Flamingo FIRE combines the best parts of three different retirement lifestyles – Semi-Retirement, Early Retirement (FIRE) and Traditional Retirement.
Soon after we started our journey towards Financial Independence, it became clear to us that we didn’t want to be chained to our desks until we hit our FIRE number. We had started our journey to Financial Independence in our 30s and wanted to make up for lost time. What we were looking for is a more flexible and efficient approach. We wanted to find the fastest way out of the rat race that would still take us to FIRE eventually. Additionally, we wanted to give ourselves the option to enjoy a traditional retirement later on in life.
So we cherry-picked our favourite parts of different retirement strategies and combined them into one plan that meets all of the requirements mentioned above. Enter Flamingo FI.
What is Flamingo FIRE?
Flamingo FI is essentially a version of Coast FIRE geared towards those who want to semi-retire but also be able to get to FIRE in the next 10-15 years. The premise of Flamingo FI is simple: safe half the required FIRE nest egg, then semi-retire and let your portfolio compound in the background until you hit your FIRE number.
I often get asked why we called our approach Flamingo FI. With Flamingo FI, we stop saving and investing when we have saved 50% of our FIRE number. It’s basically FIRE standing on one leg – like a Flamingo.
Fun fact: The word “flamingo” comes from the Spanish and Latin word “flamenco” which means – you might have guessed it – fire.
The Phases of Flamingo FIRE
Here are the four phases of our approach:
Phase 1 – Accumulation:
This is the phase in which you accumulate your nest egg. Full-time work, frugality, saving and investing – you know the drill.
The standard FIRE formula (aka the 4% rule) prescribes an accumulation phase that is complete once your nest egg equals 25x your annual living expenses. With Flamingo FIRE, you can cut your accumulation phase short. You get to quit your full-time job after just a few years of saving hard – when you have about half your desired FIRE nest egg.
Let’s look at an example: If your annual expenses are $40,000 per year, you have reached this milestone when you have accumulated a nest egg of $500,000. This is the first major milestone of Flamingo FI.
You can use our free Semi-Retirement Calculator to figure out your Flamingo FI number and the age you’ll be when you get there.
Phase 2 – Semi-Retirement:
With Flamingo FI, we replace the second half of the accumulation phase with an extended period of semi-retirement. During this period, your nest egg keeps growing in the background. Once you have accumulated half of your FIRE number, you can now stop adding to your nest egg and are free to semi-retire. You now only need to earn enough to pay for your living expenses.
In the meantime, your nest egg does the heavy lifting for you. All you have to do is enjoy life and wait until it has doubled (to 25x your annual living expenses). If your inflation-adjusted investment returns are 7% per year, your nest egg will double over the next 10 years. Once your nest egg has doubled, you are financially independent.
Phase 3 – Financial Independence (FIRE):
Once you reach your FIRE number (end of Phase 2), you can stop working and start withdrawing 4% annually for as long as you like. At this stage, work becomes optional. Alternatively, if you happen to enjoy your semi-retirement job, you could continue working part-time to allow your nest egg to grow even bigger. The choice you make in this phase impacts the lifestyle you will be able to enjoy when you get to Phase 4.
Phase 4 – Traditional Retirement (optional):
In this phase, you have the option to do what people do in traditional retirement. You can upgrade your lifestyle a fair bit and draw down your nest egg. Traditional retirement plans usually use a withdrawal rate of 5-6% for a 25-year retirement, so if you choose to draw down your nest egg, you can live it up in your golden years. This phase is optional of course. If you want to keep your nest egg intact in order to pass it on to your children one day, just stick with the 4% withdrawal rate once you stop working. The longer you continue doing some form of paid work during Phase 3, the more luxurious your retirement lifestyle will be once you start withdrawing from your nest egg.
There you go – the four Phases of Flamingo FI!
Now let’s explore the Flamingo FI strategy in more detail, and discuss who Flamingo FI is for and why you should consider it.
