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: save 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 ten 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 working 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 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.
Conclusion
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!
I love how you came up with the name, it is catchy and meaningful. I look forward to following your journey.
Thank you, Miss Balance! 🙂
Hi, Love your blog! May I ask which index ETFs and Australian LICs do you plan to invest in?
Thanks Jen! 🙂
We are considering Vanguard’s new high growth fund (VDHG) or some combination of VTS/VEU/VGS.
For Australian shares the contenders are AFI, BKI, WAM and MLT. I find LICs more attractive than VAS, but we have not made a final decision yet.
We’ve held VGAD, VGS, VEU, VAS and AFI in the past.
At the moment we are working towards buying some investment properties and want to buy the LICs / ETFs after that. I will write a post about it once we’ve made a decision. 🙂
Hi guys! Really enjoying the blog – great to get the Australian context. I’m a little confused about the 4% rule. Say your yearly expenses = $40,000 then your FI number = $1,000,000. However, if you take 10 years to reach $1,000,000 your $40,000 a year lifestyle will have increased to around $50,000 a year based on inflation hence you’d need $1,250,000 rather than $1,000,000. Should I be using the $40,000 figure for working out my FI number or the $50,000 figure for working out my FI number.
Cheers,
Sam
Glad to hear you are enjoying the blog, Sam! 🙂
We use inflation-adjusted returns for our calculations. This allows us to look at our future numbers in “today’s dollars”. We use 7% ROI per year AFTER inflation. So if you investments yield 10% per annum and inflation is 3%, the inflation-adjusted return is 7%.
Say you invest $500,000 in a portfolio of index funds and LICs that yields 9.5% per year. After 10 years, you have $1,240,00. Let’s assume inflation sits at 2.5% during this period. Instead of $1,000,000 in your FI nest egg, you’d now need around $1,280,000. This is in future dollars – using nominal returns (not inflation adjusted). However, this is the same as saying that your ROI is 7% per annum after inflation. It takes you 10 years to get to your FI number, no matter if you look at it in 2018 or 2028 dollars.
What I would suggest is that you start with your FI nest egg in today’s dollars in mind and then adjust it for inflation each year. In reality, your FI number is a moving target. We use inflation-adjusted returns for planning, but nominal returns when we look at the actual inflation rate and our nominal returns each year.
I hope this makes sense! 🙂
Thanks yeah makes sense!
Loved reading this perspective. Personally I have never been able to wrap my head around the idea of stopping to work completely after attaining FI and have even ranted against Early Retirement on my blog.
This approach however, of slowing down, working on passion projects and building a nest egg allowing you to do those seems far more relatable to me.
Also, love those images of the FIRE models.
Just saw this in Mustachian FB group! What an eye opener! Great blog, thank you so much for sharing this concept!
This is a great concept!
I’ve heard about mini-retirements and how it doesn’t have to be full throttle all the way to the end goal. I like it 🙂
Thanks Firebug! The longer we are on this journey the more I realise it’s not a race and there are many ways to reach the end goal that might take longer but are much more enjoyable. I really enjoy reading about your European adventure by the way!
This makes so much sense!
why do you want to stand on one leg when you have two. Standing on one leg is overrated and only useful for leaners not lifters. We today are enjoying life thanks to the lifting undertaken by our grandparents and parents. This enjoyment means we should continue to pay it forward by working hard, not idle down. Are we ourselves a victim of our society’s success? In much the same way that immunisation has led to the obliteration of diseases like polio such that today we cannot think about a child suffering from this disease. Some parents cannot see the benefit of immunisation and don’t immunise their kids. Another unintended consequence of success.
Like our forefathers we don’t know what the future holds but I am not sure if FIRE is the answer. Those of us who could FIRE need to continue working hard to build the nation and give thanks to our predecessors. But I agree it is acceptable to change to a less stressful job, once financial independence is reached.
I just stumbled on your blog today and have realised that Flamingo FI is what we’re working towards (even without knowing it was a “thing”!)
We are married with 2 kids not yet at school, and a fully paid off “forever” house. We had kids later in life so are able to both work part time on different days meaning we both get to enjoy time with our littles and no external childcare is needed. Even both working part time, we have an expected savings rate of ~50-55% (not including employer super contributions). Obviously we could both work full time and stash away the $$$ but time with our kids, especially while they’re little, is more important to us.
