What is YOUR formula in determining whether you're FI? And what did you do after you reach FI?

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KnowNth
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What is YOUR formula in determining whether you're FI? And what did you do after you reach FI?

Post by KnowNth » Fri Nov 15, 2019 6:25 pm

For those who feel you have achieved financial independent, what formula did YOU use? I am not asking for consensus, just individual formulas. I am not asking retirement number either, just when you feel you have won the game.

Was it Expense * 25/30/33/50 ?
Did you take Social Security into consideration?

What did you do afterward?

Retired?
Part-Time?
Didn't change a thing?
Toke it easy at work?
Looked for more exciting/enjoyable opportunities?

flaccidsteele
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Joined: Sun Jul 28, 2019 9:42 pm

Re: What is YOUR formula in determining whether you're FI? And what did you do after you reach FI?

Post by flaccidsteele » Fri Nov 15, 2019 6:46 pm

KnowNth wrote:
Fri Nov 15, 2019 6:25 pm
For those who feel you have achieved financial independent, what formula did YOU use? I am not asking for consensus, just individual formulas. I am not asking retirement number either, just when you feel you have won the game.

Was it Expense * 25/30/33/50 ?
Did you take Social Security into consideration?

What did you do afterward?

Retired?
Part-Time?
Didn't change a thing?
Toke it easy at work?
Looked for more exciting/enjoyable opportunities?
The formula I used was when passive income >= earned income

Didn't change a thing

Dottie57
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Re: What is YOUR formula in determining whether you're FI? And what did you do after you reach FI?

Post by Dottie57 » Fri Nov 15, 2019 6:47 pm

I think how old you are is part of the equation. The trinity study ran testing for a 65 year old with a 30 year retirement. I’ve heard 30 times expenses so i think you should subtract your age from 95 and that is the number of years of expenses. More years. Of retirement means a higher multiplier.

Trader Joe
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Re: What is YOUR formula in determining whether you're FI? And what did you do after you reach FI?

Post by Trader Joe » Fri Nov 15, 2019 6:50 pm

KnowNth wrote:
Fri Nov 15, 2019 6:25 pm
For those who feel you have achieved financial independent, what formula did YOU use? I am not asking for consensus, just individual formulas. I am not asking retirement number either, just when you feel you have won the game.

Was it Expense * 25/30/33/50 ?
Did you take Social Security into consideration?

What did you do afterward?

Retired?
Part-Time?
Didn't change a thing?
Toke it easy at work?
Looked for more exciting/enjoyable opportunities?
100x+. I do not care or consider Social Security at all. I continue on with my career. I love what I do.

InvestingGeek
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Re: What is YOUR formula in determining whether you're FI? And what did you do after you reach FI?

Post by InvestingGeek » Fri Nov 15, 2019 6:51 pm

flaccidsteele wrote:
Fri Nov 15, 2019 6:46 pm
KnowNth wrote:
Fri Nov 15, 2019 6:25 pm
For those who feel you have achieved financial independent, what formula did YOU use? I am not asking for consensus, just individual formulas. I am not asking retirement number either, just when you feel you have won the game.

Was it Expense * 25/30/33/50 ?
Did you take Social Security into consideration?

What did you do afterward?

Retired?
Part-Time?
Didn't change a thing?
Toke it easy at work?
Looked for more exciting/enjoyable opportunities?
The formula I used was when passive income >= earned income

Didn't change a thing
My formula is: passive income > current expenses. Nowhere close to it right now.

dbr
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Re: What is YOUR formula in determining whether you're FI? And what did you do after you reach FI?

Post by dbr » Fri Nov 15, 2019 7:01 pm

I never thought of this in terms of a formula. I guess some financial planning that would make retirement appear to be feasible played a roll. Of course Social Security was considered. Are you thinking of someone who might think themselves FI at a very early age, such as 30-40? Even then I don't think a formula means anything compared to planning something you are actually going to do.

