What if you never had to work again—unless you wanted to?
That’s the promise of financial independence, or “FI.” It might sound like a dream, but with some intentional planning, saving, and investing, it’s more achievable than you think.
Whether you want to retire early, travel the world, or simply have the freedom to choose how you spend your time, FI gives you options.
What is FI (financial independence)?
Financial independence—often shortened to FI—means having enough assets, like investments, savings, or passive income, to cover your living expenses without relying on a traditional job.
It doesn’t mean you have to quit working; you might love your job and the purpose it can provide. But FI gives you the freedom to walk away if you want to—without worrying about how to pay the bills. And if early retirement is your goal, FI is a path to get there.
You’ve probably heard of the FIRE movement (Financial Independence, Retire Early). FI is the broader concept that includes all its variations—from Lean FIRE to Fat FIRE and everything in between.
Read Fidelity Viewpoints: What is Fat FIRE?
What is an FI number?
Your FI number is the amount of money you’ll need to reach financial independence. It’s your personal net worth target—the point where your savings and investments can reliably cover your lifestyle without a paycheck, possibly all the way through retirement.
Everyone’s FI number is different. It depends on how much you spend, what kind of life you want to live, and when you want to stop relying on traditional income. Whether your dream is to travel the world or just enjoy quiet mornings with coffee and no commute, your FI number is the key to unlocking that freedom.
How can I calculate my FI number?
It’s a simple 2-step process.
Step 1: Add up the annual expenses you expect to have in retirement. Include everything—housing, food, health care, transportation, hobbies, travel, subscriptions, and more. For a quick estimate, you could expect to spend about 55% to 80% of your current income in retirement but your lifestyle can change those numbers.
Fidelity’s planning tools can help you track and categorize your spending .
Step 2: Multiply that number by 33: To achieve financial independence before age 62, Fidelity suggests saving at least 33 times (33×) your annual expenses. This is based on a conservative 3% annual withdrawal rate, adjusted for inflation. Here's an example:
- Susan spends $70,000 a year.
- Her FI number = 33 × $70,000 = $2.31 million
- With a 3% withdrawal rate, she could take out $69,300 in her first year—enough to cover nearly all her expenses.
Reminder that the above calculation is a hypothetical illustration assumes a 3% withdrawal rate with no taxes and fees. If taxes and fees were included, the amount of the withdrawal would be lower. For 33× methodology see footnote 1.
Keep in mind, though, that 33× is a general guideline.
If you aim to achieve FI earlier than 62, you may need to save more or adjust for factors like inflation, health care costs, and a longer retirement horizon.
Want help crunching your numbers? Fidelity’s retirement planning tool can also help you understand how long your money could last and how much income your retirement savings may provide. If you’re not yet a customer, you can build a free financial plan.
When crafting your FI strategy, it can be useful to work with a financial professional who can help you craft a personalized plan.
Read Fidelity Viewpoints article: How can I make my retirement savings last?
How do I reach financial independence?
The good news? FI isn’t just for ultra-wealthy tech founders or extreme savers. With the right strategies and a bit of discipline, you can build a path to financial freedom that fits your life.
Here’s how to get started:
1. Tackle high-interest debt. One way to fast-track FI success is to pay off debt, such as high-interest credit card balances. Look into balance transfer offers or low-interest personal loans to reduce what you owe faster. Just be sure to read the fine print and pay off balances before promotional rates expire.
2. Right-size your budget. To achieve your FI dreams, you may need to trim your spending. An easy way to get started: Review recent credit card and bank account statements to find spending you can slash. For more substantial savings, consider downsizing your home or car.
3. Boost your income. When it comes to review time at work, make your case for a raise. Or, consider looking for a new job where you can negotiate a salary bump. And there are many ways to create an extra income stream, from side hustles such as tutoring, walking dogs, or selling unwanted items. If you have an extra room in your home, you could even rent it out.
Read Fidelity Viewpoints: 12 ways to earn more now.
4. Maximize workplace benefits: Make sure to get the full match, if offered, for workplace savings plans like a 401(k)—it’s like free money so you don’t want to leave that on the table. If you’re enrolled in a qualified high-deductible health plan, you may be able to contribute pre-tax money to a health savings account.
Read Fidelity Viewpoints: 5 ways HSAs can help with your retirement
5. Choose appropriate savings and investments: To achieve FI, your investments need growth potential as well as protection from market volatility. A diversified portfolio with a well-thought-out allocation to stocks can help your money grow. For savings, be sure to look for competitive interest rates in accounts such as CDs and high-yield savings accounts.
Pro tip: Setting up automatic transfers and recurring investments can help make it easier to save consistently.
6. Use tax-saving opportunities. While tax-advantaged accounts such as a 40l(k) or IRA can help you reach your FI goals, they come with annual contribution limits and requirements if you want to withdraw the money without penalties.
With that in mind, it can be helpful to consider additional options, such as a taxable brokerage account. These accounts provide some extra flexibility, as they don’t have contribution limits or age restrictions for penalty-free withdrawals.
Read Insights from Fidelity Wealth ManagementSM: 5 ways to be a tax-smart investor
7. Form a bridge strategy: If you plan to reach FI before traditional retirement age, you may need a plan to cover the gap between the year you retire and the age at which withdrawals can be taken from tax-advantaged retirement accounts without penalty—or when you can claim Social Security and sign up for Medicare. A bridge strategy could mean tapping taxable accounts or budgeting for health insurance until Medicare kicks in.
And don’t forget Social Security: Although you can claim Social Security retirement benefits beginning at age 62, delaying benefits until age 70 can increase your monthly payout—so plan accordingly.
Ready to take the first step?
FI isn’t just a dream—it can be a destination you can reach with the right plan, the right tools, and a little persistence. Whether you’re just starting out or already on your way, every smart money move brings you closer to a life on your terms.