Part 3: calculating our FI number and setting real goals
- Vimal Fernandez
- Sep 25
- 4 min read
Updated: Oct 4
Disclosure: I’m not a financial advisor. This isn’t financial advice — just what worked for our family. Your financial journey is yours to chart.
Real talk: before I learned about FI, my only real investment was in faster Wi-Fi. 💸📡😅
Ok, where were we? We had our ‘why’, and we were tracking our savings and net worth. The next step was to calculate our Financial Independence (FI) number.
What’s a FI number?
FI # = Freedom = ‘Merica! 🦅
The FI number is how much money we need invested to safely retire and live off our portfolio for the rest of our lives.
One key nuance is that we need to be able to withdraw from the assets that make up our FI number. Since we plan to sell our house and cars, their value counts toward that number. If we weren’t selling them, we’d subtract their value from our net worth when comparing it to our FI target.
Calculating our FI number
We used the 4% Rule—a rule of thumb rooted in decades of research (most notably the Trinity Study), and popularized by books like The Simple Path to Wealth, Quit Like a Millionaire, and The Bogleheads' Guide to Retirement Planning. The idea is that if you withdraw 4% of your portfolio each year in retirement, there's a very high likelihood your money will last your lifetime.
The math is pretty simple. FI Number x 4% = Annual Expenses. If we rearrange this equation and solve for the FI Number we get this:
FI number = Annual Expenses × 25
We knew from tracking our spending that we were spending about $120,000/year. We assume we would continue at that spending rate (plus inflation) for the long haul.
So: $120,000 × 25 = $3,000,000
Boom! That’s our FI number. It felt like a lot TBH, but at least it wasn’t vague anymore. We needed a net worth of $3M to be free, for real.
We used tools like FIRECalc and Portfolio Visualizer to double-check our rough math.
Savings rate was our biggest lever
To wrap my head around this a bit better, I built a simple chart showing the relationship between savings rate (savings / income) and years to FI.
Here were the assumptions:
Starting portfolio: $0
Portfolio return: 10% annually (after inflation)
Annual expenses: fixed
FI target: 25 × annual expenses (aka the 4% rule)
All savings invested and growing at 10%
Here’s what the numbers showed (if we started from ZERO savings):
Upping savings from 10% to 20% = shaved 10 years off (35 to 25 years)
Saving 50% of our income = FI in about 14 years
Going from 50% to 60% = only shaved 3 years off (14 to 11 years)
So what does this mean? It’s actually pretty good news. As our savings rate climbs toward 50%, we cut serious time off our journey to FI. After that, returns start to flatten out. No need to kill ourselves trying to save 70% of our income.
This concept isn’t new. I messed around with other calculators like Networthify, which showed similar results.
With that clarity, we set 3 realistic and measurable goals
Save and invest 50% of our after tax income.
Keep expenses under $10k per month.
Grow our income by 3%+ per year
Milestones along the way
Reaching full FI would take us 8+ years (we didn't start from a zero net worth). We needed milestones along the way to keep us motivated:
Coast FI: We’ve saved enough that, if we stop contributing today, our investments will grow to our FI number by the retirement age of 65.
Lean FI: We could retire now, but with a super minimalist lifestyle.
Semi-Retired FI: We only need part-time or passion income to bridge the gap.
FI: We’ve got just enough money to continue living at our current expenses.
Fat FI: We’ve got more than enough. We can splooge without worry.
People often choose to stop at one of these milestones so it was fun reaching them and knowing we were in a better spot even if we didn’t continue.
Here’s what these milestones looked like for us (roughly):
Coast FI: $500K
Lean FI: $1.5M
Semi-Retired FI: $2M
FI: $3M
Fat FI: $3.5M+
Knowing these helped us pace ourselves. For example, once we hit Semi-Retired FI, we relaxed a bit—got sassier at work and took more vacations.
Pressure-tested by pros
At this point, we had our numbers, our goals, and a solid roadmap. But we’re not naive—we knew there were probably things we hadn’t thought of. The unknown unknowns. This was a good time to bring our plan to financial advisors to pressure-test it.
I paid a one-time flat fee ($1,000) to one FA to run a full analysis of our strategy.
I used a free FA consultation through my employer.
Schwab, our brokerage, offered free sessions with a financial consultant.
I met with a few FAs who offered complimentary portfolio reviews as part of their sales pitch.
The feedback was reassuring:
No major red flags.
Everyone agreed the plan was solid—simple, disciplined, and effective.
They applauded the focus on controlling spending.
They confirmed we were on track for early retirement.
We needed a target—and real goals to get there
Calculating our FI number gave us something to aim for, an estimate of how long it might take, and an idea of what we could (and couldn’t) control. Most importantly, we had a plan we believed in that kept the joy in living.
With a strong starting portfolio, intentional spending, and a 50% savings rate, early retirement isn’t a fantasy—it can happen in under a decade.
This post is part of our 'journey to early retirement' series, sharing our path to Financial Independence (FI) and early retirement with kids.
AI epilogue:
While asking an FA is a good option, AI can get me pretty close — and without those pesky fees!
Prompt:
"I'm trying to figure out my Financial Independence number and what I can change to retire early. Can you ask me a few questions to figure this out?"
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