I didn't retire as soon as I might have because I was working on things I wanted to see through. But I did not have a job I couldn't stand either. A lot of it was fun, in fact.

In general I can't think of any formulas (in the sense meant here) that are especially useful to individual investing and financial planning.

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steve roy
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Re: What is YOUR formula in determining whether you're FI? And what did you do after you reach FI?

Post by steve roy » Fri Nov 15, 2019 7:24 pm

Formula was simple.

I was 68. Had a pension. Had a clump of savings. I didn’t want to renew a three-year employment contract because I was mentally done. Plus, the Mrs. wanted to hang it up and get the hell out of Dodge.

So we did.

7eight9
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Re: What is YOUR formula in determining whether you're FI? And what did you do after you reach FI?

Post by 7eight9 » Fri Nov 15, 2019 7:30 pm

For those who feel you have achieved financial independent, what formula did YOU use? I am not asking for consensus, just individual formulas. I am not asking retirement number either, just when you feel you have won the game.

Was it Expense * 25/30/33/50 ? I think expense x 40 did it.

Did you take Social Security into consideration? No. SS will be the icing on the proverbial cake.

What did you do afterward? Nothing. That said my attitude towards work changed.

Retired?
Part-Time?
Didn't change a thing?
Toke it easy at work?
Looked for more exciting/enjoyable opportunities?

When I lost my job earlier this year I didn't really care. My wife's employment provides us with our current health insurance. I accepted a job at ~54% of my former pay. Quit after three weeks when I was told to work all weekend (exempt employee). Now considering whether to bother looking for another job or just call it quits. My wife wants to put in one more year so I might just look for another job. I'm actually not necessarily opposed to working but there is very little that I'm willing to put up with.
I guess it all could be much worse. | They could be warming up my hearse.

retired@50
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Re: What is YOUR formula in determining whether you're FI? And what did you do after you reach FI?

Post by retired@50 » Fri Nov 15, 2019 7:31 pm

KnowNth wrote:
Fri Nov 15, 2019 6:25 pm
For those who feel you have achieved financial independent, what formula did YOU use? I am not asking for consensus, just individual formulas. I am not asking retirement number either, just when you feel you have won the game.

Was it Expense * 25/30/33/50 ? --> 40
Did you take Social Security into consideration? --> No

What did you do afterward? --> Relaxed, pursued hobbies, etc.

Retired? --> Yes.
Part-Time?
Didn't change a thing?
Toke it easy at work?
Looked for more exciting/enjoyable opportunities?
I had finished a contract gig and was thinking about putting my resume online to find a new opportunity, but then I did some analysis of my spending over the prior two years, and since things looked good, I never put my resume online.

Regards,

Rosencrantz1
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Re: What is YOUR formula in determining whether you're FI? And what did you do after you reach FI?

Post by Rosencrantz1 » Fri Nov 15, 2019 7:40 pm

When our anticipated/expected COLA pensions exceeded our "normal" monthly bills + 20%, we retired. For many years, when I was much younger, I never really thought SS would be around by the time I retired. So, for us, SS and our portfolio will be a "bonus" - hopefully making our retirement a lifestyle something the DW and I would like to be accustomed to :) . Having said that, I fall in the camp of leaving something behind for our only child... so, it's hard for me to imagine getting too crazy in the expense category.

anonsdca
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Re: What is YOUR formula in determining whether you're FI? And what did you do after you reach FI?

Post by anonsdca » Fri Nov 15, 2019 7:59 pm

My formula is: passive income > current expenses. Nowhere close to it right now.
[/quote]

+1. This is really it for me too. Now, there are certain savings and other buckets above this that should be considered, but this is the gold standard in my mind.

Passive income > current expenses. That way you don't have to wonder/worry if your withdrawl rate is sustainable. You can with draw if you want, but don't need to. That is peace.

averagedude
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Re: What is YOUR formula in determining whether you're FI? And what did you do after you reach FI?

