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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: payitoff on June 11, 2014, 12:35:20 PM

Title: What's the difference between FI & ER?
Post by: payitoff on June 11, 2014, 12:35:20 PM

Dummy question but what is really the difference?

Just thinking:
If you're FI then why still work part time when you can already go ER?
If you're already FI, what's stopping you from going on ER?
How much do you have when you're FI vs. when you're at ER?

Title: Re: What's the difference between FI & ER?
Post by: MgoSam on June 11, 2014, 12:48:31 PM

Dummy question but what is really the difference?

Just thinking:
If you're FI then why still work part time when you can already go ER?
If you're already FI, what's stopping you from going on ER?
How much do you have when you're FI vs. when you're at ER?

A. Not a dummy question at all
B. Some people enjoy their job, or may want to break up their day or do something with their time. Even if they don't need the money they still feel the passion. Whole Food's CEO took a salary of $1 with no stock options in 2007 (I think?) because he loved the job and was financially secure.
C. I don't know if there is anything stopping anyone once they are FI, though for some they may feel secure but want to doubly sure. For me this may happen as I am in a field where once I retire it is really hard to step back in.
D. The difference between FI and ER is hard to quantify. Technically they can be the same, but I would think that ER is higher than FI due to C, but I tend to think of money in terms of being stable. Once I retire I never ever ever want to have to work again.
Title: Re: What's the difference between FI & ER?
Post by: gimp on June 11, 2014, 12:59:45 PM
I plan on never retiring or quitting working. I will get 'fuck you' money and then choose my jobs carefully; that won't take very long. I love what I do, and the people. I hope to do it until I die.
Title: Re: What's the difference between FI & ER?
Post by: begood on June 11, 2014, 01:05:16 PM
You know how some people work to live and some people live to work? My husband lives to work. So for him, I didn't get anywhere with the ER approach. The FI (and FU money) tack has been much more effective.

We've also talked about "downshifting", where he might do a job that wasn't as high stress, heavy workload/timeload. He talks about working at a hardware store, or (and this cracks me up) stocking shelves and doing inventory at Five Below.

So for him, ER doesn't make as much sense as FI, and even then, it's more a matter of him feeling that when that time comes, he'll be able to choose to do a less stressful job.
Title: Re: What's the difference between FI & ER?
Post by: KittyFooFoo on June 11, 2014, 03:28:10 PM
I plan on never retiring or quitting working. I will get 'fuck you' money and then choose my jobs carefully; that won't take very long. I love what I do, and the people. I hope to do it until I die.

Just curious what it is that you do.
Title: Re: What's the difference between FI & ER?
Post by: Cheddar Stacker on June 11, 2014, 03:31:52 PM
I've always defined them as:

FI - Financially able to live without acquiring more money.
RE- Acting on your FI.

I think there are different levels of FI though. For example:

25x expenses or 33x expenses?
Spartan lifestyle or fill in the blank expenses (golf, travel, charity, etc.)?

People have discussed already reaching their bare bones level of FI, but they anticipate higher expenses once reaching RE, so it's sort of a moving target for some.
Title: Re: What's the difference between FI & ER?
Post by: Cassie on June 11, 2014, 03:38:00 PM
Working p.t. really can be a quality of  life issue for some.  I love what I do professionally but was sick of the 9-5 gig for someone else. Now I work for myself from home. When I did not do this I was not fulfilled. I still spend plenty of time taking people to medical appts, helping people do things that they can't for themselves, etc but would not like it if my whole life was like this. I also do not have a lot of hobbies and many of my friends are younger & still working.  Also my hubby just upped his p.t. hours to about 30 a week after being retired for about 3 years.  My Mom never worked once she left the workforce. She had a very busy life but did many things that I do not enjoy.  It really will be different for everyone.  Some people want more $ to do more things-others are happy on much less income. 
Title: Re: What's the difference between FI & ER?
Post by: gimp on June 11, 2014, 05:33:39 PM
Just curious what it is that you do.

