The last time I received a raise, I knew what to do. I had a plan with where the money would go and what it would be used for.

Part of it would go to taxes, and at least a quarter to half would go towards long-term savings. The rest was free to spend how I pleased.

That’s how I approached most raises and the occasional bonus. Some for Uncle Sam, some for future me, and some for now.

It’s hard to argue against that being a sound approach. It takes the guesswork out and keeps me in line. But I realized I was doing it on autopilot. I hadn’t reconsidered why that split made sense for me anymore. More importantly, I hadn’t considered what I was trading away by sticking to it.

The decision wasn’t just about how to split the money. It was about whether I wanted to prioritize life now or later.

Once you start looking for the tradeoffs, you’ll start seeing them everywhere:

• Where to live. Higher cost for lifestyle, or lower cost for flexibility.

• Change jobs. More money or more flexibility.

• Retire earlier. Gain time now or more security later.

Most of these decisions don’t have a clear right or wrong answer. It helps to think about the version of you that results from each choice.

The Tradeoffs You See

My wife and I both chose not to study abroad in college. For me it wasn’t just the cost. I needed 150 credits to qualify for my CPA, and going abroad would have meant a fifth year of school, summer courses, or extra coursework during my first years of working. The financial and practical tradeoffs were real and I could see them clearly at the time.

What I didn’t see as clearly was everything on the other side. The friendships you build when you’re living somewhere new with a group of people doing the same thing. The experiences that only make sense when you’re that age, in that moment.

We didn’t take our first international trip until our honeymoon, years later. We travel often now and stay at nicer places than we ever could have in college. But it’s a different experience. Some of what we would have had then, we can’t quite replicate now.

My wife had her own version of that tradeoff. She also chose not to go abroad, and for a while she regretted it. What she got instead was an internship in Washington D.C. that ended up shaping her entire career. A tradeoff she didn’t fully choose so much as stumble into, and it worked out in ways neither of us would have predicted.

Same decision. Very different outcomes. Neither of us saw the full picture at the time.

The Tradeoffs You Miss

New parents often talk about the version of themselves that existed before they decided to start a family. The same is true if you changed careers or moved to a new city. The old life ends, a new version begins. That’s part of the tradeoff.

You’re not just choosing between options. You’re choosing between outcomes. Each decision creates a different version of your future. And a new set of tradeoffs.

That’s easy to see in hindsight. It’s harder to recognize in the moment.

Most decisions don’t feel like tradeoffs at the time. People often just decide what feels like the right thing to do. But underneath that decision is another layer. You’re choosing one path over another and giving something up either way.

Circling back to how to divvy up my raise. When I set how much to save, I knew there was an amount I needed to put away and a goal I was working toward. The tradeoffs were still there whether I acknowledged them or not.

• Save the same percentage. I’m trading the chance to spend more now—on travel, experiences, more stuff.

• Spend more instead of save. I’m trading future flexibility.

We’re in a much stronger position now than we were early on. Some of that came from being disciplined about those raises and bonuses. Some of it came from keeping certain costs simple.

Take our home for example. It was a real stretch for us at first, but we’ve stayed in it and the breathing room it’s given us financially has been significant. It’s not something I thought much about at the time. Now my wife and I talk about it often.

That flexibility has allowed us to pull back a little and make more room for life now. We travel more. We’ve gotten more comfortable spending on things that matter to us. The tradeoffs are still there. We’ve just gotten better at choosing which ones we’re willing to accept.

You can’t eliminate tradeoffs. You can choose which ones you’re willing to accept.

Depending on where your savings are, you might decide you’ve built in enough flexibility already. Or you might decide that money is still better off going toward your future.

The last financial decision you made, did you consider the tradeoffs? Did you actually choose which ones you were willing to accept? Or was it an afterthought?

The tradeoffs are there either way. You just get to decide whether you see them or don’t.

— Brad

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This is meant to help you think through financial decisions and tradeoffs—not tell you exactly what to do. It’s general in nature and not personalized advice.

The need to think about where we could and couldn’t afford to spend our money was always there. Going out meant finding happy hour specials or timing a visit to one of my wife’s work receptions where there was free food and a drink if you played it right.