Given we’re a little older (late 30s & early 40s), we’ve decided to both continue to work part time until 50. So one will retire earlier than the other, but we will have reached 50% of our full FIRE number by the time the oldest one of us retires. The younger one can earn enough to cover our living expenses while our FIRE portfolio grows in the background. And once the younger spouse retires at 50 it will only be a few years until the older one can access their super (at 60) if necessary anyway!
The realisation that we only needed to save half of our FIRE number before one of us retires has brought the goal so much closer that I can almost taste the freedom already (and we’re only working part time to get there anyway)!
Thank you for giving a name to our strategy!
Hi Miranda,
It’s fantastic that you can both work part time and still have such a high savings rate! This is our plan to – once we hit our Flamingo FI number (which should be in the next few months, fingers crossed), we will both slowly move towards part time work on different days. Childcare really is a killer! Great work on the paid off house too. To me it really sounds like you guys are living the dream already! 🙂
Keep up the great work!
This blog is AMAZING. Thank you so much for sharing your wisdom. I’d been wondering about semi-retirement, but hadn’t stumbled upon the elegant math of it. This is brilliant.
My husband and I have our own location independent business (Aussies currently living in Portugal), and we love what we do. So as committed as we are to FIRE, we have also wondered about how important the big FIRE goal is for us. This blog is helping us tailor our plan. Rock on.
I have to share a (totally unimportant) tip though…. The birds in the featured image are actually scarlet ibis, not flamingos. Easy to mix them up (pink colour, black wing tips) but since I’m a bird watcher and crazy bird nerd, I just thought I’d let you know…
Thanks Jodie! Sounds like you are living the dream already! And thanks for letting me know about the birds, I had no idea!
I love the meaning behind the name — seriously creative, smart, and meaningful. Thanks so much for your fantastic resources.
Thank you Nicole! I’m glad you like it. I don’t think many people realise what the name is about, so thanks for your nice comment!
Just found this blog too thanks to J$ love it, we too are on a similar journey and love reading everyone’s story and methods – it’s also great to see some FI from Aussie bloggers a lot of what I follow is from the US
Hi there, I know this is an old-ish post, but I’m curious:
Is this the same concept that is known as “Coast FI”? Or is there any difference?
Thanks a lot 🙂
Hi LadyFIRE, thanks for stopping by. Flamingo FI is basically a variation of Coast FI. With Coast FI, you don’t touch your investments (and let them compound) until you reach traditional retirement age. So you are semi-retired (working part-time) for a very long time. With Flamingo FI, your initial nest egg when you semi-retire is much higher (50% of your FIRE number), so you should reach FIRE after 10-15 years and can fully retire much sooner than with Coast FI. I hope that makes sense! 🙂
Hello Mrs. Flamingo!
I just stumbled across your blog from a link about Flamingo Fire on frankonfire.com. I have never heard of this type of FIRE until now.
My husband and I are currently taking a mini-retirement on parental leave. I am off work for 18 months and him 14 months together after the birth of our baby girl. I have been off of work for nearly a year now and we are both dreading returning to full time work in 6 months.
This concept of Flamingo FIRE has my wheels turning! We have a retirement nest egg that will be sufficient to be FIRE at the age of 40 or shortly after.
Thank you for sharing your story and inspiring others!!
Sincerley,
Mrs B
Thanks Mrs B! I’m glad to hear you are considering Flamingo FI! We reached Flamingo FI just before our second child was born and basically semi-retired during the parental leave period. It’s been life-changing for us with two very young kids. I really like working part-time now, it’s a good balance between family life and work life. I’d love to hear what you end up doing! All the best!
Hi Mrs Flamingo.
I love this concept of FIRE. Agree I will likely work part time before fully retiring.
I have a question with the calcs. When you reach the 50% FIRE number, part of this will be in super and part will be in shares etc. Is there anything to work out before you start working part time and living off 4% because it’s only 4% of what you have outside super. Would you be able to go into a more detailed example maybe?
Thanks
FI confused!
So that’s what it’s called, this thing I’m doing 🤣 although I haven’t downshifted to semi retirement yet. Typical normy answer lol. I wanted to push for full Fire during these “uncertain times” make sure I have all basis loaded, because I don’t want to fall back into my profession.