Post by averagedude » Fri Nov 15, 2019 8:42 pm

What is my formula for achieving FI? Having 25 times of investments of what your yearly expenses are.
What did I do after achieving FI? Do what most people do. Work 1 more year.😁

J295
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Re: What is YOUR formula in determining whether you're FI? And what did you do after you reach FI?

Post by J295 » Fri Nov 15, 2019 10:11 pm

FI at roughly 30 times expenses. No debt.

Did not factor in value of home, future Social Security, or likely inheritance. Considered those as safety nets when using 30 X

Went part time at 53, very part time at 55, and fully retired at 58

gator15
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Re: What is YOUR formula in determining whether you're FI? And what did you do after you reach FI?

Post by gator15 » Fri Nov 15, 2019 10:39 pm

I’ve determined I must reach three milestones to be FI. I must have a 7 figure number between all my accounts. I must have a six figure number in my taxable account. Last, I must have a paid off house. Trending pretty well toward the first two goals. Haven’t figured out how I will pay off house yet. Right now I’m focusing on reaching my first two goals. Figured once I’ve accomplished those goals, I will turn my attention toward the mortgage.

retiredflyboy
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Re: What is YOUR formula in determining whether you're FI? And what did you do after you reach FI?

Post by retiredflyboy » Fri Nov 15, 2019 10:54 pm

When pension (COLA) income covered all necessary expenses and the house was paid off. Also, investment income covered the rest of the budget not counting rental realestate income or social security. I retired and my wife started a phase out and retired 2 years later.
Facts are stubborn things. Everything works until it doesn’t.

CoastalWinds
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Re: What is YOUR formula in determining whether you're FI? And what did you do after you reach FI?

Post by CoastalWinds » Fri Nov 15, 2019 11:22 pm

Minimum Criteria for me:

1. House paid off
2. 33x annual expenses + taxes (3% withdrawal rate)

If I decide to not get a house, then it becomes:
1. 40x annual expenses + taxes (2.5% withdrawal rate)

I ignore SS for my calcs, but the boomers better not take it all!

Dude2
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Re: What is YOUR formula in determining whether you're FI? And what did you do after you reach FI?

Post by Dude2 » Sat Nov 16, 2019 1:42 am

Dottie57 wrote:
Fri Nov 15, 2019 6:47 pm
I think how old you are is part of the equation. The trinity study ran testing for a 65 year old with a 30 year retirement. I’ve heard 30 times expenses so i think you should subtract your age from 95 and that is the number of years of expenses. More years. Of retirement means a higher multiplier.
+1
also, add health care costs from x to 65
also, add lack of SS from x to 65

snowox
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Re: What is YOUR formula in determining whether you're FI? And what did you do after you reach FI?

Post by snowox » Sat Nov 16, 2019 6:01 am

For me/us I really took note of our expenses for 2 years. Took that x 110% x's till my DW lived to 100 based on multiple calculators not including SS or my paid for homes worth.

In addition after firing I took a side gig that I enjoy working 20-25 hours a week and my DW is working a gig she negotiated for Healthcare.

It works for us. I think the key is being as flexible as you can be health permitting and making sure you have Healthcare in these changing times covered as best as you can.

MathIsMyWayr
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Re: What is YOUR formula in determining whether you're FI? And what did you do after you reach FI?

Post by MathIsMyWayr » Sat Nov 16, 2019 6:39 am

FI: > 25 x annual expenses not counting ss and pension
> 50x after ss and pension
After reaching FI: did nothing (no change)

mjb
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Re: What is YOUR formula in determining whether you're FI? And what did you do after you reach FI?

Post by mjb » Sat Nov 16, 2019 6:48 am

My wife and I have tiers of FI

Tier 1 is only the higher earning spouse's income is necessary for expenses and savings goals

Tier 2 is only the lower earning spouse's income is necessary for expenses and savings goals.

