Financial Independence

Having enough invested that working for money becomes optional.

Definition

Financial independence is the point at which your investments can cover your living expenses, so a paycheck is no longer required. It is usually measured against your FI number (about 25× annual expenses) and is the central goal of the FIRE movement.

Example

Reaching your FI number means your portfolio, not your job, can pay the bills.

Related terms

FIRE (Financial Independence, Retire Early)
A movement focused on saving aggressively to reach financial independence well before traditional retirement age.
4% Rule
A guideline that withdrawing about 4% of a portfolio in year one is likely to last 30 years.
FI Number
The nest egg you need to live off investments — roughly 25× your annual expenses.

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