My Path to Semi-Financial Independence: The Plan to Achieve Freedom by Age 50
Every year, I assess my financial position and determine my earning and saving capacity for the year ahead. I also set a minimum investment goal—anything above that is a bonus. This breakdown helps me stay accountable to my larger goal of achieving semi-financial independence (semi-FI).
This was calculated using the moneysmart.gov.au compound interest calculator
My Original FI Goal: Too Far, Too Late
Initially, I aimed to follow the popular FI (financial independence) 4% rule, setting a goal of $1.5 million. The idea was simple: with a $1.5 million portfolio, I could safely withdraw $60,000 per year for 25 years, which would see me through retirement. However, that pushed my retirement target to 60, and I wasn’t gaining the freedom I wanted earlier in life.
$1,500,000 ÷ 100 × 4 = $60,000 per year for 25 years
Discovering Semi-FI
That’s when I discovered Mrs. Money Flamingo, a popular FI blogger who introduced me to the concept of semi-FI. This concept gave me an epiphany: I didn’t need to hit the $1.5 million target to live a more flexible life. Semi-FI suggests achieving half of your FI goal earlier and potentially working fewer days per week. The theory goes that if you have a portfolio of $625,000 by age 50, your investments will double over the next decade, leaving you with a full FI portfolio by 60.
A Shift in My FI Strategy
Inspired by this, and also influenced by Bill Perkins' "Die With Zero" (which I talked about in my previous post), I set new priorities:
I don’t need a $1.5 million portfolio.
I want to spend more time with my children while they’re still young.
I want to work fewer days after 50 but continue working on my terms.
My Revised FI Goal: $625,000 by 50
Now, I aim to accumulate an investment portfolio of $625,000 by age 50. By the time I hit 60, this should double to at least $1.25 million, assuming standard capital growth. Add in my growing superannuation, and I’m looking at a total of $1.85 million by retirement age:
$1,250,000 (investments) + $600,000 (superannuation) = $1,850,000
This was worked out using moneysmart.gov.au superannuation calculator, based on an average salary of $100,000 per year over the next 20+ years. I therefore rounded up to $600,000.
At that point, the 4% rule would allow for an annual withdrawal of $74,000 over 25 years, offering more flexibility than my original plan.
$1,850,000 ÷ 100 × 4 = $74,000 per year for 25 years
Debt Recycling: Supercharging My Strategy
Between now and 50, I plan to use debt recycling (converting non-deductible home loan debt into tax-deductible investment debt) to supercharge my investments. I’ll invest a minimum of $20,000 per year over the next 12 years. According to the debt recycling calculator I use, instead of $625,000, I’ll have $722,844 invested by age 50. On top of that, my current $135,000 in investments will grow to around $312,000 by then.
In total, I’m looking at a $1.03 million investment portfolio by age 50, along with about $455,000 in superannuation.
This was worked out using a debt recycling calculator.
What’s Next?
In theory, based on the 4% rule, I could retire fully at 50, but I won’t. I love the idea of continuing to work, but on my terms—part-time and with more freedom. For now, I’ll focus on hitting this year’s investment goal and keep adjusting my plan as market conditions and my life evolve.