Tier 3 is ability for top earning spouse to be half time and lower earning spouse to FIRE.

Tier 4 is FIRE = expenses + added healthcare in income stream accounting for inflation

Tier 5 is FATFIRE

Using this structure was a goals based way of thinking about it and how different forms of FI can affect us. We were Tier 1 when married, so that was nice to have a goal we already met.

We both have career options we enjoy and both have flexible part time options, so for us Tier 3 is probably where we plan on ending up.

We like to think do FI and not enabling RE, but to enable us to pursue jobs/volunteer in things we enjoy including spending more time raising a family.

smitcat
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Re: What is YOUR formula in determining whether you're FI? And what did you do after you reach FI?

Post by smitcat » Sat Nov 16, 2019 9:31 am

Formulae was 25X expenses after SS was considered.
We have not changed much since we hit that level

Soon2BXProgrammer
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Re: What is YOUR formula in determining whether you're FI? And what did you do after you reach FI?

Post by Soon2BXProgrammer » Sat Nov 16, 2019 10:04 am

KnowNth wrote:
Fri Nov 15, 2019 6:25 pm
For those who feel you have achieved financial independent, what formula did YOU use? I am not asking for consensus, just individual formulas. I am not asking retirement number either, just when you feel you have won the game.

Was it Expense * 25/30/33/50 ?
Did you take Social Security into consideration?

What did you do afterward?

Retired?
Part-Time?
Didn't change a thing?
Toke it easy at work?
Looked for more exciting/enjoyable opportunities?
Expense * (25-30)
I feel my expenses will continue to change, so i didn't feel exactly comfortable at 25x. (note i'm 35, married with 2 kids, so lots can change)

I didn't include projected SS benefits. I also didn't include my VA disability, because it disappears when i die.

I transitioned to part time work at my MegaCorp over the last year and have gotten the CFP and ChFC education.

I am in the middle of forming my own RIA, and once i get through all the legal paperwork, i'll start to hold myself out as a Financial Planner.

I'll then quit my reduced hour megacorp job, and work to create a "lifestyle" practice that supports my lifestyle. ( A lifestyle practice is a practice that supports the advisor's lifestyle, with no growth goals or empire building goals. Merely to build a practice that they have clients they enjoy working with and they might cap the number of clients relatively low, to keep their work requirements low. They are a professional, it isn't a hobby, but they just don't have delusions of grandeur)

Outer Marker
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Re: What is YOUR formula in determining whether you're FI? And what did you do after you reach FI?

Post by Outer Marker » Sat Nov 16, 2019 10:49 am

When I can maintain current lifestyle, including medical, at 3% Safe Withdrawal Rate on portfolio.

Dottie57
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Re: What is YOUR formula in determining whether you're FI? And what did you do after you reach FI?

Post by Dottie57 » Sat Nov 16, 2019 11:36 am

Members on this forum helped me see that I did have enough in retirement and I will be ever grateful for their help.

I didn’t retire then but when offered a voluntary separation with good severance I took it. Happy I did.

mmmodem
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Re: What is YOUR formula in determining whether you're FI? And what did you do after you reach FI?

Post by mmmodem » Sat Nov 16, 2019 12:02 pm

I keep it simple: 25x expenses is the minimum level. I know I can survive on that but thin FIRE is not for me. I want to enjoy life's luxuries. I don't include SS.

I saved and scrimped and sacrificed until the 25x milestone was reached. Now I can choose the job I want to do. I don't have to put up with a terrible boss. I can splurge a little with purchases.

33x is the next milestone and I plan to be fully retired at this point.

blahblahsunshine
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Re: What is YOUR formula in determining whether you're FI? And what did you do after you reach FI?

Post by blahblahsunshine » Sat Nov 16, 2019 12:21 pm

I rely more on financial calculators than ratios. But that said, we are at a place where 3.25% seems like a reasonably sustainable rate (~30x). We are early 50s with hopefully good SSA benefits at age 70.

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