HW engineer. Embedded systems, silicon design, whatever I get paid to do, it's fun times. Come to work late, work late, work with awesome people, work with awesome stuff, build cool toys... I can't complain.
Title: Re: What's the difference between FI & ER?
Post by: arebelspy on June 11, 2014, 07:44:12 PM
Dummy question but what is really the difference?

FI/Financially independent = You no longer have to work for money, your investments provide enough to cover your annual living expenses.

RE (or ER) = You retired from your job.  Usually after FI.

Semi-ER = You switched to part-time work.

MMM equates the two terms as identical, even if you haven't yet left your job he calls you "retired."  Many of us here disagree.  But the above are the most common definitions.

If you're FI then why still work part time when you can already go ER?

Some people still like their job and want to still work, full or part time.  Some switch to semi-ER when they aren't quite FI just to work less.  Some want a bigger safety buffer before they ER.

If you're already FI, what's stopping you from going on ER?

See above.  Most common is OMY (one more year) syndrome, where people keep working to keep adding a little more to the stache and keep lowering their withdrawal rate (WR) to slightly lower.

How much do you have when you're FI vs. when you're at ER?

Depends on the person, what they spend, and what level of buffer makes them comfortable.  For me we hit FI around 25k passive income, but are shooting for 50-60k before we FIRE.
Title: Re: What's the difference between FI & ER?
Post by: Random on June 11, 2014, 10:26:29 PM
For me, I believe I and family are financially independent.  My wife is not as sure.  It is less of the "one more year" syndrome and the "what if we want to" syndrome.  Right now, I am jazzed about work in a mission-related non-profit, am potentially on the brink of a break-through strategy in the group I lead, and would rather build an unassailable buffer than argue the "what if" scenarios endlessly.  It is working for  me for now.
Title: Re: What's the difference between FI & ER?
Post by: theglobetrotter on June 12, 2014, 05:45:16 AM
Once my husband gets to 20yrs in the military in 4yrs, we will be FI. We're not big spenders and so his pension can get us through. But, we both enjoy working. He plans on going another 4-6 more years and then see what to do after. After the military, my husband wants to work on vintage cars or be an airline museum curator. He's also thinking of maybe owning a pub. None of the above sounds like a money making endeavor. But because of his pension, he can. My investing goal is for him to be FI and RE to do whatever he pleases. I suppose that would make him FI and semi-ER.

I LOVE working. I stay home now with the kids and it is killing me inside. I suck it up for many reasons but while I love the girls and we do so much, I HATE not working. I think I live to work. I LOVED my job and I cannot wait to go back to it. While I still do a bit now and then (I do tech consulting and web developing) it's not the same. I want to go to work, hang out with co-workers, present at conferences, network, play with gadgets (for free), train, research, create things, have a job title and make money. I am going work sick just writing about this!! FI will help me pick and choose the perfect place to work and somebody would have to offer me Anthony Bourdain's job in order for me to RE from my career field :) I'd take Rachel Ray's old job too. What was that show, the $50/day travel food show.
Title: Re: What's the difference between FI & ER?
Post by: payitoff on June 12, 2014, 08:36:23 AM
Dummy question but what is really the difference?

FI/Financially independent = You no longer have to work for money, your investments provide enough to cover your annual living expenses.

RE (or ER) = You retired from your job.  Usually after FI.

Semi-ER = You switched to part-time work.

MMM equates the two terms as identical, even if you haven't yet left your job he calls you "retired."  Many of us here disagree.  But the above are the most common definitions.

If you're FI then why still work part time when you can already go ER?

Some people still like their job and want to still work, full or part time.  Some switch to semi-ER when they aren't quite FI just to work less.  Some want a bigger safety buffer before they ER.

If you're already FI, what's stopping you from going on ER?

See above.  Most common is OMY (one more year) syndrome, where people keep working to keep adding a little more to the stache and keep lowering their withdrawal rate (WR) to slightly lower.

How much do you have when you're FI vs. when you're at ER?

Depends on the person, what they spend, and what level of buffer makes them comfortable.  For me we hit FI around 25k passive income, but are shooting for 50-60k before we FIRE.

well explained, now that makes more sense