I kept grinding until I reached the magic number.

Work work work 100% push save a lot work grind… and then Quit & Hope, knowing that there’s still a long tail of odds that I’m actually not FI. Do you want to chase Certainty? Well, grind until you reach 40-50x (i.e. SWR of 2-2.5%), and bring the odds of failure below 0.1% – mind that it’s never zero.

But reaching 40-50x is tough… very tough. Even with a Saving Rate of 50% it takes 3 decades. Is it worth? Is it worth sacrificing your life and be unhappy until you reach sure certainty you’ll be financially free?

No, it’s not.

I found myself lost in this loop: I don’t like my job, so I want to reduce the odds of failure as low as possible, so I will work more, so I will hate my job even more, so I need the odds of failure to be even lower because I can’t even think of coming back to work, so FI number is pushed further in time…

No way out.

Then other players joined the party

You might find yourself holding a good dose of freedom with 20k yearly spending and a 200k Net Worth, sitting at a 10x multiplier… but then you raise your spending to 30k and you’re now below 7x. Then a kid comes, and you’re now spending 50k per year and you’re back in total slavery at 4x.

You want to have Certainty, right?

But guess what, my dear 20-something FIRE seeker, you have no idea how much you’re going to spend in the future. And that’s true even if you’re awesome at keeping lifestyle inflation at bay (like I think I am). Family happens, moving to HCOL happens, children happen… your spending regime moves over time. It usually grows, but it can also shrink. You might feel you don’t have enough, but maybe if you move to a cheaper place, or if your kids leave expensive Swiss child care, you might discover you need less.

And while you plan for your FI Number, slowly walking there, aiming to reach the magic number in more or less a decade… you realize there’s another universe expansion effect, a dark energy that’s not helping you reach your goal in the allotted time.

It’s called Inflation.

I’m not talking about the impact of inflation during withdrawal phase (according to a SWR model). Those withdrawals are planned to be inflation adjusted.

I’m talking about your current goal if you’re starting your journey today.

You might plan like this: “I spend 40k per year, I’m happy with 4% rule, I need 1M. Cool, I should be there in 10 years!”

Then in 10 years 1M is worth less than it’s worth today! Your FU Number should slowly grow over time, to make you able to start the withdrawal phase with the same purchasing power of today’s 40k. Your target is always moving, sadly it’s moving in the wrong direction!

And maybe during this decade you realize 40k – even inflation adjusted – is not enough because… well, life!

I couldn’t wrap my head around those two extra factors.

The old model doesn’t work.

Certainty had to be killed.

That’s why I said that FIRE is DEAD.

Mind that I’m not giving up on my goal, I’m just growing up.

So, what’s the solution?

I don’t know of course. What I would recommend to anybody seeking FIRE who is still at the starting blocks of their journey is the following: FI is a spectrum, so let’s make RE a spectrum as well.

Let’s not split your work life in two. There’s no before and after on the financial side, let’s not have a before and after on working side as well!

Push harder until you have enough safety (3-5x for me, your mileage may vary), then take steps toward your ideal life. Work less, change job, take a lower paying job that you like more. Keep saving anyway.

Then as time passes you might reach the point of “coasting”, i.e. your wealth will reach real freedom alone in X years, you just need to cover your expenses. That’s the territory of all the altFIRE (Barista, Semi, Coast, Lean). Take advantage of your partial freedom, and enjoy life.

Maybe at one point you feel confident to quit your main job to start working on a passion gig, aware that you’re not 100% free but confident that you’ll produce enough income to still move toward full freedom.

If you hate your job, do not push harder to reach an arbitrary number earlier. Find a way to improve your life now.

The day you reach FI should just be a normal day, a day where you don’t make any drastic change because you are already moving toward your ideal life since years.

Do you think I’m stating the obvious?

Take a look at this fresh r/fi thread (there are hundreds of them):

This gal is 24 years old, and already hates her job. There’s one thing that relieves her from her job: horseback riding. But it’s too expensive and it would slow her down in her FIRE Journey…

But no! Fucking no!

