What the Flock is Flamingo FI? – Part 2

In part 1 of this post we discussed the four stages of Flamingo FI and how it allows you to quit the 9-5 in record time.

By now you know how Flamingo FI works – 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!

“This is stupid! I don’t want to semi-retire. Once I’m done I will never work another day in my life!” you might say. 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:

“I’m free! I will never work again!”

Now compare it to what usually happens once someone reaches FI:

“Hmm… Turns out, I don’t want to lie on the beach for the rest of my life after all. And the fun projects I’ve started working on actually earn me some money. Looks like I won’t need to tap into this massive nest egg I accumulated any time soon. Who would have thought?”

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:

Just a Flamingo casually strolling down the stairs to freedom.

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 won’t be financial independent when we leave our full-time corporate jobs in early 2021. We 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. This will be more than enough to sustain our fun yet low-cost lifestyle.

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.
  • The best out of both worlds: Semi-retirement is part of this plan, but not the entire plan. You will still become financially independent with this approach.
  • A soft landing: With 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.

By now you have probably figured out why we have chosen this silly name – Flamingo FI – for our approach. We will pull the trigger and quit our jobs when our FIRE plan stands on one leg – like a Flamingo. The word “flamingo” comes from the Spanish and Latin word “flamenco” which means – you might have guessed it – fire. Flamingo FI = FIRE standing on one leg!

You don’t have to slave away in a job you hate until you reach your FIRE number!

15 thoughts on “What the Flock is Flamingo FI? – Part 2”

    • 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. 🙂

      Reply
  1. 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

    Reply
    • 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! 🙂

      Reply
  2. 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.

    Reply
    • 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!

      Reply

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