Forget Retiring Early--Go For A Fully Funded Lifestyle Change Instead!

Forget Retiring Early–Go For A Fully Funded Lifestyle Change Instead!

Fully Funded Lifestyle Change is different than FIRE (Financial Independence Retire Early) because it doesn't require “retiring”. A Fully Funded Lifestyle Change (FFLC) means saving up enough money to make a major change, such as starting a business, moving out of the country, or just simply spending more time with family.

If you consider that most people are approaching FIRE with the mentality that they will find something new to work on in retirement what they are really pursuing is the FFLC. If you aren’t grinding through a job just to reach FI, it’s likely that you would have the opportunity to retain the parts of your job that you like, and you, too, could pursue the FFLC instead of full-on FIRE.

Plus, the benefits would be to reach your goal that much faster and get to fully enjoy your life that much sooner.

What Drove Our Change in Mindset

Since our daughter was born, I have felt the need to change the way my life was structured. Sure, I’ve always had the plan to retire early from work and pursue other goals. However, I never really quantified it before meeting with our financial planner. Instead, I assumed when we reach 30x our expenses (3.33% withdrawal rate), my wife and I would have more than enough to never worry about money again. At that point, we could quit our jobs and live it up for the rest of our days!

Because of the new motivation of having a little one at home, I have come to realize that the time we have right now is more precious and valuable than time in the distant future. What if we could make a shift in our lifestyle? Allowing us a sustainable career that would provide the flexibility to enjoy time with our daughter, while also providing the income that we need to maintain our lifestyle. Yes, we would be sacrificing the years of completely not working. But on the other hand, if we’re enjoying our jobs, do we need to get out of them completely?

My wife works in our local school system as an instructional facilitator. In essence, she works with teachers on how to better present lesson plans, incorporate technology and analyze data to improve the students’ learning. This job is tailor-made for her and she is really enjoying it. In addition, she is able to walk to work and the school day is from 8 – [3:30]. It’s hard to beat that!

I, on the other hand, have a 45-minute commute which starts before our daughter wakes up in the morning. Given her bedtime, I see her for about an hour a day during the week.

Additionally, where we live in the Washington, DC suburbs, isn’t the ultimate location for us. We would love to travel the world while we still have a young family. Also, we want to build a homestead on our property at some point.

Listen: Beyond Financial Independence With Edmund Tee

What Does it Take to Reach FFLC?

Talking with our financial planner, Harry, got us thinking about what really mattered and how to accomplish it. Also, having the numbers to back up the conversation and provide confidence in our opportunities and choices, really provided value and clarity.

Harry calculated that our current nest egg of retirement accounts and taxable savings is sufficient to meet 200% of our retirement spending goals, starting at age 60. I chose age 60 because we will be able to pull penalty free from our tax-deferred accounts at that time. That means we only need to conquer the next 29 years to get to that point! Additionally, we don’t need to save another dime to meet our goals in retirement.

The realization that we could spend all of our income for the next 30 years and still be fine in retirement is mind-blowing. Of course, if we did spend all of our income for that period of time, our expenses would have grown so significantly that retirement at that level of spending probably wouldn’t work. With that in mind and our current comfort with our spending, we can afford to reduce our income significantly. That provides a lot of opportunities for our family.

Looking at our finances, I determined that my wife’s income and benefits could more or less support our family. I figure I need to make about $20-25,000 per year to make ends meet. It would almost be hard to make less than that if I apply myself at all.

If we are able to change our careers to suit us and provide the current income that we need to meet our goals, we should be able to live happily for the next 30 years until we are able to pull from our retirement accounts. We won’t be able to sit on the beach 365 days a year at this point, but that sounds like it might get boring pretty quickly anyway. If our target is $75,000 per year, between the two of us we should be able to accomplish that easily, whether my work scales up and my wife’s scales back or vice versa. Finally, it’s very likely that we will still be earning more income than we need to live our lifestyle.

Related: When A Life-Sucking Job Forces You To Rethink Everything

What If We Earn More Than We Need?

What would happen then? Well, given that we don’t need to save anymore, we will have flexibility there too. Maybe we save some of it and pull forward the ultimate retirement date by saving into a taxable account. Or, maybe we devote more of our earnings towards charitable giving. A distant third will be increasing our spending significantly.

