Flamingo FI: A Balanced Path to Retirement
Who doesn’t like early retirement? The new generations are very keen on escaping the 9-5 and living life the way they want. They sacrifice their 20s for extreme savings and investments by creating multiple income streams to become financially independent and retire early. Flamingo FI (Financial Independence) is a concept for such people.
Have you seen a Flamingo standing? It stands on one leg but balances itself. Flamingo FI is all about achieving financial balance. Once you have half the money you need to retire, you let compounding do its work. Meanwhile, you downshift to a more relaxed lifestyle. Keep reading and find out how this works and see if you can apply this in your life.
Understand Flamingo FI?
Flamingo FI is a financial strategy that involves saving aggressively until you reach half the target amount needed to become financially independent and retire. In the traditional FIRE framework, your FI number is calculated by multiplying your annual expenses by 25 and you are allowed to withdraw 4% of it every year.
In Flamingo FI, you aim to make 12.5 times the annual expenses and leave it untouched so it doubles over time by compounding. The target becomes more achievable and you can reach your goal faster.
The Key Principles of Flamingo FI
The 50% FI target
As you know, the goal of Flamingo FI is to save up to half your FI number. It needs aggressive saving and investing. Once this is achieved, you stop saving for retirement and start the next phase of life.
Compound Interest
After you hit the Flamingo FI number, you let your investment sit and grow. If you get around 7% returns, it will take 10-15 years to double your investment. You can use the Rule of 72 to calculate how long it will take you to double your wealth. Just divide 72 by the interest rate you hope to earn. That number gives you the approximate number of years it will take for your wealth to double. During this time, you can create income for your expenses by doing a job and a side hustle or part-time work, so you don’t have to touch the investments.
Semi-retirement
Once you reach the halfway mark, you can shift to a semi-retirement lifestyle. If you do full-time high-stress work for a living, you can move to a more relaxed and flexible lifestyle. You can choose your gig and work on your passion. Align your work more with personal fulfillment.
Reevaluation and Adjustment
The Flamingo FI strategy depends on the market performance too. So it will be good to review your progress periodically. You may need to reduce expenses during market downturns. If the market performs well, you will reach your goals sooner. Being flexible is the key. Flamingo FI is just a milestone and not a destination.
Who is Flamingo FI Best Suited For?
Flamingo will be perfect for those who:
Want to retire before the 60s.
Are between 20 and 40 who can save aggressively.
Think they can’t achieve complete retirement.
Achieved a good amount of savings and want to downshift while letting their investments grow.
Wants to take up a part-time low-stress role some years before completely retiring.
People who want a balanced life sooner but with a safety net.
Flamingo FI is an ideal option for those who want to semi-retire in their 40s and later fully retire by their 50s and 60s.
Pros of Flamingo FI
You get to break free from the rat race sooner. You get to enjoy more free time and less stress.
It provides a sense of security. Having 50% of your FI in a shorter time feels like a relief.
With a shorter timeline, you can pace your life better.
You have better flexibility to carry your spending to stay on track.
Cons of Flamingo FI
You still depend on your income for your expenses. Your plan might be at risk if you face uncertainties.
The time to reach the goal will vary depending on the market performance. A recession could affect the plan badly.
After disciplined saving for years, it can be hard to change the habit. Overspending after retirement can also turn out badly.
You need to find part-time work or side hustles to support your expenses, which may not always be stable and secure.
Conclusion
Flamingo FI is a mix of freedom and structure. It minimises the difficulty of retirement savings. It also reduces the risk of burnout by trying to achieve the full FI number. It’s flexible and leverages compound interest to grow wealth. Life doesn’t have to be a sprint to the finish. Do you think this is a suitable retirement plan for you?
Frequently Asked Questions (FAQs)
The Flamingo FI aims for 50% of your full FI number, that is, 12.5 times your annual expenses.
If your monthly expense is Rs. 5 Lakhs, your Flamingo FI number would be 62.5 lakhs.
While compounding can grow your wealth, inflation can reduce your future purchasing power. So choose investments that beat inflation. You must also adjust your expenses based on inflation rates.
You will be able to switch to part-time, passion-based work to earn money.
Travel and pursue your hobbies
Spend more time with your family
Reduce retirement pressure
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