I don’t know– maybe it’s all the time I spend focusing on the life we can already afford abroad, or maybe it’s that my ideas about financial independence have changed with time, but it seems to me that FI does not happen all at once.

Medellín, Colombia – A Totally Kickass Place We Can Already Afford

When we started out on this journey, it seemed that FI (Financial Independence) and RE (Retiring Early) were one and the same.  By definition, the ability to leave work behind forever implies financial independence, and I couldn’t fathom referring to myself as FI if I wasn’t also able to RE.  Obviously, you can also become financial independent and keep working.  What most people don’t talk about is the fact that you don’t just wake up one day and decide that you’re financially independent, either.

Let’s use me and my fiancé as an example:  We’re both working, both happy, and we’ve accumulated a pretty decent start towards our desired retirement income.  Our current monthly safe income could not support our current cost of living.  Still, I think you could make the argument that we are financially independent.  I’ll list some of the attributes of financial independence to explain why.

You Can Survive A Job Loss

The most basic prerequisite for financial independence is adequate financial resources to make working optional.  Whether it’s your own choice or unexpected, a financially independent person must be able to stop working and provide for themselves and their dependents.

You Can Support A Satisfying Life

Of course, it’s not enough to survive– everyone has stuff they love to do!  We all want to be happy, pursue our passions, and (where applicable) provide opportunities to the people we love.

Sure, your current safe withdrawal rate might put a roof over your head and food on the table, but is that enough to really feel “independent?”  Most of us have activities that we love that are non-negotiable.  We’re all saving well beyond the “survival” level to a point where we can sustain an acceptable level of activity to make us happy.  For some people, the freedom to sit and read, write, or think may be enough, and thus their “FI number” might be barely above the survival level.  For some people (such as ourselves), the budget has to include the ability to travel and support paid activities.  Thus, our desired retirement income is well above a bare minimum.

The Wildcard: Lifestyle Flexibility

Despite our relatively lavish planned early retirement lifestyle, I think we have one advantage on our side:  We’re extremely flexible about where we live and what constitutes enriching experiences.  Most of the places I have written about in the retire abroad series are affordable at our current safe withdrawal rate.  Though we want the ability to change our minds and experience many places, including those above our current safe withdrawal rate, the reality is that in a pinch, we could be happy living a lot of the places our current budget could support.

Now, this doesn’t mean we’re going to go out tomorrow and retire– our goal isn’t to have just a few choices, but a literal world of them.  Still, it’s cool to recognize that we have the means to live happily if we left our jobs behind.  On a basic level, I think that makes us financially independent, even if we’re still several years away from early retirement.  This is what I mean when I say FI does not happen all at once: Financial Independence, for us, is actually a series of milestones passed on the way to early retirement.

If you’re working towards early retirement (or even just financial independence), I think it can be a very worthwhile exercise to figure out just how flexible you can be with your early retirement plans.  The less you see changes to your original plan as a sacrifice, and the more you see them as an adventure, the more likely it is that your financial independence date is right around the corner.  Maybe it has even already come!

What do you think?  Are you already financially independent, and you just don’t know it (or just haven’t “called it”)?  If you don’t think you are financially independent, but you have substantial savings, what’s keeping you from considering yourself FI?  Would you consider drastic changes to your lifestyle to achieve financial independence or early retirement?  Let me know in the comments!