The Retirement Lie
With Flamingo FI you work and save hard for a few years and then you semi-retire. While you are busy enjoying the perks of semi-retirement, your nest egg continues to grow in the background. Before you know it, you are financially independent. Magic!
Now you might say something like “This is stupid! I don’t want to semi-retire. Once I’m done I will never work another day in my life!” But here is the problem with this statement: It is not true.
Someone who becomes financially independent in their 30s or 40s is not going to sit by the pool slurping cocktails for the next 50 years. You know this; everyone knows this. And while you might feel like you want to never work again once you hit FIRE, chances are that you will.
Most people are not on this path because they hate working. They want to achieve FI so that they have more time for their family, health and hobbies. Almost everyone who reaches FI ends up finding a fun part-time job they enjoy or works on interesting side projects and hobbies that make some money. While everyone knows that this is what usually happens, no one actually seems to plan for it.
Let’s have a look at what a typical FIRE plan looks like:
Now compare it to what usually happens once someone reaches FI:
Everyone likes a holiday, maybe even a long one, but eventually you will get bored. Think about it – you are going against the norm, you work hard and stay focused for a long time to get to FI. This means you are an ambitious, motivated and driven person (just not when it comes to your silly day job). If you are like us, you have a long list of projects you want to tackle once you don’t have to spend all your time working, commuting and ironing your work clothes anymore. And this will almost certainly lead to some form of paid work after you reach FI.
So why wait until you hit your FIRE number before you downshift and do what you really want to do with your life?
Now compare the charts above with Flamingo FI:
With Flamingo FI, we don’t pretend that we will never work again once we quit our jobs. Instead, we save enough to ensure we will still be able to enjoy FIRE (and a traditional retirement if desired) at some point in the future. After that, there really is no reason to stay in your full-time job, unless you want to.
Mr. Flamingo and I are happy to work a few days a week (or a few months a year instead). I’m not talking about jobs that pay six-figures here, just a bit of income on the side.
The Benefits of Flamingo FI
If you are currently working towards FIRE, you should consider Flamingo FI. The advantages are obvious:
- You can exit the rat race faster: It doesn’t take long to accumulate the nest egg needed for this approach. This means that you are free to leave your full-time career and start semi-retirement sooner. Once you hit this milestone, you don’t have to add to your savings anymore. With the pressure to keep adding to your nest egg gone, your options are endless – become a part-time diving instructor, start your own dog-walking business, retrain to become a pastry chef – it is all up to you.
- You can still retire early: Flamingo FI is very similar to Coast FI. One major difference is that with Flamingo FI, you should reach Financial Independence after about 10-15 years instead of at the traditional retirement age.
- The best out of both worlds: Semi-retirement is part of this plan, but not the entire plan (like with Barista FI, for instance). You will still become financially independent with this approach.
- A soft landing: With a semi-retirement approach like Flamingo FI the transition from full-time employment to retirement is slow and smooth. You don’t have to worry about sinking into depression once you pull the trigger because you downshift gradually instead of going from 100 to 0. This gives you plenty of time to find out what you want to do with the rest of your life.
- You don’t need to to save 75% of your income to get there: Flamingo FI is achievable in a reasonable amount of time even if you don’t have a crazy high savings rate. If you can manage to save 50% of your income, you will reach Flamingo FI in 10 years (if you start with zero savings). It is of course unlikely that you start with no savings and Super, so if you have a small nest egg already, you can reach Flamingo FI in just a few years. This is doable even if you live in a high cost of living area (like Sydney and Melbourne) and earn an average income.
Flamingo FI is more than a milestone on the path to Financial Independence. It is a bit of a sweet spot that combines the benefits of the semi-retired life with Early Retirement. If you are on the path to FIRE and looking for a way to get more of your life back sooner, you should consider Flamingo FI.
You don’t have to slave away in a job you hate until you reach your FIRE number!