Unpopular opinion: Many of us are probably aiming for the wrong FI number

Investing / Others
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Lately I’ve been rethinking the way I calculate my FI target.

The standard approach is pretty straightforward:
Annual expenses / SWR = FI number

But there’s one assumption in this calculation, that I find more and more questionable:
→ This assumes an income of 0

I know, Barista FIRE is nothing new. But I wonder why I should treat traditional FI as the default goal, rather than questioning whether I actually want to stop earning money altogether.

Personally, my goal isn’t necessarily to never work again. It’s to never HAVE to work again in a job I don’t enjoy.
And I found out, that this distinction makes an enormous difference financially.

I ran some numbers:

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Assuming monthly expenses of CHF 4.5K and a 3% SWR:

  • “Traditional FI”: 1.8M required
  • With 1K / month income: 1.4M required
  • With 2K / month income: 1.0M required
  • With 3K / month income: 600K required

What I find interesting:
We spend years optimizing our saving rate, investment returns and withdrawal strategies.
But maybe one of the biggest variables in the entire FI discussion is something we possibly don’t challenge enough:

How much income would we actually enjoy earning after becoming FI?

Maybe you’d love to work two days a week in your current job. Maybe you’d teach, consult or turn a hobby into a small business.
Not because you need to maximize your income, but because you enjoy the work.
And if that income covers a certain part of your expenses, your FI timeline changes dramatically.

Of course, there is a trade-off: You’re trading some financial independence for dependence on future income. That’s why I’d still want a plan for what happens, if that income vanishes.
But here’s the question I’ve been asking myself:

Is it really worth working, say 10 years, in a job you don’t enjoy that much, just to reach a FI number, that assumes you’ll never earn another CHF? Or could it make more sense, to aim for a smaller nest egg and design a life where earning some money is actually part of the plan?

I’m curious how others think about this.
For those pursuing FI: Do you calculate your target assuming zero future income, even if you expect to keep working in some position? And if so, why?

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Yeah. I think maybe we are a partly self-selecting group of people who are always looking at irrational worst case scenarios.

I do plan on zero income but probably this is not realistic as money has always flowed in some way or another even when I wasn’t looking for it.

A lot of us may be risk-averse and so planning on over-shooting, but it is better to actually under-shoot as we over-estimate the risk of running out of money and under-estimate the risk of wasting our good years.

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Without attacking any of your work - it’s fantastic, I think the main takeaway with this is: “You can’t have it all” in a way.

So imho the best success in this approach - given it’s uncertain nature - is always to “just wing it” - endless calculations and spreadsheets probably don’t make a more successful retirement than making it due with the 4% rule 100% stocks and some “gut feel”.

And this especially works, if one is a bit generous on all sides, so:

  • Planning for a bit more than you need
  • Planning on earning nothing (or less) than one probably does
  • Not 100% accounting all positive factors (many don’t know that the AHV payments from wealth will slightly reduce your income taxes)
  • etc.

The really risky thing is to calculate this stuff out and pretend you know what you’re doing, because you shuffled around some numbers. More complex retirement planning and strategies don’t pay off - imho and from what I saw only are a mental exercise that can be substituted for simpler “rules of thumb”.

But yes - earning income is a huge FIRE booster - but I think most people want the real deal - and they’d rather not be in need of work. Even the sweet part time job can start to suck - only now you’re stuck and maybe left a huge golden bucket and stand there with 3K for 3 days of work… instead of idk. 10K+ for 5 days.

I however don’t get being overly cautious either - and can only explain this with irrationality. If you’re 100% in stocks, you don’t need a 2% withdrawal rate, that’s ridiculous - even at 4%, the chance of running out of money (without you noticing and being able to react) is nearly 0 - again, given you calculated generously.

My FI goal is at about 2.5M and 100K withdrawal. I can easily feed 8 people on 100K if I need to and we can support our future kids, without having so much wealth that they can lay back and hope for daddies wallet. I prefer it that way… and if shit hits the fan, I’ll be able to feed my family with 60K - so more than enough cushion :slight_smile:

Not because you need to maximize your income, but because you enjoy the work.

One point on this: Imho this is just “copium” or a lie to be blunt - you can’t tell me there are people that do consulting “for fun”… I mean come on… We can look at jobs that people do for fun (artists, musicians, etc.) and they pay like garbage for 98% of the participants… in order for work to truly count as “having fun” - my definition would be that you would do that even for free - and then the question arises: So why take money then and make it transactional? There is no free lunch - and there is no “fun” in a monetary transactional relationship imho.

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I had one case where it was a free lunch. I did something for fun/free. Then one day thought of putting out the equivalent of a ‘tip jar’.

It ended up making $2,000 a month until a change of job stopped me from doing maintenance work on it.

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The problem is finding low income jobs, that ware paid well per hour.

I likely cannot find a job earning 2k that would be enjoyable enoigh for me to go for a half-assed retirement.

I will not work a Barista job suddenly earning a fraction per hour compared to what I earn now just so I make 1-2K extra. I’d rather full steam ahead a few years more and not work at all.
My job will likely not accept 40% and for consulting you need to work hard to build a client network for some years. It’s like starting a business. Very far from retirement. You may even faill completely there.

I would just help me to mentally feel more save, that I could do that at an earlier then planned proper fire date.