We live comfortably now, but do keep a close eye on our expenses. I imagine we would enjoy spending a little bit more, or at the very least releasing the tight grasp on our wallets. I can’t imagine how we could increase our spending significantly, however, and I don’t think I would get the same level of enjoyment out of it either.

Listen: FI Lifestyle Before FI Number With Nick True

How Can You Calculate the FFLC Point?

All jazzed up about this idea yet? There are a few calculators out there to figure out the amount of savings you need to fully fund your retirement. Some of these calculators are a bit simplistic. But, I received immense value from having this discussion with Harry (in addition to running through my own financial planning software of course!) In essence, you are calculating a present value of the retirement number to fund your retirement spending needs. The other variables in the calculation are the rate of return and the years of growth. One potential pitfall here is the impact inflation will have on your retirement spending. The second is that the present value that you are calculating is actually a future value if you are still in the saving phase.

Unfortunately, I don’t have a robust tool available online that will help with this calculation. I’m sure there are calculators out there, or that some of the personalities in this community could create one. I may work on creating a Google Sheet that tackles this calculation. Please let me know if you've got one already in the comments below!

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Forget Retiring Early--Go For A Fully Funded Lifestyle Change Instead!


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13 thoughts on “Forget Retiring Early–Go For A Fully Funded Lifestyle Change Instead!”

  1. I think I need some example numbers in a scenario to fully understand this but this is exciting.

    Since leaning about FI I discovered I could probably, very safely, quit 9-5 work in 4 years, stay at home with kids, and let my wife continue to work. Just like you laid out, I can very easily generate $20-25k a year for myself without much work. She brings in $60k gross, so less after tax deductible contributions.

    Since daycare accounts for 25-30% of our spending, cutting it short by 3-4 years would be very beneficial.

    Even doing that, even with much less income, we could still potentially be FI in 6 years after that (so, 10-12 years total) but realistically that would accelerate when all kids are in school (8 years from now) so we’d have even more time for me to bring my earnings back to what they are today.

    I’ve worked very hard to create my own work and skills which gives me a lot of safety from 9-5 work, I have made myself a hot commodity which is it’s own form of FU money.

    I will need to crunch the numbers more wholistically so like I said, sharing specific scenarios or a sheet or anything would be great to help. What I did was use the MDM Google sheet from MMM forums and create projections for each of the key years in the future to plug in all sorts of simulated numbers.

    • Hi KR, yes it’s exciting to figure out how to make this work. I’m not sure what you’re looking for, so let me know if I go down the wrong road:

      Let’s keep numbers simple for discussion’s sake. If you expect to spend 40k per year in retirement and are using a 4% withdrawal rate, you will need $1 million to fund retirement. If your target (full) retirement date is 20 years from now, you can back into the current portfolio balance that will grow to 1m in 20 years, with an assumed growth rate. If we use 10% because it’s a round number (you’ll have to come up with your own rate of return given market expectations, portfolio allocation etc), then you need roughly 150k saved up today. I assumed you weren’t saving any more and not pulling from the portfolio at all.

      This is extremely simplistic, and you will need to figure out what your spending will be in the future to really do it justice. $40,000 grown at 3% inflation will be 72,000 in 20 years, so that needs to be considered in the calculation too.

      I am biased towards doing an in depth financial plan and also have access to financial planning software to help me with these calculations. If your MDM/MMM spreadsheet helped you calculate your number, I’m sure others would get some benefit!

      • Well, I’m 31 now but my FI number is probably around $1.5-2MM (depending on how fatFIRE we want to be, hmm) and we are just under $200k now. Within 4-5 years, we should be growing our stash aggressively to around $700-800k. Our FI number is larger mainly due to kids, mortgage, and planned home improvements.

        So along FFLC thinking and my thinking, I figured I could safely leave 9-5 work at the $5-700k mark (because keep in mind, most is pre-tax and I need taxable to draw from early). Then, my wife can continue working, maybe maxing at least her 457b if not more depending on expenses.

