Launching Our Targeted and Achievable FI Number in 94 Months

A first step to financial freedom for an individual, couple, or family is to determine their FI Number or the amount of money they need to achieve Financial Independence (FI). Do not confuse household income or adjusted gross income with an FI Number.  In the Financial Independence community, an FI Number is based off the amount of money an individual, couple, or family plans to spend or actually spends annually. Additionally, the FI Number calculation must generate enough funding through investments or other sources on an annual basis to reach that goal. 

What is an FI Number?

Many in the Financial Independence movement use the FI Number multiplied by 25 as the baseline. FI’s cult-like leader Mr. Money Mustache describes this in his post “The Shockingly Simple Math Behind Early Retirement.  Using historical data to determine withdrawal rates is based on the work of, Bill Bengen, known as the Godfather of “the four-percent rule” or 4% rule. Explicitly, Bengen in utilizing historical stock market data determined that under most scenarios, one could “safely” withdraw 4% of their investment income without jeopardizing their principal investment.

*Disclaimer: The following is not intended to be investment or life advice. Readers should consult with
their legal, financial, and accounting specialists and spiritual and/or life coaches to provide insight on
their personal and specific circumstances as each situation is unique. The following is written for
entertainment.

– fi59andahalf.com

Securing Our Two-Part Strategy

As we wrote earlier, we are excited to secure our FI Number based on a two-part strategy. Indeed, our Part I is for Age 59 and a half to Age 65 and our Part II is for age 65 and beyond. Consequently, our plan puts the “personal” in personal finance to meet our desired goals. Our Part I FI Number- will use funding sources that we can live off for 5.5 year period. Uniquely personal about our Part I F Number is that does not require us to have growth in these funds. A significant portion of our Part I funds are in cash-like options. We plan to shift and/or convert the portion of the funds in equities into cash-like options.

“Personal Finance” in the Two-Part Strategy

We estimate 99-percent of financial advisors and readers would likely find this no growth for 5.5 years strategy crazy . We are hoping that there is growth in these funds, but we are not planning on it.

Part II FI Number funds for age 65 and beyond are almost exclusively in equities.

We have been diligently working on financial independence for a long-time. With a desire to make “paid work optional” we developed this two-part FI Number strategy within the past year. Our plan has a range of FI levels. Ideally, we would have both Part I and Part II FI Numbers equal “Fat FIRE” status as outlined by Physician on Fire (Technically, F– is known as the “F word” in our household and is not a word that we allowed to be used. Perhaps it would be better to use something like “Big FIRE” as in “Big Ben” in London, England. Alternatively, there is also Lean FIRE, but this would require us to alter our intended plans.

Our FI Number As of 95 Months Out?

Our Part I accounts are at 41% to achieve Big FIRE and at 74% to achieve Lean FIRE as of last month. Technically, we are Coast FI (a term coined by the FIONEERS) for Part II Age 65 and beyond right now. It seems way too early to be Coast FI. It’s unclear that reaching Coast FI will alter our strategy knowing that the math works. In our Psychology of Money we worry about another Great Recession and having our Sequence of Returns adversely impacted.

We are seeing and feeling signs of a possible recession and/or market correction, but remain optimistic about our future.