Vacations meant driving to the beach for a long weekend. Flying somewhere for a week wasn’t in the conversation. We were putting just enough into our retirement plans to capture the employer match and not much more.

The script said save consistently, invest for the future, stay in a job with good compensation. We were doing all of it. It just didn’t feel like we were getting anywhere.

Then things shifted. My career was advancing. Promotions, raises, the way forward starting to feel real. And my wife made a career change that nearly doubled her salary. She started traveling for work and I could occasionally join her, which meant nicer hotels at no extra cost. Things that had required careful planning suddenly didn’t. The financial pressure lifted a bit.

And here’s what I expected to happen next: clarity.

More money meant more options. More options meant easier decisions. Easier decisions meant finally feeling like we were moving in the right direction.

That’s not quite what happened.

The savings started growing. The trajectory looked good. But the questions that followed weren’t the ones I expected.

Not “am I saving enough”. I knew the answer to that. The harder questions were underneath it.

Were the decisions I was making for the future the right ones to prioritize over living more fully now? Was the nest egg I was building actually going to lead to the future I wanted? I didn’t have a clear picture of what that future even looked like beyond a number I was supposed to hit.

Even my career felt a bit unresolved. I spent years on a path that could have led to partnership. I was close at one point. But during Covid—when how I worked changed and my wife took on a new role that shifted how we divided everything at home—I started seeing that path differently. Eventually I chose a different one.

That decision didn’t come from the financial plan. It came from finally slowing down enough to ask what I was actually building toward.

The financial progress was real. The certainty about whether it was the right progress wasn’t.

Most financial advice is good at telling you what to do. Save this percentage. Invest this way. Hit this number by this age.

What it’s less good at is helping you figure out whether the decisions behind those actions are pointed in the right direction for you specifically. Whether what you’re optimizing for is actually what you want. Whether the tradeoffs you’re making now will feel worth it later.

Those aren’t questions the script answers. They’re the ones that show up after you’ve been following it long enough to wonder if it’s taking you somewhere you actually want to go.

I still sit with that. The savings are growing, the timeline is taking shape, and I still find myself wondering whether the choices between now and retirement are the right ones. Whether it will all add up the way I’m expecting.

That uncertainty doesn’t mean something is wrong. It might just mean you’re paying attention.

If that feeling sounds familiar, there’s a way to look at this that helps.

— Brad

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This is meant to help you think through financial decisions and tradeoffs—not tell you exactly what to do. It’s general in nature and not personalized advice.

Sometimes you just feel stuck. You’re not directionless, you just can’t seem to move.

You might find yourself watching accounts grow without acting, running scenarios without deciding, or feeling close but never quite ready.

Maybe you haven’t even gotten to the point where there’s anything to watch. Some are so certain they’ll make the wrong move, they just stay put.

This might show up as:

• missing out on an employer match because you aren’t sure how much to contribute

• letting money sit in your checking account, slowly losing value to inflation

• delaying opening an investment account because you don’t know what to choose

So you sit and wait. The information to proceed must be somewhere. Once you find it, then you’ll move.

The real problem isn’t the lack of information. It’s the expectation that you need certainty before you act.

Think about the last decision you put off.

Was it really because you didn’t have enough information? Or because you didn’t want to be wrong?

What’s Behind the Behavior

A lot of what we learn early in life comes with some level of uncertainty.

Take driving.

You can follow the rules, pay attention, and do everything you’re supposed to do. Most of the time, that’s enough. But everyone understands that it doesn’t eliminate risk entirely. Accidents still happen, even when you’ve done everything right.

That possibility doesn’t stop you from getting in the car. It just becomes something you account for.

The same idea shows up in other parts of life.

You can follow a doctor’s advice, choose the recommended treatment, and still not get the outcome you hoped for. There’s uncertainty in how things play out, even when the decision itself is well-reasoned.

We don’t expect certainty in those situations. We accept that there’s some level of risk involved and move forward anyway.

But when it comes to decisions around our financial independence (FI), that expectation often changes.

Instead of approaching them the same way, it’s easy to start looking for a level of certainty that doesn’t exist. The expectation shifts from making a thoughtful decision to making one that can’t go wrong.

And when that becomes the standard, it becomes much harder to move at all.