        The main thing is certainly we’d reach FI quicker with my current household income but like you said, I want to be with my kids sooner vs. later. And then, really, we wouldn’t even care to be fully FI until they’re out of the house. Being able to have the funds to do full summers off (my wife has school position) and breaks is “good enough” until fully FI.

        Still, I did the math and conservatively, we’d still reach FI when kids are in high school.

        Aghh! It’s tough to decide but luckily I have a year or two to really see what our expenses are.

        • You’re right about the trade off, but as I spend more time with my daughter I’m realizing more time today is more valuable to me than time in the future. It’s the opposite of our saving/spending mentality where not spending now is worth so much more in the future.

          The school positions are really great for the summer off, my wife’s looking at administration positions but I’m not sure we want to give up those summers!

          Please check out Chris’s post below, with a link to Budgets Are Sexy, that calculator might help you reaffirm your numbers.

  2. Hey Danny,

    Great article. I am a 52 y/o father of three. Two in High school and one in college. You have just described the lifestyle my wife and I have been living since our kids were little and before. My wife left her job when we were expecting baby number two. She discovered her true passion in life was to be a stay at home mom. Like you, seeking meaning and value in the choices that we make; focusing on careers that are vocations not jobs; enjoying saving and frugality have all played a part. I can walk away from my fulltime job (health care, not a huge salary) in three years, as can my wife. But I really like my job, and will probably go until 60. Bottom line is that it certainly can be done.

    • Mark, thanks for your comment. Becoming a parent definitely changed the game for us. Having worked with a lot of high earning, high net worth people, it’s not common to view a job as a vocation and a part of their joyful life. I’m glad I’m in a community that views it the other way around.

  3. Has anyone considered the loophole where if you leave your job when you turn 55 (assuming your 401k is with your current employer) you can withdraw your 401K without the 10% penalty? I haven’t seen anyone talk about factoring this into their FIRE or FLCC planning. Maybe they haven’t because everyone wants to retire before they hit 55, but I like my job (airline flying) and I don’t want to quit it just yet. Thoughts?

    • Hi Sarah, the separation from service withdrawal rules definitely apply and are a great way to get funds out of a 401k without penalty. I think you’re right that a lot of people are targeting an earlier retirement date and that’s why it’s not talked about as much. Thanks for bringing that up, I think it deserves some attention for those who aren’t targeting or aren’t able to target an earlier retirement date.

  4. Hi Danny – nice post.

    The terms that jump out at me after reading this are “CoastFI” and “BaristaFI.” I’m not sure if you’ve heard of those. Or maybe you have, but you meant something different and I interpreted the article wrong.

    It basically means that once you pass a certain threshold, your retirement nest-egg has enough momentum to reach full FI in the future even if you don’t save another dollar. You’re set as long as you don’t touch your savings until reaching FI. So you “downshift” your working hours and enjoy more time now.

    In any case, for those who haven’t heard of the terms, here are some good discussions:

    • Hi Chris, I wasn’t familiar with those terms but I think you’re exactly right. Getting to that point is when you’ve really got the FU money to allow you to pursue real passions, assuming they’ll cover your living expenses until you can full-out retire. I think J. Money’s calculator is exactly what KR is looking for above. Thanks for linking to that!

      The MMM forum post does a great job explaining the concept and the different points of view of the FI community.

  5. We just did a FFLC and decided to move to Alaska – one spouse took a job and the other may/may not work. For us, we had been working toward FI but struggling with the RE idea – both like our careers but wanted to adventure/travel more. Thankful for the ChooseFI community for the inspiration and motivation to take the *cold* plunge!

    • This is excellent! It’s great to hear stories of folks that aren’t as “extreme” and pursuing a full retirement by 30. I wish you the best, we just had a cold blast down here and I’m glad it’s over. Good luck up there!

  6. Love the article! It’s exactly what my husband and I are doing. Both of us left well paying, corporate jobs to pursue our passions once our retirement accounts had enough funds and our investments can cover our mortgage pre-retirement. My SO is now and artist, he paints and teaches art and I’m boarding and walking dogs and writing an FI / personal growth blog, (check it out and lmk what you think). Our lives have much less stress and we have more time to enjoy our kids.

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