Financial Freedom 45 Update: Have I Already Achieved F.I.R.E.?
For years I’ve been tracking my net worth with the dual goal of becoming a millionaire by the end of 2020 (Ha!), and achieving financial freedom by age 45 (in 2024). The financial freedom target did not necessarily mean a full-stop early retirement, but a point when I could realistically leave my day job to pursue other interests – namely blogging, financial planning, and freelance writing.
In my last financial freedom update I mentioned I was still on track to reach my goal, although what life would look like afterwards wasn’t exactly clear. Now I have a much better idea. What a difference two years can make!
Since then, I quit my day job and turned my side hustle into a “full-time” pursuit. I’m working for myself and doing what I love – helping people with their finances by writing educational content and providing one-on-one coaching.
They say if you do what you love, you’ll never work a day in your life. According to many in the personal finance community, by that definition I’ve already achieved F.I.R.E., or financial independence, retire early.
I’ve left the commute, the cubicle, and the drudgery of the 9-to-5 to pursue my dream. I work when I want, and for as long as I want. That, to me, is freedom.
Now, before the retirement police come out with a cold dose of reality, I am fully aware that I’m not retired. I need to earn an income to meet our current and future spending needs. In fact, my best estimate is that we could survive for about 10 years on our existing resources – not an ideal F.I.R.E. scenario.
On the other hand, I’m not looking to retire on a meagre budget of $30,000 per year. We still have big dreams to travel the world (eventually). We like good quality food and wine. We still have growing children to feed and clothe. And we’re not the kind of people who want to sell it all and roam the continent in an RV.
After tax spending to age 95
Have I already achieved F.I.R.E.? I’ve never branded myself as a F.I.R.E. blogger because I don’t believe you can call yourself retired if you’re still earning an income. But I’ll admit I’ve had a loose definition of financial freedom because what I really meant was the freedom to stop working for someone else and start working on my own terms.
The truth is, I’m still striving for that freedom – just now I aim to be a financially independent entrepreneur (FIE?). Here’s what that might look like:
Financially Independent Entrepreneur
I’ve been working on my own business full-time since December 2019. Revenue has exceeded my wildest expectations. But when I say ‘full-time’, just know that means working an average of 20-25 hours a week. I’m not busting my butt 24-7.
In a typical work day this summer, I’d get up at 6am and go for a run, come home and make breakfast for the kids, then sit on the deck with a coffee and eat breakfast with my wife, clean up and have a shower, and start working on projects by 10am. I’d pause for lunch and a 30-minute walk around the neighbourhood, and then finish up any writing or financial planning by 3:30pm. I like to be finished by noon on Friday.
Now, just because I love what I do doesn’t mean I want to do it forever. I’ve mapped out a plan that has me ‘working’ until age 55. I doubt I’ll stop at that age, but it’s a reasonable guess at this point.
I’d also like a large enough annual spending target that gives us the flexibility to travel and maintain our current standard of living. We’ve built $15,000 per year in travel expenses into our budget (spending is that much lower in the chart this year because 2020).
We’ve talked about spending our summers abroad when we’re able to travel again – renting a house somewhere in Europe or the U.K. for two months and using it as a jumping off point for other destinations. Working online means I can check-in from anywhere in the world if needed.
I’ve given us a spending boost once both of our kids are in post-secondary (my age 50 year). The thinking is that we’ll have a lot more flexibility to travel during the school year.
New worth projections to age 95
Our net worth will reach around $2.9M by my final working year (age 55) and stay relatively constant for 20 years before we spend down our investments and savings by my wife’s age 95 year. That’s the “die-broke” scenario that has us spending all of our savings and investments, but still leaving the house in our estate.
I’ve mentioned before why I’m not aggressively paying off the mortgage – not while the interest rate is at 1.45%. This projection has us paying off our mortgage in 7.5 years – well before I stop ‘working’ so we avoid the risk of carrying a mortgage into retirement.
One important note is that we don’t have big annual savings targets. Both of our RRSPs are already maxed-out, as is my TFSA. The next three years will see some pretty big catch-up contributions to get my wife’s TFSA fully funded. Outside of that, we’re only projecting to max out our TFSA contributions each year. We’ll also continue to max-out the kids’ RESPs.
That means I can work just enough to meet our spending needs and hit those modest savings targets while our investments grow.
Final Thoughts on Financial Freedom 45
I’m going to ‘retire’ this financial freedom 45 series now that I’ve officially quit my day job and started working on my own terms. While I haven’t achieved F.I.R.E., I do think I’ve unlocked what most F.I.R.E. enthusiasts are searching for – the freedom to stop working for someone else and start pursuing your passion.
Truth be told, it does sort of feel like I’m retired. I mean, I am working a bit more than I need to right now. But that’s because we’re in the middle of a pandemic and I’ve spent more time at home than I had planned. Stuck at home, I might as well write an article or work on a financial plan. That’s actually how I started my blog in the first place – when our first born daughter started sleeping through the night from 7pm – 7am and we were stuck in the house with free time every night.
