Financial Independence (FI)
Financial independence means having enough invested assets to cover your living expenses indefinitely without working. It is the point where your investment returns equal or exceed your annual spending.
Financial independence does not require early retirement — many FI adherents continue working voluntarily. The key shift is that work becomes optional: you are no longer dependent on a paycheck to survive.
FI is typically measured by the FIRE number (25× annual expenses). Reaching FI can take 10–30+ years depending on your savings rate, investment returns, and spending level.
A 50% savings rate (saving half your income) typically leads to FI in roughly 15–17 years from scratch, assuming 5–7% real portfolio returns.
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Open calculator →Related terms
- FIRE Number
- Your FIRE number is the portfolio size needed to retire early and live off investment returns indefinitely. It is calculated as your annual expenses multiplied by 25 (the inverse of the 4% safe withdrawal rate).
- Safe Withdrawal Rate (SWR)
- The safe withdrawal rate is the maximum percentage of a retirement portfolio you can withdraw annually without running out of money over a given time horizon. The 4% rule is the most widely cited guideline.
- Compound Interest
- Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. It causes savings and investments to grow exponentially over time.