Well, as I said elsewhere, it’s always healthy to push yourself at the boundaries of comfort. I don’t 100% trust my feelings, I have mixed feelings (which by definition I shouldn’t trust?) toward Free Will, but let’s not even get started on this today. Maybe it’s ok to try to see “how real” is the joy your hobby is providing you, or if it’s something you can substitute in some cheaper way. Try something different, but if you realize that you want it badly, then screw FI! Life is not a Journey. Dance!

What about myself?

Well, I can’t change the past. But if I could go back in time I’d quit my last job at Hooli 2-3 years before, and would try something else. Maybe I’d be 2-300k less rich by now, but I might also be still in love with writing software, and generally happier.

My vision as a young FIRE seeker was: work work work hate myself until I reached a magic number… then send my boss to fuck off, and live my awesome life without having to work a day anymore because 4% rule works 100% of the time.

My vision today is: work, save, accumulate until you’re ~20-30% Traditional FIRE. Then leverage this power to find a better job or negotiate a 80% position. Once you’re 50% FIRE you should already design your ideal day and make progresses toward that dream life. Like: taking long sabbaticals, work 60%, work a lower paying job, and so on. Let your wealth grow on its own. Once you’re 80% FI you’re already Free. Not monetary speaking (you’re never really free), but I’d bet that nothing will ever go wrong in your finances forever. You showed skills that put you in the top percentile of human population, you fucking rock! Just don’t retire to leisure, but try to leverage your inner desire to produce something useful with your time and skills. Something good will happen to you.

Have a nice day!

 

P.S. I can’t link More to That’s post about Money, and Mr Money Mustache’s post about Confidence enough… Even though both have a fully intentional twist at the end, I like to be more grounded into “money and spending”. But I love their approaches. Maybe I have room for growing up and leaving Fear behind 🙂

34 comments

  1. Loved this Mr.Rip,
    As a ’20-something FIRE seeker’ this seems a lot more relatable and what I ‘felt’ was realistic while pursuing financial independance. Which for me simply meant not having to worry about daily expenses. It didn’t feel like having a magic number locked up in some bank account that meant you can sit back and relax like a teen again was not possible ( at least not for the average human before hitting 40-50s ).

    This does indeed seem like you’ve found the best balance in the spectrum so far, which will only become more optimised as time goes by. Can’t wait on those golden nuggets of information that are yet to come.

    Thank you for these posts! Getting life lessons and information like this while I’m still in my 20s is unbelievable.

    You rock! 😀

    1. Happy you appreciated this, Vasilis 🙂
      I guess this post is so easily misinterpretable… What I want to recommend to young people is:

      “ok, you’re millennial, I know you hate your job after 6 months. I put my 10-15 years in before judging how much I hate it, while you millennials already know it… ok… mind that there’s no easy way out! Someone told you can grind 5 years, save 95% and then you’re free at age 26 with 300k because your expenses are 1k per month… well, IT’S A LIE. Get passionate with your job, don’t hate it YET. Save, invest, achieve some freedom (20% FI, 5x your expenses, not 100% FI, 25x your expenses) and then make some move. Don’t destroy your life trying to reach 100% before doing any move – and then drop everything. Don’t do that. Push hard for a couple of years, then leverage that. And prepare to ride a pleasant 20 years career (hopefully gradually slowing down or moving it in the direction of your dreams) instead of hating yourself on a 7 years career under the false promise you’ll be free after”

      It’s both an encouragement and a scold 🙂

  2. Frankly, I was always taken aback by the fact that in your posts reaching the FI and leaving work was the biggest goal that one could reach in life and that any job was a curse, a hellish punishment. Maybe it also depended on the troubled situation you lived at work.

    Now I understand that you have a more balanced vision, it is excellent to make a sober life and save as much as possible but it must not become an obsession that feeds anxiety and stress in our lives and does not allow us to live the present serenely with people that we have close.

    having a fulfilling and stimulating job is perhaps the best way to live our lifes, always leaving the right space for friends and family.