I had this happen to me early in my career.

My first accounting job was fine, but I wasn’t learning as much as I should have been, or as quickly. I was falling behind some of my coworkers, and the situation probably wasn’t the right fit. But I kept delaying the decision to move on because I didn’t know if anywhere else would be any different, or maybe even worse.

Then people who joined the firm after me started getting promoted. Not me.

I thought about leaving. Then I’d reconsider. Another year passed. Still no promotion. Still I didn’t move.

It wasn’t until the financial crisis forced my hand that I finally took another job.

I was promoted within six months.

That one still stings a little. And it’s hard not to wonder if I’d started moving sooner, would that promotion have come sooner too? And the pay bump that came with it?

The Tradeoff

When you start looking for a decision that can’t go wrong, waiting begins to feel like the safer choice. There’s time to gather more information, think through more scenarios, and avoid committing too early.

Waiting feels like the responsible thing to do, especially when trying to avoid being wrong. It creates a sense of being thoughtful and careful with decisions.

For a while, that can feel like progress. Before long, it creates a different set of tradeoffs. Delaying action takes time to reveal itself and can easily be overlooked.

The cost of waiting for certainty begins to appear as:

• years of missed growth

• decisions you never tested

• learned experiences you delayed

They tend to build quietly, in decisions that keep getting pushed out.

The contribution you haven’t increased.
The account you haven’t opened.
The change you’ve been meaning to make.

Eventually, that pattern starts to feel less like waiting and more like standing still.

Acting carries risk too. You might lose money, regret a decision, or have to adjust sooner than you expected. But taking action creates something waiting never will.

Information.

Even the bad outcomes can provide value. A person will often learn more from an investment that lost them money than one that performed well. Losses tend to reveal how you actually respond when things don’t go like you thought. Not how much risk you thought you could accept, but how much you actually can handle.

You begin to see how your assumptions hold up, how you respond to outcomes, and what you would do differently next time. Something you can use to improve future decisions and actions.

Over time, those adjustments start to move you closer to what you’re actually trying to solve for, even if the path isn’t as direct as you expected. You’re no longer trying to figure it out from the same place.

Be Careful

There's a natural tendency to judge decisions by their outcomes alone. A bad result means the decision was wrong. A good result means it was right.

That kind of outcome bias leads to the wrong conclusions.

The S&P 500 has dropped 20% roughly 25 times over the last 100 years. Someone who retired early and watched the market fall might conclude they made a mistake. In most years, the outcome would have looked completely different. Same decision. Different result.

So, was their decision wrong? Or were they just on the unlucky side of a range of possible outcomes?

The decision and the outcome aren’t the same thing. Confusing the two is where the thinking breaks down.

Recalculating

I have an embarrassing admission. I have a terrible sense of direction. It’s a running joke that if I have a 50/50 chance when turning left or right, I’ll pick the wrong one more often than I should.

I used to dread driving somewhere new because I didn’t want to get lost.

Then GPS became readily available, and everything changed. If I made a wrong turn, it recalculated and showed me a new way to keep going. I wasn’t lost. I was just recalculating.

I wasn’t any better at directions. I had just become more comfortable pivoting from one way to the next.

Too often we treat decisions like they are permanent and can't be corrected. A wrong turn isn't the end of the route. It's just a prompt to recalculate.

That’s what having a direction does. It doesn’t remove uncertainty, but it does make it manageable.

Staying Put vs. Getting Started

There’s a natural desire to balance the need for certainty with the desire to move forward.

At a certain point, waiting stops being about getting it right and starts to look more like avoiding decisions altogether.

A plan only becomes useful once it’s tested. The feedback you need doesn’t come from thinking through more scenarios. It comes from seeing how your decisions actually play out.

The goal isn’t to eliminate uncertainty. It’s to make decisions that can hold up across a range of possible outcomes.

Consider two people who want to start putting extra savings each month into a brokerage account.

Person A plans to wait until they better understand markets and the investments they want to make. Until then, their money stays in a checking account.

Person B doesn’t know much about markets or investing, but decides to invest part of their money now and sets up a recurring automatic transfer for future monthly amounts.

Even without calculating which outcome is better, there’s a difference in what each person learns—either by staying stopped or struggling forward.