I’ll keep tracking and updating my net worth, but that $1M goal has never mattered to me as much as achieving financial freedom. Now that I’m doing what I love, I have a better idea of what financial freedom actually means.
Congratulations Robb on reaching FIE! The key here is that you are working for yourself and doing something you love and you can still support your family.
Personally I don’t think I have ever understood the appeal of retiring super early. I think your plan to work until your mid 50’s makes a lot of sense. IMO, you need something to make you want to get up early every day that provides purpose in your life and I would worry that retiring in my late 30’s or 40’s would cause me to become bored and stale. I realize that not everyone shares this viewpoint however and that’s perfectly fine.
Hi Pat, many thanks. I agree with you 100%. I look at retirement as something you retire ‘to’, not something you retirement ‘from’.
I should also mention that I’m not out there hustling to make my income. Financial planning inquiries come to me through the blog or from referrals. I don’t go seeking new clients by putting on seminars or paying for advertising. I also have a sold freelance connection that pays well, but I choose the assignments that come to me – I’m not pitching editors with story ideas.
This makes the work much more enjoyable and flexible.
Curious. If your net worth isn’t even $1 million, how can you be FIRE? $1 million generates $10,000-$25,000 a year maximum.
If you have kids, even if it’s only you and your wife, how do you live off that little?
I would try and shoot for st least $3 million to be considered FIRE.
Thank you
Hi, did you read the post?
Sorana,
Maybe you should hire Robb to set out and help with a financial plan for you.
10 to 25,000 return on a million dollars is only a 1-2.5% return. A minimum 4% return with that amount of money is relatively easy to achieve with a less than volatile batch of stocks. If you don’t have to touch the principle and then having an enjoyable side gig, as Robb outlines in his blog, you’re looking at upwards of $40,000 per year minimum.
Also as someone who left a six figure job and cut their salary in half, most people would be surprised at how much stuff is non-essential in their life and where they can save to offset some of the income loss.
Great post! What tool do you use to forecast your net worth? I like those charts. I keep a detailed spreadsheet that forecasts my cash-flow, dividends, expenses, income etc and would love to find a model to forecast net worth, CAGR, annual spending etc.
Hi Gene, thanks! Those charts are from the financial software that I use for my clients called Snap Projections. The bonus is I get to use it to run scenarios for myself 🙂
Ah thanks! I just went to their site. It’s too bad they don’t have a personal edition. 🙂 I would love a way to show my wife the projections to give her a sense of comfort on where we are… 🙂
Hi Robb, Congratulations on all past and upcoming post detailing how important having a plan and goals really are, you’re really fortunate! The plus is having a passion for what you love and what works for a real home work balance.
I still struggle with being wrapped up with the big banks, one of your post stresses getting away from high fees. The part I struggle with is are those fees off set vs. lower fees in terms of returns?
In other words if I shift all investments to, say Wealth Simple would I achieve the same or better returns regardless of fees? My advisor continues to caution me that lower fees may not provide the protection of having a Managed Portfolio. Your thoughts?
I’m now 58 and no longer working full time but also not generating enough money to make any meaningful contributions. Like you my RRSP and TFSA are maxed out and I have a small non registered account. My biggest problem is as our net worth is just under a million, no debt I still feel I have no where near enough to fully retire.
Great post Rob, well done- honest, simple and inspirational is what I like best abt your posts and your financial life inspired journey.
Qn for you- do you account for business draw downs/investments after taxation as part of your portfolio projected here now into ‘retirement’? I got self-employed recently (Nov-2019) and been contributing into the company paying myself only a small ‘required’ monthly salary. The rest has stayed within doing nothing literally (0.002% interest I believe)! Could you perhaps share insights (or even a post) on opening an investment account for your INC and I suspect you’ve auto piloted via VEQT/VBAL?
Thanks again!
I “retired” at 50 and needed life insurance. So when I got checked out I had actually gained 1” in height once the weight of the corporate world was off my shoulders. I “busted my tail” for 11 years – my wife restricted me to 45 hours a week – helping happy clients. At the end, we bought a summer condo in the GTA (we’re ex-pats living in the U.S.) thanks to the extra money from freelancing. Happy times after age 50. My wife provided the benefits, I paid for college for two sons and saved. It can be done. And it was fun doing it! Now I look back at my net worth statement from back then and compare it to the current time – just wow. In addition to your advice I follow several other people’s advice (some guys like Warren Buffett and John Bogle amongst others) and it paid off.
Cheers Robb! Your journey is both inspirational and educational.
Congratulations Rob.
For me retirement is how would I spend my time.?
I am 47. My net worth is 1.8M with 110K mortgage.No other debts. I have 200K in RRSP and 50K in TFSA. 70K in RESP for kids. Plan is to pay off mortgage by 50 and I am on track. I am planning to retire by 55 and travel. I am just hoping my health holds up. I am working to setup revenue stream to supplement my income once I retire.