    I congratulate you again for your next job and for the courageous mentality that has allowed you to reach the FI which, not secondary, certainly makes you free compared to the majority of people who dare not change a demeaning job for fear to remain without a salary.

    1. Thanks for your comment 🙂
      A couple of clarifications:

      I never said that reaching FI and leaving work was the biggest goal that one can reach in life.
      In one of my first posts (https://retireinprogress.com/mystory8/) I was very clear that I didn’t want to leaving work as a goal itself, but because I had many other things to do with my life.
      I still want to quit every job and spend time with my passions and my family, but instead of planning to go all-in too early, I plan to gradually move toward my ideal life, even if it means I will be able to go all-in later than anticipated.

      “having a fulfilling and stimulating job is perhaps the best way to live our lives”
      If by “a job” you mean working for someone I totally disagree. I don’t think you can be really fulfilled by achieving someone else’s dreams.

    1. Thank you Indeedably 🙂
      It’s an honor to receive such recognition from you!

      Ok, tell me the truth… It’s just because I introduced drawings? 😀

  3. Thanks a lot for sharing this Mr. RIP. This is one of the best pieces of advice you’ve written so far and is invaluable for a late 20s guy soon to be burnt out workaholic aiming for FI like me.

    Looking forward to your next posts!

  4. Hi RIP,
    Great perspective on FIRE! It is exactly hitting my thoughts after 2 years of reading all FIRE Blogs. Personal Finance is a Net-Worth-Continuum. And this has to be designed in a way to fit your life plans, your risk tolerance, your personal interests and your ambitions.
    How will this new movement be called? 🙂

    1. I don’t want to dismiss FIRE yet. The vision is useful to make people start a financial diet… but it’s just the carrot, and the stick is longer than you anticipated. But it is still a somewhat “healthy delusion”.

      If I had to name an alternative movement I’d call it Financial intelligence, Financial Awareness, or something around Intentionality… I don’t know 🙂

  5. Thank you so much for this excellent and inspiring post, will read this definitely again! “SWR religion” is hilarious! Pi might be a good compromise for those who want to be conservative and cannot come to any other meaningful solution 🙂

    Cheers from Germany, Georg

  6. Marvelous post,

    I so enjoy the new «Dark Side of FI” post series! This is because exactly this topics are what I was thinking about.
    I read so many posts about FIRE from 20 to 30 year olds that are full of energy to reach FIRE as soon as possible and am wondering if they ever early thought about the uncertainties of their future needs.

    As a 40 year old with 2 teenagers I know that spending can grow radically by getting older and having older kids. Of course it’s still possible to live ultra frugal and there are a lot of people who apparently enjoy doing so. I’m happy for them but somehow it does not resonate with me…

    For me the Financial journey is more a journey to learn to be intentional with financial resources. It’s a constant conscious process of balancing out current wants and needs with future ones.

    Thank you so much RIP for sharing your thought with us

    1. Uncertainty and Confidence seem to be on opposite side of the spectrum, and embracing them feels like a paradox. Uncertainty demands caution while Confidence demands bravery.

      How to solve the paradox?
      Is it actually a paradox?

      1. Uncertainty and Confidence are both a human view of reality. It’s though not reality itself.

        Reality is our effort to make order out of the chaos. Some times we succeed and some time the chaos shines through.
        But chaos is always there lurking even if we experience big time gaps of order.

        Obviously the chaos element can at any time be of an indefinitely large magnitude just by pure (bad) luck. (I think this is what you call uncertainty).
        If you try though to prepare for any magnitude of chaos you want be doing anything else. If you don’t prepare at all, you’ll be taken out by the first small glimpse of chaos.

        So you need both. Prepare for some chaos and still trust on the existence of some order. Prepare with caution and confront the future with bravery.
        It’s seems to me to be more of a balance act than a paradox.

        The hero must be brave to face the dragon, but also prepared. Else he is not a hero but a fool.
        But if he only prepares and never faces the dragon he is definitely also not a hero.

        So you need both and the question is how much of which? Or how to find out how much of which…

        Like you wrote it’s more of a dance or a balance act. And probably you find out by trial and error.

