FI date update: ouch…!

As a family, we are far away from FI. The current official retirement age in Belgium is 67. That translates for me into 2043. Every year that I can be free before that is a win! So, what is the current guesstimate?

When I first made a calculated guess of the FI date, I came to 2029. Not too bad, that is a full 14 years sooner than the current regular people.

After a year of blogging, meeting people, changing jobs and getting new insights, it is time to update this guesstimate.

It hurts

Plugging all the numbers in my custom, personal simulator, I have nice graph with the following result.

Compared to my previous plan, I now end in the year 2040! This means I have lost 11 years compared to a year ago.

Big fail?

Let’s analyse before we jump to conclusions.

• After 2016, I did a full review of our real expenses. As we decided that travel experience is important to us, we needed to adjust the budget. When we want to ski once per year, have 2 weeks of summer holiday and a few weekends away, then we need a lot of money. Before 2016, we did not ski and stayed local for the holidays. Big impact on the budget. There are off course alternatives:
  • No travel: ain’t gonna happen. We do want to enjoy life
  • local travel: summer weather is just not reliable enough. Last 2 years, we shortened our summer holiday due to rain. Big bummer. We off course arranged alternatives, it is just something we want to avoid
  • No ski, no way. I love the outdoor activities, the atmosphere in mountain towns, the scenery, the speed you get

• Job change: in 2016, I joined a startup for a lower salary. In exchange, I got what I consider a more comfortable work environment. I refrain now from statements like: I hate my cubicle job, I will never keep doing this till retirement. For me this is a BIG WIN! at least, I do something I do not mind doing. in a certain way, that means I am free. As a result, there is less money available to invest. What are the alternatives?
  • return to mega corporate and golden handcuffs? I am not that kinky
  • take a side hustle: that would mean less time with family and friends.

• Taking unpaid leave at work. This means I get a lot more holiday throughout the year. Time I can spend with the family, friends, on road trips,… Worth all the money. The impact on a FI plan is that there is less money coming in.
• The updated version of the tool now has inflation build in. It is scary to see how expenses rise with inflation… that added a few years as well.

Big Win!

Despite the later FI date, it still feels like a win. I actually get to live already in 2107 a life that comes close to my ideal life. That is worth a lot. This is how I phrased it before

Work about 9 months per year on challenging projects and deliver results. The remaining 3 months are spend traveling, if the school agenda allows it. My work should allow to have each day either the morning or the evening to be there for the kids and weekends should be for family and friends. Over time, I would go to less work. The free time could be used to work on other challenges like volunteer work or more social related challenges.

Other than that, there is more in Life than FI! Happiness comes from a lot of things. And the good news, these items are now part of the plan. In 2017 already, not as of 2019!

What are the flaws and upside in the model?

• The model assumes no salary increase what so ever. That is a worst case scenario. As I can not look into the future, I prefer to keep it like this. When the current  job goes well, there will be increases. When the current jobs comes to an end, I will look for other, -hopefully better paid – opportunities.
• I do everything based on the modest scenario. This suggest modest returns per year. Why? With the current valuations in the market, there is a consensus that the next 10-15 years, it is more realistic to have lower returns that the average overall long-term results. Current CAPE is above average, thus expected returns are below average.
• Option income is not yet part of this model. Last year it accounted for 3K. Quite an impact when you ask me. Is it sustainable? No idea
• The model assumes no income at all in FI. That is not very likely. I expect to keep working and earning when FI. And I expect to get a pension as from age 67. Maybe not a lot. Image we each get only 500€ a month, that would be 1000€ together and represent 300K less we need for FI after age 67. Amazing….
• It assume the 4 pct rule. we know from ERN that this might not be the best pct to pick. 

Conclusion

As long as I have a system in place that pushes me in the direction of happiness, than I am happy already now. Interim goals in the process are just that: interim goals!

Life will throw curve balls, life will surprise you. You can not model this.

You can create the habits so that you know that you do what you can do.

We are still far away from FI, right now, I have a plan in place and an adjusted FI date. To be honest, I do expect a lot of parameters to change the coming years. Also, our view on FI might change. What if we decide in a few years to work only 9 months? In that case, we will never FI, we would have reached our ideal life though…