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How to FI and Know Your FI Number Calculator

Inside: Find out your FI Number Calculator and learn how to FI. This is a very important tool for anyone looking to change their life. It did mine!

How many times have you thought about how much FI would it take to retire?

It’s a question that can be frustrating, especially since the answer is different for everyone.

What if there was an easy way to calculate your personal FI number and find out what kind of portfolio you need based on your spending habits? That’s where this handy calculator comes in!

Calculating your FI number is not as difficult as it sounds.

This is an important personal finance number to know.

If you desire to do something else or are just looking forward to retirement, you need to know how much money you need!

Find out your FI Number Calculator and learn how to FI. This is a very important tool for anyone looking to change their life.

What is FI number?

FI number is the amount of money needed to retire.

It can be calculated using your salary, interest rate, and the time period in which you need to save for retirement.

The 4% figure is a reasonable place to start. The 4% rule is a conservative estimate, with the expectation that Social Security will play a larger role in retirement income.

Why Choose Financial independence?

Picture of a sign that says financial freedom for why choose financial independence.

Financial Independence, or “FI”, is a term used to describe the state of not needing to work for a living because your passive income from investments or savings can cover your living expenses.

It doesn’t mean you have to stop working altogether, it just means you’re no longer tied down by the need to earn a certain amount of money each month.

FI is an attractive proposition for many people because it allows them the freedom and flexibility to pursue their passions or hobbies without having to worry about financial constraints. And if you have money saved up, you can live comfortably off your savings or investments!

What exactly is financial freedom?

How to calculate your FI number?

Picture of a calculator and paper on how to calculate your FI number.

There are a few different ways to calculate your FI number. The easiest way is to use an online calculator. This will give you a ballpark estimate of what you need to save in order to achieve financial independence.

Option #1 – Using Yearly Spending

One way to calculate your FI number is by multiplying your annual spending by 25. This will give you the amount you need in savings to have 25 times your annual spending available each year without having to touch the principal.

FI Number = yearly spending * 25

For example, if you spend $50000 a year, your FI number would be $1,250,000.

Option #2 – Using a Safe Withdrawal Rate of 4%

Another way to calculate your FI number is by using the safe withdrawal rate of 4%. In fact, many studies believe that 4% is the too old way of thinking and 3.3% is a better safe withdrawal rate (SWR).1

You can calculate either way. If you prefer to pull more money out at retirement, then stick with 4%.

FI Number = yearly spending / Safe Withdrawal Rate

For example, if you spend $50000 a year and choose a 4% Safe withdrawal rate, your FI number would be $1,250,000.

Using a 3% safe withdrawal rate, your FI number would be $1,666,666.

The Financial Independence Formula

Do you know your FI number?

It’s a question people are often too embarrassed to ask, but if you don’t have an idea of what it is or where it comes from, you might be spending too much of your money.

Let’s start with the basics and work our way up to where we are today in terms of financial independence!

Calculate Your Spending

To calculate your spending, you need to know how much money you spend in a year. To do this, simply multiply your monthly spending by 12. This will give you an estimate of how much money you spend on an annual basis.

It’s important to have a detailed zero based budget before calculating your Financial Independence Formula. This way, you can be sure that you are including all of your regular expenses (and irregular expenses) in your calculations.

The FI Formula is based on conservative retirement calculations, so it’s important to include all of your regular expenses in the formula. The more accurate your figures are, the better idea you’ll have of how much money you’ll need for retirement.

Find Your FI Number

To achieve financial independence, you need to find your FI number.

This is determined by two factors: spending and withdrawal rate. The safe withdrawal rate (SWR) determines how much money you can withdraw each year without running out of savings in your lifetime. You divide your current spending by SWR to find out how much wealth you need to reach a certain financial target.

  • FI Number = yearly spending / Safe Withdrawal Rate

Everyone will have different FI numbers.

Determine Years to Financial Independence

The Financial Independence Formula may help estimate how much time it will take to reach financial independence. The formula is only a rough estimate, and you must adjust it as needed for more accurate calculations for your own savings plan.

The Financial Independence Formula factors in how much you need to save each year to become financially independent.

The goal of the Financial Independence Formula is to achieve financial independence before the typical retirement age of 45.

  • Years to FI = (FI Number – Amount Already Saved) / Yearly Saving

Using the example above, we calculated your FI number to be $1.25 million. You have already saved $450,000 and currently saving $25000 a year.

  • 32 Years to FI = (1250000 – 450000) / 25000

However, if you increase your savings rate to $80000, then

  • 10 Years to FI = (1250000 – 450000) / 80000

As you can tell, the more you can save and invest, the quicker you will reach FI.

For the amount already saved, you need to use the amount saved in retirement plans as well as any taxable accounts that will fund your lifestyle.

A commonly asked question is… should I include my house value? Honestly, the answer is no – unless part of your FI plan includes selling your house and moving to a lower cost of living area. Then, you would use the difference of your appreciated house value minus the cost of a cheaper home.

How to FI – Create a Plan

Picture of a lady working on how to FI and create a plan.

One of the most important aspects of actually achieving financial independence is to create an action plan.

Without action, you will be spinning on the same cycle over and over.

So, take an hour and start making your plan.

Step #1 – Figure out Numbers

The first step is figuring out your FI number and how many years away you can be.

There are many ways to make variations on finding your FI number. So, make sure you take into account how many years it will take for you to reach financial independence at your current savings rate.

This is the most important step!

Step #2 – Pick a Realistic Date

This is when most people get motivated when they pick a realistic date to retire early.

Every single decision you make will take you one step closer to your goal.

You are working backward from your “selected” date.

Step #3 – Take Action to Enjoy Life

The hardest step for actually making the decision to FI is to take action.