  7. Probably one of the best articles about FIRE!

    Did read every sentence one by one and following your thought process step by step. Appreciate the immense value you provide to participate your journey and “lessons learned” to not fall into the same traps and holes.

    Thank you very much for what you are doing Mr. RIP!
    OogieBoogie

  8. Thanks much for the post and the blog!! I’m not interested in investing aspect of it as I’m risk averse but I find it very helpful that you share your mental state and insights you got while you’re going through it. That’s precious and thanks a million for doing so!!! I’m sure it helped many of us!

    I would like to share my story that somewhat emphasizes your findings. I’m FI already for 3 months and I’ve been unemployed for 22 months. My age group: mid-forties. It’s important to state it as my views on life, wishes and needs changed dramatically since I started to think how to get myself out of corporate bs (2010). And I managed to be FI without even reaching 1M CHF nor investing in the stock markets. There were few questions to sweat over them and it took me almost two years to resolve them. Once I dealt with them I lost the fear and I didn’t need the certainty anymore as there is no such a thing in this world.

    When is enough?
    For me it was when I reached the amount which could enable me to be FI in my home country which is way more affordable for living than CH. Yes, leaving Swiss bubble was difficult decision to make, but few things had helped. For example: I was unemployable. I hated the sector I was in and I couldn’t stand any authority or anyone telling me what to do. I felt like bullied kid and didn’t want to go back to the same (corporate) environment. Or any other which would force me to be somewhere from 9-5pm doing the job that I’m bored with.
    What I really want?
    Difficult one to answer and no, it’s not FIRE. For me it was Freedom and Time. I didn’t have neither for almost 20 years. Also, to be a Master of my life and not just a Slave to the system. I saw FIRE as a mean how to get there.
    Find the question that helps with decision process.
    Mine was: can I go back to slave in order to afford myself XYZ? The answer was always NO so that helped tremendously with the idea that I don’t have enough money for all that I needed.
    Define your lifestyle and be happy with that.
    Mine is minimalism. Not because of saving (although it’s a great help when you want FI) but for the sake of sustainability. We need to leave something to the next generations.
    Life purpose and meaningful contribution to the society
    These two questions became the most difficult things to deal with as I turned forty. I lost interest in 90% of the things that I was interested in before. Which meant that life became meaningless. I almost reached my FI and was unhappiest ever as mid-life transformation (or crisis if you will) hit me hard. Still dealing with it. Here, I would like to thank you Mr. Rip again for sharing your struggles, as some (most) of them were identical to mine.
    Retire Early
    When I started to amuse myself with FIRE, RE part seemed obvious. I worked hard for years, already had one burn out, was heading into another and couldn’t wait for the RE time. Now that I was out of work long enough I realized that one can’t be idle. We need to be busy, to be creative, to produce something. It took me long time to find something that I like (difficult task when you lose interest in almost everything and feel slightly depressed for no reason). Now, I’m working 17 hours a week on the job that I find meaningful and I couldn’t be happier. I have full freedom to decide when and how much. I hope this will help the others who are on the road to FI(RE) to realize that RE is not the final goal.
    Cheers, M.

    1. Hi Maybe, thanks for your contributions.
      I’m curious of how you reached FI with less than 1M and being risk averse…
      Then you claimed to be FI since 3 months, but unemployed by 22. Seems weird to me. You achieved FI after 19 months of unemployment? Without investments? I assume you had some salary/unemployment paycheck coming.
      But then you said you work 17 hours per week now. Can you elaborate it a bit?

      I share the “Unemployability” feeling though. I feel that I might not be able to accept following anyone else’s dream, and not able to follow anyone else’s command.

      I also like minimalism as a philosophy of life, focused on leaving a small footprint.

      Thanks for your contribution 🙂

      1. Hi MrRIP,

        Here are the answers. I’m truly sorry for not being clear enough of the nature of the investments I made and the time horizon in which I became FI. I hope this will clarify all. If not, I’m happy to answer whatever questions are still in the air. Your blog and the comments here helped me a lot and I want to help the others too. Sharing is caring :-).

