Work Optional – Financial Independence, Realized Early

Work Optional – In Plain English

Work optional is the outcome after you’ve reached a level of financial independence where you can work – but don’t have to. This is where Financial Independence leads to a point where Fulfillment Intent can thrive, built on the Foundational Investments you made in yourself.

Stages Of FI

To me, financial independence (shortened to “FI” for this blog post) can be achieved in progressive stages, and with each stage, the less you are dependent on a “job”. At the work optional stage – FI, you should have enough investable assets (generally liquid and quickly deployable savings, investments, and other assets) to cover your living expenses indefinitely without relying on new sources of income. You can achieve the work optional FI stage at any age, depending on certain choices made for you in life initially (your childhood environment for example), but mostly based on choices you make in your adult life and your lifestyle preferences. The earlier you get here, the more likely your earnings, savings and investing exceeded your previous spend. It is also more likely that you are somewhat more knowledgeable around personal finance than the average Joe. Some refer to people that get here earlier as “FIRE”, or “financial independence, retired early”, however, I like to think of it as realized early vs retired early – as the word retired sounds like I’ve reached the end of useful life…but there is still a lot I’d like to do.

There have been many flavors of FI coined over the years – some of the most popular are as follows:

Coast FI: Your investable assets are enough where they can compound to arrive at the estimated amount you need to withdraw from at your target work optional date. You can now “coast” to cover expenses until your target work optional age.
Lean FI: Your investable assets are enough for you to be work optional and live a low cost “lean” lifestyle. You likely don’t need much to live off of and likely won’t have much cushion for larger unexpected or discretionary spend.
Barista FI: Your investable assets are almost enough for you to be work optional, as long as you pair it with a lower income “barista” type work to supplement the difference.
FI: This is what is considered “regular” FI. You are work optional. You can choose to work, or not. Up to you.
Fat FI: You are work optional and rockin’ it. Your investable assets give you more than ample cushion.

The above FI flavors serve as casual reference points, but the real focus should be on Foundational Investments in yourself. Do the incremental self-work in investing in yourself. Understand your personal finances and what lifestyle feels right for you and your dependents, if you have any. Most importantly, continue to refine what an authentic to you Fulfillment Intent may be like at each season of your life. When you commit to those things, you’ll navigate change with confidence, courage and resilience. You don’t need to match anyone else’s version of FI or life – only your own.

Quick Check – Are You Close to FI? (The 25X Rule)

The very high level general loose rule of thumb estimate is to have 25x your annual expenses in your investable assets that you can live off of over a 30 year work optional time frame. This rule is also commonly referred to as the 4% rule, as originally derived by Bill Bengen, whom has recently updated his original research to a higher withdrawal percentage. Your investable assets exclude tangible assets (e.g. net equity in your house – if you have one, cars, art, jewelry). This means you should be able to access your investable assets for use rather quickly when needed. If you are headed somewhere in this range, you are moving in the right direction!

There are many articles around how to determine your FI estimate. A simple google search will give you a myriad of info, however, make sure to look at reliable sources and to do your own due diligence. I would not place much emphasis on advice around needing x times your annual salary by x age. It is more about what you and your family’s spending and lifestyle needs/preferences are now and over time, that you need to estimate for, rather than your annual salary. Additionally, calculators using total net worth should be used with caution, as these may have you include assets (like your house) that may not be quickly accessible for spending.

Nuances That Change The Math (Estimates and Assumptions Used)

Be aware that there are many (so many – because we are all so different!) factors to consider in your FI estimate, including and not limited to the estimates and assumptions around:
• how and when you intend to draw down your portfolio
• remaining life spans on individuals your portfolio intends to cover and whether you plan on leaving legacy funds behind
• asset allocation/location mix
• investment growth/inflation
• milestones/life events/fixed/variable/discretionary/healthcare/what-if and unexpected expenses
• tax considerations
• social security/pensions/potential additional sources of income
• your money psychology
• your level of comfort around risk, etc.

If you have a target work optional date in mind and prefer to delegate out the considerations leading up to and after your target date, or simply want a second set of eyes, it may be a good idea to hire a financial planner who also incorporates tax planning strategies a few years before your target date to review your total financial picture. Make sure to vet your planner and consider the fees being charged and that you understand what you will be gaining from their services as well as your opportunity cost in hiring them. Continue to learn about personal finance though because having a professional look over your plan doesn’t mean you should be hands off. The plan impacts your life more than it does the person you hire so it is in your best interest to educate yourself. You may even eventually be able to handle it on your own. Check out my recommendations page for some less expensive Foundational Investments you can look into to start.

No one knows what the future may hold but if you have clarity behind your Fulfillment Intent and resilience from Foundational Investments in yourself, you may decide what Financial Independence estimate is enough for you to allow you the courage to experiment with your time more intentionally.

Financial Independence Realized Early (vs Retired Early)

What surprised me as I was working through what was troubling me in 2024 was finding out that I was already within the vicinity of regular FI. I knew I was well on my way towards a traditional retirement (around mid-60s in the US) but never allocated time to see if I could be work optional sooner. Thank goodness I hit pause in 2024 to deeply reflect and analyze, because otherwise, I most likely would have ran on the hamster wheel till my mid-60s at the cost of trading in my more youthful time and energy away from Fulfillment Intent activities I had otherwise dismissed or earmarked for later in life.

This is why I say that it only took me a few months to jump off the hamster wheel. Becoming work optional was only available to me as a byproduct of incremental and consistent Foundational Investments in myself, knowledge and steps made towards Financial Independence, and a purpose driven ongoing refinement of my life’s Fulfillment Intent over the years. Knowledge is not power without action. I have financial independence to do so as realized earlier (vs retired early) and now have flexibility to consider earning new sources of income in a manner more aligned with my fulfillment intent should I choose to. Freedom, amplified.