Person A may build familiarity with concepts and follow what’s happening in the market, but their understanding remains somewhat abstract. Their money sits.

Person B starts to learn through experience. They see how they react when their investments fluctuate, begin to understand their tolerance for risk, and recognize what they would change going forward. Eventually, those adjustments begin to shape how they invest.

The difference isn’t that one of them had a better plan. It’s that Person B began to understand how their own FI equation actually works by using it.

By creating the brokerage account and setting up monthly transactions, they’ve built a system to learn, adjust, and improve.

The plan might not be what’s holding you back. It might be the expectation that you need to get it right before you start.

Don't wait for the perfect plan before you open the account, make the contribution, or take the job. You’ll learn more once you start moving and see what happens.

— Brad

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This is meant to help you think through financial decisions and tradeoffs—not tell you exactly what to do. It’s general in nature and not personalized advice.

Even when things are going well—excelling at work, saving more than you used to, life feeling busy but balanced—you still feel unsure about the decisions you’re making.

I get it. The only person who wouldn’t be surprised by how often I’m looking at my finances is my wife.

You might be feeling this too. It’s hard to know if we’re making the right choices.

The questions probably sound familiar:

• Should I spend more now, or save it?

• Am I saving enough, or too much?

• Should I change jobs even though things are working?

• Am I any closer to what I want, or just further along the same path?

• What path am I even on, and am I happy with where I’m heading?

The questions pop up often, but the answers? Rarely. Or at least not without some intention.

Right now you, and many others working towards their financial independence (FI), probably reduce everything down to reaching a savings goal for retirement—your FI number.

Decisions get reduced to: does this help me reach it or not?

No, you’re not doing something wrong. There’s value in that. But it’s too narrow to guide your decisions.

I didn’t come up with my own framework for thinking about this overnight. For a long time I just followed what I thought I was supposed to do — save at least 10%, invest for the future, stay in a job with good compensation and security. Things I’d read or heard along the way. A script that made sense on the surface.

The problem was it didn’t always reflect what was actually happening.

There were stretches where my wife and I watched our savings grow while our spending grew right alongside it. We weren’t actually getting ahead. We were just moving faster on the same treadmill. The progress was visible. The feeling of getting somewhere wasn’t.

Then there were the milestone benchmarks. You’ve probably seen them. The ones that tell you how many times your salary you should have saved by 30, by 35, by 40. For years those numbers made me feel behind. My wife and I both knew we’d earn significantly more later in our careers, but in our 20s and 30s we couldn’t seem to measure up. I didn’t stop using them so much as I quietly decided they must be flawed for our situation.

It wasn’t until our 40s that we started actually hitting those milestones. By then our combined income was much larger than it had ever been, which made the targets harder to hit in a different way.

Just saving more or picking up a few tactics doesn’t really solve it either. It helps to look at it a little differently. An expanded view that doesn’t just work around the number.

Shift the focus to your decisions and what they’re built on.

Future posts will go deeper into this, but the core idea is this: the FI number alone won’t give you what you need. There’s a bigger equation at play. One that’s shaped by your decisions and how they connect to each other.

When those connections aren’t clear, it’s easy to keep making progress without ever feeling more certain about where it’s leading.

I still feel that. I can see the savings growing, watch the timeline take shape, and still find myself wondering whether the choices between now and retirement are the right ones. Whether it will all add up the way I’m expecting.

The progress is there. The clarity isn’t always.

— Brad

New here? Start here.

Or read more at The FI Equation.

If this way of thinking about financial independence resonates, subscribe to get future posts like this.

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This is meant to help you think through financial decisions and tradeoffs—not tell you exactly what to do. It’s general in nature and not personalized advice.

If you found this, you’re probably not starting from zero.

You may even be doing well. Your income has grown. You’re saving more than you used to.

And still, something feels off. You’re not doing something wrong, but it’s not always clear what it’s all adding up to. Or whether the decisions you’re making are pointing you in the right direction.

If that sounds familiar, these four posts are the best place to begin:

1. This Is Where It Starts

   What financial independence (FI) actually means, why the simple calculation is just the starting point, and what the FI equation is built on.