There are so many factors going into what you need to do once you know your FI number.

You can’t just sit back and do nothing once you know your FI number. You have to follow the steps below on saving and investing to reach financial independence.

For many people, this is choosing to live a frugal green lifestyle while saving money.

How to FI – Saving to Achieve Financial Independence

The FI Number Calculator is a simple tool that helps you calculate how much it will take to reach financial independence when investing in the stock market and using your savings rate as well.

But there are certain steps you must take to be able to save more money to jumpstart your path to financial independence. While many of our money saving challenges will help you, you need to find ways to save more money.

Step #1: Pay Off Debt

When you’re working to achieve Financial Independence, it’s important to address your debt. Paying off debt will help you achieve financial independence faster.

Two types of debt are especially important to pay off:

  1. Credit card debt
  2. Student loan debt

Credit card companies have high-interest rates, so it’s important to consolidate your credit card debt. This can help you find a lower monthly payment and reduce the amount of time it takes to pay off your debt.

Before seeking to consolidate your credit card debt, make a plan for how you’ll avoid future use of this type of loan!

Debt is a cash flow drain while pursuing Financial Independence.

Step #2: Reduce Expenses

There are many ways to reduce expenses and achieve financial independence faster.

One potential area for savings is housing, which can be achieved through refinancing, house hacking, or downsizing.

Other options include trading in your new car for a beater car, scaling back on eating out, or cutting back on your streaming services.

Typically those who budget consistently have an easier time reducing their expenses. Using a budget binder will help you find ways to reduce your expenses.

Step #3: Boost your income

Picture of a sign that says extra income.

This is probably the most important step to be able to increase your saving percentage significantly!

There are many ways to boost your income and save more money.

For example:

  • Find ways to increase your income from your 9-5 job.
  • Develop skills or get promoted to earn a better job with higher pay.
  • Side hustles can help you earn a decent income every month.
  • Find passive income streams as ways to start earning more money without any effort on your part.
  • Sell your old stuff on websites like eBay or Amazon for some quick cash infusion into your savings account.

Finding ways to make money fast is important during your FI journey.

You must search for additional sources of income, as they can help you save more and invest more in the future.

Step #4: Invest Money

It’s important to invest money to grow your wealth. You can do this automatically by investing through most online brokers.

This way, you’ll avoid making any rash decisions based on fear or greed. Investing consistently is a great way to get an average of 8-12% returns on your investments.

The idea is to save as much as possible and invest in assets that provide a high return on investment. This could include buying stocks (like me), real estate, or other investments that offer long-term stability and growth potential.

Learn how to invest $100 to make $1000 a day.

How to FI – Investing to Reach Financial Independence

Picture of lady at the beach with outstretched arms for how to FI - investing to reach financial independence.

Now is a good time to start investing for financial independence.

When you’re ready to invest, it’s important to make sure the investment risk matches what you can handle. A portfolio must match your risk tolerance and long-term goals if you want to achieve financial independence.

We will cover various options on how to use investing to help you reach FI sooner.

Step#1: Make Investments Automatic

When you invest your money automatically, you don’t have to think about it and you can take advantage of dollar-cost averaging.

This means that over time, you’ll get a better price for your investments since you’re buying them in small batches instead of all at once.

In layman’s terms, that means investing a certain amount of money each month.

Step #2: Choose an Index Portfolio

Creating a lazy index portfolio is one of the best ways to invest your money.

This type of portfolio is made up of low-cost index funds or ETFs, which means that you don’t have to worry about timing the market or trying to pick stocks that will outperform the rest.

All you need to do is hold on for the long term and let the market do its thing – in good times and bad.

Step #3: Track Your Progress

As you save and invest your money, it’s important to track your progress so that you can see how well you’re doing and whether or not you’re on track to reach Financial Independence.

This can be done easily by creating a budget and tracking your net worth, both of which will give you great insight into where you are with your finances.

Also, track your liquid net worth separately.

Seeing this progress in black and white is often motivating enough to encourage people to keep saving and investing!

FI Number Calculator

Picture of someone using a FI number calculator

The Financial Independence Number Calculator uses a range of variables to calculate the length of time it would take to save for FI. This information can help develop a savings plan that is tailored specifically to your individual needs.

Here is a simple FI number calculator.

As you can imagine, there are many different scenarios for finding your FI number.

For starters, get a ballpark range and the amount you need to save each year to reach your goal. As you get closer to actually, hitting that switch and becoming fully financially independent, then you can refine your FI number.

Remember, while this formula provides a ballpark estimate, more precise results are possible by using a financial independence calculator such as Networthify’s model.

Saving for Retirement or More Savings to Quit work?

If you have some money saved already, the time to reach FI will be shorter than if you are starting from zero. Saving at a high rate is important to reach FI in the shortest time possible; saving at a lower rate or not saving anything makes reaching FI impossible.

Financial Independence is reached by saving a certain amount each year.

This number can vary depending on your unique circumstances, such as income and expenses.

There are a variety of reasons people are pursuing FI – more than likely it is because I hate my job or you want to spend your time doing something else.

The FI Number formula is just a starting point: remember that many other variables could impact your individual savings plans, such as debt load, income, and monthly spending habits.

While using this formula can provide helpful insight into when you might achieve financial independence, it’s important to remember that there is no one-size-fits-all answer.

Every person’s situation is different, so it’s important to tailor your savings plan to your own needs and goals.

Now, time to start repeating those money affirmations.


  1. 401k Specialist. “3.3% Safe Withdrawal Rate is the New 4%: Morningstar.” https://401kspecialistmag.com/3-3-is-the-new-4-morningstar/. Accessed January 22, 2024.

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