        MrRIP: ” I’m curious of how you reached FI with less than 1M and being risk averse…”

        Maybe: By investing in the apartment in my home country, that I bought in 2006. and lived there for several years before relocating to Switzerland. I took 15 years mortgage term and paid it off earlier by diligent saving. I left CH for my home country at the end of 2019. and been living in my apartment since then (meaning no rent to pay).
        Another mean was saving 50% of my net (Swiss) income for 7 years.
        Third thing that helped was restructuring package but that’s locked in 2nd pillar for now. I never invested in the stock market – that’s what I was referring to when said that I’m risk averse.

        MrRIP: ” Then you claimed to be FI since 3 months, but unemployed by 22. Seems weird to me. You achieved FI after 19 months of unemployment? Without investments? I assume you had some salary/unemployment paycheck coming.

        Maybe: I’ve been out of work since 05/2018. I was receiving garden leave payment for 3 months and RAV for 18 months. It’s been 3 months since latest RAV paycheck and that’s what I meant as the start of FI for me. Living fully of my own money without any steady income.

        MrRIP: “But then you said you work 17 hours per week now. Can you elaborate it a bit?

        Maybe: It started as volunteering on organic farm during COV-19 lockdown in April and we agreed that I’ll be paid some symbolic hourly wage as of May. I can afford myself working for “peanuts” (compared to what I was earning before) as long as I’m deciding when and how much I work.

        Please let me know if this helps. I’ll be happy to provide more clarity on whatever is questionable in my story. I don’t want to deceive anyone but to share my journey / dance.

        Best, M.

  9. I think that this new series is good because it also shows that FI(RE) is not all roses & flowers as one could perceive by reading some of the (many) blogs on the topic…
    What I personally consider good in the FI path is the reduction of inflation lifestyle which is fully part of the society we are living in. Without going to extremes, the concept for me is that if you can reduce wasting money on “rubbish” (without depriving yourself), you gain in several aspects of life, e.g. you leave less footprint, you are less depending on high paying job, it may be easier to relocate (this also depending on family situation) etc.
    Myself, I started to follow the “movement” ca. 5 years ago. Now, near to my mid forties with a lovely family (wife + 2 teenagers), I don’t want the FI goal to poison my life and – as a consequence – the relationship with my loved ones. FI path it is a marathon, not a sprint, and leaving broken pieces of everything (physical/mental health, family, friendships) behind me was surely not an option.
    As you have discovered, goals in life change with aging and there is no magic number that solves it all…
    We need to try to identify what makes us happy – on a daily basis – as human beings and strive to achieve that condition.
    Having succeeded into accumulating $$$ at the cost of being burnt out and maybe alone ? No, thanks

    1. Good points!
      I liked the lifestyle inflation one.
      Which translates in being more aware and intentional with your spending decisions. Don’t live (paycheck to paycheck) like current state is going to persist forever.
      As I said several times I perceive myself as an anti-consumerist capitalist. An apparent paradox that I didn’t investigate deeply yet 🙂

      Thanks for your comment, weirded 🙂

  10. Dear Mr, RIP
    Excellent article, I have to agree with you that we ALL live in a spectrum of FI with scale of confidence , current spending and net worth.. If you draw three dimensions diagram to reflect the sweet spot between all the three factors..

    However the more you progress in one factor the more freedom you gain to take in a life style adjustment [Lower working hours, move to lower paying job with less stress and better working conditions or take break for few months to decompress AKA as sabbatical].

    I noticed you have changed the blog default page from the recent posts to the main Wellcome page .. not sure why ? I prefer the old layout .

    1. Hi ATM, yes, I’m changing the static page structure of the blog. Mainly because I would like to drive newcomers to intro pages (not yet written).
      Whenever I share my blog with someone new, who usually “would like to know more about investing and personal finance”, it feels a bit weird because “what the hell is this?”.
      The blog as it is now is only useful for those who are following me since forever. It’s kind of a continuous dialogue between me and my old readers… it scares newcomers.
      It’s still work in progress, and I’ll write a post about it once finished 🙂
      Anyway, the Blog page is the old view, and if you get new posts notification via RSS or mail subscription nothing should change for you.

