My Financial Independence

To me, Financial Independence is when you have enough money to do what you want, when you want. The amount of money to achieve FI depends on what you want to do, where you live, and your tolerance for uncertainty/flexibility.

The path to financially independence is different for everyone, but it usually involves an income stream that meets or exceeds your expected spending. Some examples:

• You have a trust fund and it throws off a bunch of money every year. Or, you have so much money you don't even need to invest to finance the rest of your life.
• You invest in the stock market and the average returns meet or exceed your spending.
• You own rental real estate and pay someone else to manage everything.
• You live in a country with universal basic income.
• You trained a family of weasels to steal for you and they pass down their craft to each generation.

I chose to invest in the market because of the very low barrier to entry. Also, the weasels were really hard to train and started to sass me.

Financial Independence does not mean retirement, it means you have the option to stop trading your time for money. You can be financialy independent and still trade your time for money in any kind of job or entrepeneurial venture, if that's what you want! I will probably try to make money doing what I love at some point, just for fun.

Why

I love independence. I want the freedom to explore, create, and have fun on my own terms. As long as I am reliant on earning money to fund my life, I am limited. Work becomes the largest rock in my life, demanding the majority of it. I like my work, but I'd rather choose how much of my life that I spend on it.

Some people retire and actually miss work. I am not one of those. I once took a long sabbatical and it was everything I dreamed a life without work could be. Trust me, it's great.

My identity is not tied to my profession in any way, it's actually the other way around. I chose my profession because of my identity, someone who likes to write software. After I stop working, I will still be someone who likes to write software.

I've seen some people write about how they get bored after retirement. I've never been bored in my life, I always find something to learn or do. The world is too crazy to be bored.

Enough

How much is enough? This is often called your "FI number," the amount you need to be financially independent. It's just a fuzzy guideline because it's always changing, either due to expenses shifting, life circumstances, cost of living, inflation, etc.

At first, it was $1,000,000 ($1,523,070 in 2024) in the mid 2000s.

Then, I moved to San Francisco, and it became $1,500,000 ($2,047,562 in 2024) in the early 2010s.

Then, I decided I wanted to upgrade my lifestyle¹ and it became $2,000,000 ($2,590,962 in 2024) .

Then, I got married, and it became $3,500,000 ($3,672,169 in 2024) for both of us.

Then, we started planning to have 1-2 kids some day, and it became $4,500,000 ($4,721,360 in 2024)².

That's it, $4,500,000 ($4,721,360 in 2024)! We're aiming to hit this goal around May 2025, at which point I plan to stop working. My wife may end up working for longer or switching jobs, who knows!

Pre-emptive strike

Let me pre-emptively address a couple reactions to numbers like these in the FI community. This is a common mindset, "If you spend more than me, you are wasteful. If you spend less than me, you are cheap."

Whoa, why is your number so high?

I invite you to compare your city's cost of living and browse Zillow for 3 bedroom homes in San Francisco in a quiet neighborhood with good schools. You will find that our number lands us squarely in a middle class lifestyle using a safe withdrawal rate in the worst-case scenario. If you'd like to get a better sense of what these numbers would be equivalent to in your own city's cost of living, try finding the closest COL city in the Cost of Living Conversion dropdown at the top of the page. This will convert all numbers from San Francisco cost of living to the target city's cost of living.

Yes, I am aware that we could move to Texas, Las Vegas, Vietnam, Bali, or any other great low-cost of living area and retire on a small fraction of this number. One can say the same about anyone who doesn't live in the absolute cheapest places to live, developed or otherwise. The point is that we want to live in SF for the time being, and who knows if or when that will change?

Financial Independence is all about options. The option to do what you want with your time, to earn money or not, to dabble in anything. If you are able to retire in one of the most expensive cities in the world, you have the option to live almost anywhere else.

Whoa, why is you number so low?

If you live in SF and have kids, you might think our number is low. I am limiting our budget per kid to $12,000 per year until college. I'm planning on spending $36,000 per college year for 4 years.

It's very likely we will be able to spend more than that. If we see something worse than the Great Depression, we may need to move to a lower-cost of living city, but we'd still be in a better position than 95% of Americans.

It's complicated

Ah, the duality of FI, you need to be concerned about the overly good outcomes as well as the bad! In the case where we saved too much, we gave up things in opportunity cost: we could have retired way earlier, had a nicer lifestyle, or helped others that needed help. In the case where we saved too little, we'd be forced to either reduce spending or earn money again.

The truth is, there is no "shockingly simple math" to early retirement. It's complicated and unknowable, like life, but more so.

I'll go over how I calculated our number and how it translates into spending in retirement in a later post. That's all for now!