> Every Dollar's Job · Plan Your Financial Independence # Your FI Number ## The Problem "Retire someday" is not a plan. It has no number, so you cannot tell whether you are ahead or behind, and you cannot tell what this month's savings actually bought you. Financial Independence (FI) planning replaces "someday" with one number: how much you need invested so that your investments pay for your life. ## The Formula ``` FI Number = Annual Future Expenses ÷ Safe Withdrawal Rate ``` If you expect to spend $40,000 a year and use a 4% withdrawal rate, your FI Number is $1,000,000. Spend $60,000 a year and it is $1,500,000. The **safe withdrawal rate** is the share of your portfolio you can take out each year with a strong chance it lasts 30 years or more. The 4% figure comes from a long-run study of U.S. market history (the Trinity Study). You can set it lower for more safety or higher for more risk. The app lets you change it in the Goals settings. Two things drive the number: your future spending, and the rate. Lower spending is the lever you control most. That is why the budget you built is the foundation of this module. ## Auto-Computed or Set by Hand The app can fill in your FI Number from your FI Budget (next lesson) and your withdrawal rate, or you can type a target of your own. Either way, it is the number your goals are measured against. ## Try It: Set Your Withdrawal Rate 1. **Navigate:** Goals 2. **Click:** "Settings" 3. **Verify:** the settings panel shows Safe Withdrawal Rate (SWR), Target Financial Independence Number (FIN), and Timeline (Years) 4. **Type:** Safe Withdrawal Rate (SWR) — 4 5. **Type:** Timeline (Years) — the number of years until you want to reach FI 6. **Click:** "Save" 7. **Verify:** a confirmation message reports the FI Plan settings were updated ![Setting your safe withdrawal rate](/videos/learn/every-dollars-job/module-10/your-fi-number/set-your-withdrawal-rate.webm) Leave the Target FIN blank for now. The next lesson fills it from your FI Budget. If you already know your target, type it here and the app uses your number instead. ## Aside: Mark Your Investment Accounts Investment accounts (a brokerage account, 401k, IRA) are regular debit accounts with one extra flag. Marking them as investments and giving each an expected return rate unlocks smart defaults on the Goals page: when you add a goal named after the account, the app pre-fills the balance and the rate. Pick a return rate you believe. Enter it as a decimal: 0.05 (5%) for a bond-heavy mix, 0.07 (7%) for a balanced one, 0.10 (10%) for mostly stocks. These are estimates. Real returns swing year to year. The Goals settings also track an S&P 500 return rate and an inflation rate, and use the difference as your real return. ## Try It: Flag an Investment Account Adding an account here needs a subscription if you already have two. The free tier covers two active accounts, and demo data creates four, so this step prompts you to upgrade before the New Account form appears. 1. **Navigate:** Accounts 2. **Click:** "New Account" 3. **Type:** Name — Index Fund 4. **Type:** Balance — 25000.00 5. **Select:** Investment Account — checked 6. **Type:** Expected Return Rate — 0.07 7. **Click:** "Create" 8. **Navigate:** Accounts 9. **Verify:** Index Fund is listed under Investment Accounts ![Flagging an investment account](/videos/learn/every-dollars-job/module-10/your-fi-number/flag-an-investment-account.webm) The investment flag is only available on debit accounts. A loan or credit card cannot be an investment. --- **Key Takeaway:** Your FI Number is annual future expenses divided by your safe withdrawal rate. Set the rate in Goals settings, flag your investment accounts with a return rate, and the next lesson turns your budget into the spending half of the formula. ## Check Your Understanding 1. You expect to spend $50,000 a year in retirement and use a 4% safe withdrawal rate. What is your FI Number? **Answer:** $1,250,000. Divide $50,000 by 0.04. 2. What does the safe withdrawal rate represent? **Answer:** The share of your portfolio you can withdraw each year with a strong chance it lasts 30 years or more. 4% is the common default. 3. Which of the two inputs to the formula do you control most, and why does it matter? **Answer:** Future spending. Lower annual expenses mean a lower FI Number, which you can reach sooner. 4. What does marking an account as an investment account do? **Answer:** It lets the Goals page pre-fill a goal's balance and rate from that account when you add a goal with the same name. --- [Reconciliation & Sustaining Your Budget](https://budget.gnar.li/learn/every-dollars-job/module-9/reconciliation-and-sustaining-your-budget.md) [Your FI Budget](https://budget.gnar.li/learn/every-dollars-job/module-10/your-fi-budget.md)