FIRE (financial independence retire early) is based on the idea that we can save and save and save up a large nest egg, then quit our jobs and then pull 4% indefinitely from that nest egg to live on. Except there is trouble with the 4% rule. Mainly, most people don’t want to pull 4%! To complicate things, people often find that they want to do have some productive hobbies or side jobs. Enter the idea of Flexible FIRE.
What if FIRE looked less like traditional retirement and more like Flexible FIRE:
- Some weeks you are in a state of blissful relaxation. You are resting, reading, walking on the beach, hiking through the forest, traveling or slowly taking in the cultural attractions.
- Other weeks you putter about at a reasonable pace. A few productive hours here and there. Doing some fun side jobs and tinkering with the things you like to tinker on.
- A few weeks of each year you are knee deep in a passion project. It’s hard to count the hours because you’re in a state of flow. If it weren’t for needing three pesky meals a day, you might forget about eating altogether. All your time is in your core competency and natural skill set. The work you’re doing, you are deeply passionate about the outcome. And while this week is full, 90% of the time, this project fits easily into your ideal week.
How does that sound?
For most people that sounds like the dream. Hammocks are great (I own one and love it!), but I don’t lay there 10 hours a day, 52 weeks a year.
Most people take a traditional FIRE path of large nest egg with a 4% withdrawal. If “do nothing” isn’t actually the plan with your schedule, why is it the plan with your money?
What if instead of taking this off-the-shelf 4% plan, you did a Choose-Your-Own-Adventure plan?
Rather than focusing 95% of the planning on creating a large lump sum, you put equal effort into every element of your plan?
I mentor people through life transitions. Often they are stepping away from their main job and trying to figure out what exactly the next season will be.
Here are three things most people are looking for:
- Spend time on things they are passionate about
- Amazing work/life balance (maybe 3-6 hours of “work” a day, 30-45 weeks a year)
- Not stress about money
The traditional FIRE plan doesn’t really deliver those things.
To achieve traditional FIRE you need to be hyper-focused on your saving rate. Every extra minute and dollar serving that purpose. Then once you hit that magical number, you start pulling your 4%.
Traditional FIRE gives you this instead:
- No time, energy, money or bandwidth to investigate what you are passionate about and grow your skill set there before retirement.
- You go from 40-60 hours working a week to zero. Instantly. (See #1) There was little time to build something to fill the gap.
- You have to instantly switch from investing 20-70% of your income to……pulling from it. Which is stressful. The very opposite of “Not stress about money.”
You can create a better plan. A custom-built plan.
Choose Your Own Adventure
Think of this as a Choose-Your-Own-Adventure book and build-your-own-pizza night had a baby.
There are three elements to pick from
- Fixed Expenses
- Passive Income
- Passion Income
In Flexible FIRE you create your custom blend of income and expenses. Instead of just saving a large lump sum, you can work towards building multiple sources of Passion + Passive Income to custom design your life.
In future posts I’ll outline the variety of Passion + Passive Income options. And how people mix and match them in a custom blend.
Passion Income comes from things that:
- Are in your natural skill set and match your core competency
- You love the outcome and feel like it’s making a difference
- It gives space for everything else in your life (health, family, travel, friends, hobbies)
Passive Income takes the pressure off Passion Income.
It helps cover your fixed expenses, so you don’t worry about paying the bills. Passive income gives you a safety net for when the economy goes south, and the Passion Income turns into a trickle instead of a steady stream.
Here’s where Choose-Your-Own-Adventure/ build-a-pizza enters:
There is more than one meat, one veggie, one cheese option to choose from!
You can pick multiple Passive Income streams and multiple Passion Income streams.
The happiest retirees average eight streams of income. And it’s easy to see why. The more, the merrier. When one goes dry, or we decide we simply don’t like it anymore, we have seven other streams covering our fixed expenses and adding some cushion to our lifestyle.
The benefits of this are simple:
- You get exactly the lifestyle you are after.
- You enjoy spending the income coming in
- And best of all…..It can happen much, much sooner than traditional FIRE.
In the next post, I will go over all the different “pizza topping” options when it comes to choosing your Passion + Passive Income. And it’s not a “pick one” kind of deal. You get to add lots of each in your custom build – a delicious pizza creation.
You might end up with five kinds of Passion Income, each covering a small slice of your budget. And three kinds of Passive Income that cover most of your fixed expenses. Plus I’ll show you different ways to combine all these elements.
I’ve been able to take a peek into many early retirees and soon-to-be-retirees income sources and the variety of options is amazing….and exciting.
The key to Flexible FIRE:
First, you have to get clear on what you might like this next season of life to look like. There is no use pilling on pizza toppings if you have no idea what kind of pizza you want!
You can build a plan that accommodates this lifestyle and actively starts working towards that plan!
One of the reasons I LOVE mini-retirements is that they give you a chance to test and scale up some Passion Income! Sometimes we just don’t have the bandwidth to really pursue profitable hobbies and side hustles while working a full time job and all our other obligations.
My mentoring questions are a great place to start.
Read this one: Ideal Day/Week/Year.
When you sign up for my email newsletter, you get a whole bundle of free tools to help guide those conversations and gain a lot of clarity!
Once you have a picture of this new life, you can easily see how much money it will need and what kinds of Passive and Passion Income will be the best fit.