The financial independence planner (“FI Planner”) is not intended to project or predict the present or future value of an actual asset allocation or actual investments. Limitations of the financial independence planner Learn more about the methodology of the financial independence planner. * Financial Independence Planner Methodology This information is intended to be educational and is not tailored to the investment needs of any specific investor. In the example above, Sarah’s savings could be spread out across a number of accounts to help maximize the potential tax benefits. Her FI number is $3.3 million (33×$100,000).įidelity's financial independence planner can suggest where to put your savings each paycheck to help reach your FI goal in an efficient way. Here's a hypothetical example: Sarah is 50 years old and her household expenses are about $100,000 per year. If your savings rate or estimated expenses change, the number of years to reach your goal may change as well. The number of years until your potential financial independence day is calculated from your estimated retirement expenses and your savings rate. To be conservative, Fidelity's FI number is 33× (times) your expenses at a withdrawal rate of 3% (although other calculators use 25× and a withdrawal rate of 4%). Your FI number is an estimate of how much money you may need to save and invest in order to be financially independent. Your FI number and the number of years to FI If your long-term goal is to be financially independent, spending less and saving more now isn't a chore but a choice that supports your future plans to take control of your life and your time. By making fewer unnecessary purchases you may have some extra money to put toward something you value even more. When there's a mismatch between your spending and your values, bringing them into alignment may be one way to spend more intentionally. To help avoid that, try to identify your highest values and keep an eye out for spending opportunities that align with your long-term goals. ![]() It's easy to get swept up in the excitement of buying new things and experiences. ![]() All things equal, you may have preferred to do something else with that time and money. That represents nearly half of your working hours for the year. For instance, let's say you make $40 an hour and work 2,000 hours a year. Your money can be used to enhance your quality of life now-whatever that may mean to you-and it can be used to buy more free time in the future to do what you want.įor most people, most purchases are made with money that was earned so it's easy to quantify how many hours of work were required to afford it.
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