2. You’re Doing the Right Things. So Why Doesn’t It Feel Like Enough?

   If you've ever felt the gap between making progress and feeling certain about where it's leading, this is the next step.

3. The FI Equation

   This introduces the lens. Financial independence isn’t just a number to reach. It’s something you’re constantly solving. A set of decisions, tradeoffs, and assumptions that shape the outcome over time.

4. Every Decision Has Its Tradeoffs

   Where the thinking becomes more tangible. Every decision creates a tradeoff, whether you can see it or not. This is where that starts to matter.

If this way of thinking resonates, explore more posts or subscribe to follow along.

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Ready to explore more? Browse all posts at The FI Equation. Or if you want to know more about me and why I started writing this, you can read that here.

— Brad

Retiring earlier doesn’t just mean you work less. It can require significantly more money and introduce a completely different set of tradeoffs.

That’s because financial independence (FI) isn’t just reaching a number. It’s an equation that keeps shifting as your life does.

Change the Inputs; Change the Outcome

Time is unique because it affects both sides of the equation at once.

Let’s look at an example to see this in action.

Mary is 57 and planning to retire at 64. Based on her current spending and savings trajectory, she’s on track to reach her FI number by then. But like a lot of people, Mary starts asking a simple question:

What if I retired earlier?

I ask myself this question all the time.

Let’s say instead of 64, she wants to retire at 59. That might seem like a straightforward decision.

Stop working five years sooner and give up those five years of additional savings. But it’s not that simple.

What Actually Changes

Retiring earlier doesn’t just shift the date. It changes multiple parts of the equation at once.

You’re giving up years of:

• Peak earnings (income)

• Compounding investments (savings)

And taking on years of:

• Additional withdrawals (expenses)

• Health insurance coverage (expenses)

Less income and savings, combined with higher expenses, means less margin for error if things don’t go as planned, and less flexibility. That’s where the tradeoffs become real.

This is the FI equation in action and why I think it’s so important to view it from this lens.

Why This Matters More Than It Seems

Those five years carry a lot of weight. Extending retirement by five years means:

• More exposure to market variability

• More time your plan needs to hold up

This isn’t a small adjustment. It’s starting to feel like a completely different equation.

The Tradeoff

Let’s make this more concrete.

Assume Mary currently has $1.2M saved and is saving an additional $80K per year for retirement. If we assume a 6% annual return:

• Scenario 1: If she retires at 64 (in 7 years), her portfolio grows to almost $2.5M

• Scenario 2: If she retires at 59 (in 2 years), her portfolio grows to about $1.5M

That’s nearly a $1M difference—from just five additional years.

What’s easy to miss is that this isn’t just five years of lost savings.

It’s about losing five years of compounding on your entire portfolio, while also adding five more years of withdrawals.

That’s why the gap becomes so large, so quickly.

To make this more tangible, assume a 5% withdrawal rate:

• Scenario 1: Retire at 64 with $2.5M portfolio at 5% withdrawal rate = $125K

• Scenario 2: Retire at 59 with $1.5M portfolio at 5% withdrawal rate = $75K

That’s not a small gap. It’s the difference in how much room she has and how often she has to think about what she spends.

Travel, helping family, even smaller decisions that repeat over time start to feel different with less margin.

In Scenario 1, she likely won’t think twice about stopping at her local coffee shop.

In Scenario 2, she may start to limit how often she goes.

Those small decisions add up. Not just financially, but in how her days feel.

Mary’s routine stops were more than just a coffee break. They connected her to the community. Gave her that energy boost that comes from interactions with the friendly and familiar locals she’d gotten to know over the years. Brought a little more enjoyment to her day.

Would she now stress about the growing cost each time instead of being in the moment?

With a smaller amount to spend, every choice carries a little more weight.

Time compounds in both directions. It can help you, but it can also work against you.
Even small changes in retirement timing can have outsized consequences.

Shrinking your time horizon to retirement means:

• Less time to build your portfolio

• More years your portfolio needs to support

Understanding the Decision:

So what is Mary really choosing?

If she retires at 59, she gets five additional years of freedom.