  11. This is a great post and I also view it as a spectrum, it is just very challenging to define the different stages within the spectrum and how to change behavior accordingly. You can set a clear target for a “complete FI” but the others are vague.

    Even the calculation of “complete FI” I find challenging because we tend to include pillar 2 and 3 in our net worth calculation but it is money that would only become available with the legal retirement age (unless of course you buy a house, leave the country, start a company etc). It is tough to put the increase in net worth over time into tangible milestones (what % of FI are we really?). Have you ever taken this into account for FI calculations?

    1. Thanks Sjess!
      Good point. It’s a spectrum, and like black/white FI it’s also a subjective one. It’s vague by its own nature. Black/White FI is more straightforward, simpler. “Multiply by 25 your yearly spending and you’re done”. Except it’s misleading, wrong, false. Unless you have plenty of affiliate links on your blog.

      The “complete FI” calculation is subjective as well. Some doesn’t include home equity, cash, pension pillars (1, 2 and 3). I think one should add everything that has a monetary value, including Pillar 1. Yep, I wrote a post about it and included in the only case study published on this blog so far: https://retireinprogress.com/reader-case-study-mr-atm/

      The fact you can’t access your money until you’re 65 can be modeled with a minor discount depending on how far you’re from pension age. Because even if you’re 45, you will access to pension money in 20 years. Unless you’re hit by a negative sequence of returns, you would not have withdrew those money anyhow in the next 20 years, assuming they are less than ~30% of you NW.

  12. Hey Mr. RIP, congrats on this article. I came here from Oliver “Frugalisten”. I do think it makes sense, the way to FI is as important as FI itself. It’s however not that simple sometimes, being an employee, depending on your industry or area of work, to negotiate a work schedule reduction or to find a job that you “like”. In the tech industry the changes are so fast that someone out of work for a couple of years will find it very difficult to come back to work if needed or desired. I am in that area, and for that reason I decided to push as much as I could for that magical day where I FIREd. I think for physicians this idea of spectrum and gradual work reduction is totally feasible. My daughter’s pediatrician is maybe 70, clearly retired but practices a couple of hours a day.
    One thing I don’t quite agree from the article is about calculation. With so many incredible ERN articles out there it is possible to calculate a number which, even though not being precise (life/economy changes), would give you a direction and give you a feeling of how far/close you are. A financially savvy FI seeker should have a pretty good grasp at his current and future expenses.
    Nice blog, I’ll come back for more articles !

    1. Traditional Employment is outdated. Things are going to change.
      See my latest WLJ post, the entries on the future of work, the passion economy, the full-stack freelancer… Enablers for a “early retirement” spectrum are coming.
      Retirement, be it early or standard, after Employment is an old dying model.
      In a portfolio approach to self employment, the spectrum will be easier to implement 🙂

      About the calculation I’m with you: this post wasn’t meant to offer a mathematical ground truth on this topic, and I suspect it’s silly to desire for a mathematical framework around this concept. It’s all very personal and subjective.
      I even think that “traditional FIRE”, i.e. the 4% rule or whatever SWR you pick is a silly delusion. Retirement Spending is the harder, nastiest problem in personal finance, and it’s both inefficient and inaccurate to model it with a fixed spending regime and a SWR (see my FIRE is Dead post).

  13. Hi Mr. RIP, the spectrum interpretation is great, thanks! I would like to add my 2c. “Fire people” are the ones that put on their own shoulders the burden to manage their own wealth. So, the more they get older, the more they lose the mental capabilities to constantly be in control. Shall we say that the more time pass, the more we accumulate money, the more we have to think about how to cope with ourselves getting older? Shall we consider, when closer to 70 years old, to pay someone to manage our money? Best

    1. Good point, but if you trained yourself to be a passive investor it shouldn’t matter much your decline in mental capabilities, assuming it’s a “normal” decline and not a severe mental health problem (like Alzheimer).

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