Pre-Financial Independence: The New FI?

pFI – the new FI[/caption] I recently discussed and defined the terms FI, RE and FF. I’d like to introduce another term – Pre-Financial Independence or pFI. pFI is just like it sounds. You have not reached FI, but you’re at a point where you have some choices. Perhaps the most obvious choice is go part-time or take a job that will make you much happier but pays less. pFI is obviously easier to attain than the ultimate goal of FI. I just recently became familiar with this concept and Physician on FIRE discussed this concept in a blog post titled: What’s Your Part-Time Number? In my opinion, pFI is the new FI. Why? FI can seem unattainable or “too far away” for most people. pFI isn’t. It may be closer than you think! There is no hard and fast rule on how to choose your pFI # but it should be at least 50%-70% of your FI number. So, how do you calculate these numbers? The short answer is that you estimate your yearly expenses in “retirement” and multiply that by 25. Or take those yearly expenses and apply the 4% rule. The 4% rule basically states that you can withdraw 4% of your portfolio annually and most likely not run out of money. It’s tough to know what your expenses will be unless you know what you are actually spending now. Keep in mind that the goal is to be done with things like paying off your mortgage and other debt at FI. And as mentioned previously, these expenses can and will change, so you may want to pad these numbers a bit. Here are our (tentative) numbers with dates: pFI # = $3 million by 2027 (I turn 50) FI # = $5 million by 2037 (I turn 60) FF # = $7 million by 2039 (I turn 62) [ Editor’s note: After this post first went live, I realized the FI & FF numbers & dates were slightly off, they have since been modified ] You’ll notice that I chose 60% of our FI number for our pFI #. These numbers probably seem really high to most of you. I figure the more the better (and safer). They are tentative since we are still working out what our actual spending is. I recently added M’s accounts to YNAB so we’ll have a much better idea in the next month or so. We are also still working on the plan with our FA. I’ll be sure to post an update once our initial plan is finalized. My pFI date is only 10 years away! And, we may reach that # sooner. What does my pFI look like? I’d cut down my clinical duties to 3 days a week (2.5 perhaps …). I’ll be able to spend more time with my kid(s) – the first one will be around 10 then. I’ll have more time to work on other endeavors like this blog. I’ll be in awesome shape. I can’t wait. Have you thought about your pFI # or part-time #? Comment below!]]>

Get our guide

Sign up to learn the 5 Money Myths Keeping You From True Wealth — so you'll never fall for them again.

Posted in

Recent Posts

Interviews with Real Women Physicians- Millennial Doctor

Welcome to another installment of Interviews with Real Female Physicians. The goal of this series is to share their story so that you, the reader, may learn and be inspired by their experiences – good and bad. We all come from different backgrounds and have different situations. Some of you are married, some are not,…

The Freedom of a Locums Doctor

Today I have a guest post for you from my friend Dr. Cory S. Fawcett, the author of The Doctors Guide book series. His blog can be found at DrCorySFawcett.com. At the end of the article, there is a special treat for anyone interested in Locum Tenens. Be sure you check it out. Many physicians…

Investing in Your Romantic Relationship May be One of the Most Powerful Decisions That You Ever Make

Editor’s Note: This is a guest post by a fellow Wealthy Mom MD, Dr. Ali Novitsky. “Dr. Ali Novitsky MD is the CEO of http://mindbodymarriage.com/.  She is a certified life and weight loss coach, board-certified pediatrician, board-certified neonatologist, blogger, national speaker, and host of the podcast, “Resuscitate Your Marriage.” Let’s face it, relationships can get complicated…if…