But she’s doing it with:

• Smaller portfolio

• Lower sustainable spending

• Longer time horizon to sustain it

If she waits until 64, she gives up those five years, but gains:

• Significantly larger portfolio

• More flexibility in spending and withdrawals

• Extra margin for error

Retiring early could easily mean giving up five of her most financially impactful years. It’s reasonable to think she’s probably making more later in her career than closer to the beginning or middle.

And remember that retiring earlier reduces your overall savings and increases the burden on those savings at the same time.

Another Cost to Consider:

But before you conclude that retiring earlier is the wrong choice, there’s one more factor to consider: opportunity cost.

For those not familiar, opportunity cost is what is given up (missed opportunity) by choosing one thing over the other. In Mary’s case, we know the financial opportunity cost would be greater if she retires early. We saw that in the example above. But what about nonfinancial costs?

I find the nonfinancial opportunity costs of working longer start feeling bigger when I’ve stepped away from the office for a bit and start thinking about all the work emails I’ll return to. How much nicer Monday morning might be if it didn’t involve “getting all caught up again.” The relief of waking up with ownership of how I want to spend the day. My day.

Delaying retirement isn’t risk-free. It assumes you’ll have the time, health, and circumstances to enjoy those extra years later.

Most people have seen or heard of situations playing out where that didn’t happen.

For some, the earlier years of retirement may be the most valuable. Energy is higher, options are broader, and more is still possible.

That doesn’t make retiring earlier right. But it does make the decision more than just a financial one.

Mary also has the power to adjust, by increasing savings or reducing spending, to shift the outcome.

Until you’ve considered the impacts on everything, including opportunity cost, you haven’t seen the whole picture.

Retiring earlier isn’t free. It’s paid for with either more effort towards saving, lower spending, or higher risk. But retiring later has its costs too.

Where Flexibility Comes In

Remember that this isn’t a binary decision.

Mary doesn’t have to choose between working full-time until 64 or stopping completely at 59.

She has options:

• Transition to part-time work

• Reduce spending in early retirement

• Delay certain expenses

• Adjust along the way

Each of those changes the equation, and that’s often overlooked.

A More Useful Way to Think About It

The idea of retiring earlier is appealing. But once you start to see what it requires, the decision becomes more nuanced.

It’s not just about leaving work sooner. It’s about what you’re willing to trade for that time.

Increase time in retirement, and the required resources go up. Adjust spending or income, and the equation shifts again.

If you’re thinking about retiring earlier, what are you really trading for those extra years?

What might become harder to do later than sooner?

It’s worth taking a closer look at what you’re really giving up and getting in return.

Remember, change the inputs, and you change the outcome.

— Brad

New here? Start here.

Or read more at The FI Equation.

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This is meant to help you think through financial decisions and tradeoffs—not tell you exactly what to do. It’s general in nature and not personalized advice.

I followed the 4% rule for years without thinking much about it. It’s one of those ideas that’s widely accepted and rarely questioned. It shows up in almost every conversation about financial independence (FI). For many, it becomes the default starting point.

Developed by Bill Bengen in 1994, it was meant to answer a simple question:

How much could someone withdraw each year without running out of money?

But there’s an important detail that often gets glossed over. It was designed to work during the worst-case periods (the Great Depression and the high inflation of the 1970s). Not average conditions. Worst-case ones.

I’d missed this distinction myself until recently. And that’s when I started to see it differently.

How many of us want a lifelong plan that directly impacts how we live based on the worst-case scenario?

When you build a plan around worst-case scenarios, you’re not just protecting yourself. You’re shaping what your life looks like on the other side of that decision.

What Safety Actually Costs

For a long time, I followed the same thinking. Use 4%. Be conservative. Give yourself some margin. It felt responsible.

But being safe and being right aren’t the same.

At some point I started running the numbers on what staying at 4% actually required. How many more years my wife or I would need to keep working to build a portfolio large enough that 4% covered our expenses. How much more we'd need to save each year to get there. I wasn't comfortable with either answer.

Yes, 4% is safer than 5%. And 5% is safer than 6%. Lowering your withdrawal rate will always reduce the risk of running out of money. I’ve seen suggestions of 3%, even 2.5%.

Yes, we might experience low portfolio returns for a prolonged period.
Yes, something could happen that impacts our savings or spending.

But does that mean you should plan for something even more conservative than a strategy already built to survive the worst 30-year period ever experienced?

In the short term, maybe. Over the long term, it’s highly unlikely.

At some point, you have to ask whether you’re protecting your future or limiting it.

Not finding the right balance could be wasteful.

The 5 Iron on a Par 5

I have a significant slice with my driver. It’s bad enough that I stopped using it off the tee and started hitting my 5 iron instead, even on par 5s where most people would never consider it. Safer. More predictable. Fewer disasters.

Eventually I started avoiding the first tee altogether on days when I knew people were watching. At some point the plan to avoid the bad outcome started to affect whether I showed up at all.

That’s what over-conservatism does. It starts as a reasonable adjustment and gradually becomes the thing that keeps you from playing the game the way it was meant to be played.

Building a retirement plan around the worst-case scenario works the same way. The adjustment feels responsible. But over time it shapes what the plan allows, and what it quietly rules out.

The Assumptions Behind the Number

The 4% rule maintains several assumptions:

· Your spending stays relatively consistent

· You won’t adjust along the way (except to account for inflation)

· And you need to survive the worst financial environments we’ve ever seen.

That level of protection comes at a cost. More years working. More saving. More delaying decisions. All to solve for a version of the future that may never actually happen.

Not a likely outcome. Not even a moderately likely one. The worst-case version.

And it rarely stops at 4%.

The 4% rule doesn’t exist on its own. It gets layered with other conservative assumptions: higher spending estimates, lower expected returns, longer time horizons. Each one feels reasonable on its own, but together, they push the target out more than most people realize.

Many people don’t over-save because they’re disciplined. They over-save because they’re unsure. And while useful, the 4% rule can reinforce that uncertainty.

It Was Never Meant to Be Fixed

To be clear, I’m not saying the 4% rule is wrong. I’ve used it. I’ve referenced it in other posts. It’s simple, familiar, and works well for quick calculations.

But it’s not the only way to think about this.

I started noticing a pattern. Every few years a new wave of thinking would emerge recommending something even more conservative—3.5%, even 3%—based on current market conditions or sequence of returns risk. And then the markets would keep performing. And the conversation would quietly move on.

At some point I started wondering whether the conventional wisdom always knew as much as it sounded like it did.

That skepticism got reinforced when I learned that even Bill Bengen had updated his own thinking over time. His more recent work points to a higher safe withdrawal rate—closer to 4.7%—and suggests higher rates may be worth considering depending on assumptions and investment allocations.

It was never meant to be a fixed answer.

Lately, I’ve started using 5% as a baseline in my own thinking. It forces a different conversation. There's more risk involved, but there's also more optionality. More room to decide how to spend time and money rather than locking into a narrower path.

The Impact: 4% vs 5%

Let’s make this real.

Say you want to spend $100K per year in retirement.

At 4%, you need $2.5M.
At 5%, you need $2.0M

That’s a $500K difference.

For a lot of people, that’s not just a number. It’s years of working longer at a point in life where your time starts to feel more valuable.

Or look at it from the other angle. If you already have $2.5M saved, 4% supports $100K per year while 5% supports $125K.

That extra $25K means less hesitation and more saying yes to the things you want to do.

It’s not too hard to imagine which version of retirement feels better.

What Happens in Real Life

In practice, people don’t use fixed withdrawal rates.

They retire with a portfolio and spend what they need. If markets struggle, they adjust. If things go well, they loosen up.

I don’t build my margin only through the withdrawal rate. I build it in other places too. My budget includes a miscellaneous expense line I’ve deliberately set higher than I expect to need. I’ve bumped up the health insurance line to account for uncertainty there. And I’ve added to my travel and hobbies budget lines so I can spend more or less in a given year depending on our situation, health, and what the economy is doing.

The margin is there. It’s just distributed differently.

I’m not telling you to ignore the 4% rule entirely. It’s still a useful tool. In some environments, it may even be the right one. But there's a difference between using it as a starting point and treating it as the ceiling on what's possible.

Starting closer to 5%, or even above, means accepting more uncertainty. But it also reduces the risk of over-saving for a future that may never happen.

And like everything else in the FI equation, it’s changeable.

If you spend more early or markets don’t cooperate, you adjust. If things go well, you have more flexibility later.

The Other Risk

The risk of running out of money is real, and it should be taken seriously. But there’s another risk that doesn’t get talked about as much: spending years optimizing for safety and never actually using the flexibility you built.

When every assumption is conservative, the result isn’t cautious—it’s excessive.

A plan can work perfectly on paper but still not translate into a better life.

Are you stacking conservative assumptions on top of each other without realizing it? It’s worth looking at how they add up and what they’re costing you.

The 4% rule isn’t inherently bad. But it was designed to minimize failure. That's not the same as building the retirement you actually want.

When you build a plan around the worst-case scenario, you should be clear about what you’re giving up in return.

— Brad

New here? Start here.

Or read more at The FI Equation.

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This is meant to help you think through financial decisions and tradeoffs—not tell you exactly what to do. It’s general in nature and not personalized advice.

My first real financial decision was signing up for a high-interest credit card because they were handing out free t-shirts. It wasn't a smart move. Most of us start that way, making decisions before we fully understand what we're deciding.

My hope is that you'll come along with me as I'm still working through this myself.

Because whether you're just starting to think about this or already watching your savings grow, that feeling of uncertainty is more common than you'd think. You're not alone.

I’ve been there too.

Save consistently. Invest well. Watch the number go up. There was a certain comfort in it. It felt like progress, even on the days nothing else did.

And for a while, that was enough.

But at some point, I started expecting that progress to give me clarity. That as the number got bigger, the decisions would get easier. That I’d feel more certain about what I was working toward.

That never really happened.

If anything, the questions got harder. I wasn't asking how much to save anymore. I was asking what it was all actually for. How I’d use it. What I’d change. What I wouldn’t.

Because the number, on its own, doesn’t answer any of that.

What the Number Actually Is

If you’re new to financial independence, it helps to understand what people mean when they talk about a FI number.

Financial independence means your investments generate enough income to cover your expenses without needing to work. The calculation most people use to find that number is straightforward:

Take your expected annual expenses in retirement and multiply by 25.

If you expect to spend $60K a year, your FI number is $1.5M. If you expect to spend $100K, it’s $2.5M.

That multiplier comes from the 4% rule—the idea that you can withdraw 4% of your portfolio each year without running out of money over a long retirement. The 25x calculation and the 4% rule are two ways of expressing the same thing. A portfolio 25 times your annual expenses supports a 4% annual withdrawal.

When most people run this calculation for the first time, the number that comes back feels impossibly large. That reaction is normal. Part of what makes it feel so large is that calculators often show future dollars rather than today’s dollars, accounting for inflation over the years between now and when you’d retire. A number that accounts for 20 or 30 years of inflation will always look larger than what you’d need if you stopped working today.

The other thing that makes it feel large is that it’s built entirely on assumptions: what you’ll spend, when you’ll retire, what returns you’ll get. Change any one of those and the number changes with it. That’s not a flaw in the calculation. It’s just what happens when you’re trying to plan for something that’s still years away.

The goal at this stage isn’t to get the number right. It’s to understand what’s driving it.

Why the Number Is Just the Starting Point

The 25x calculation is useful because it’s simple and gives you something concrete to work toward. But it was designed to answer a specific question under specific conditions: how much do you need if your spending stays flat and markets behave like the worst historical periods on record?

That’s not the same question as how much do you actually need for the retirement you’re planning.

A few things the basic calculation doesn’t account for:

• Spending tends to change across retirement as health and priorities shift.

• Other income sources like Social Security or a pension reduce how much your portfolio needs to generate.

• What you think you’ll want later may not match what you actually want when you get there.

This is where the calculation starts to feel incomplete. Not wrong, just not the whole picture.

That’s where this started to shift for me.

I began to realize that financial independence isn’t just a finish line. It’s a set of decisions. Ongoing ones. And those decisions are connected in ways you don’t always see when you’re focused on a single target.

That’s what I mean by the FI equation. Not a formula you solve once. Something you’re constantly adjusting as your life, priorities, and resources change.

I'm writing this because I think a lot of people are doing the hard part really well. They're saving. They're disciplined. They're thoughtful. And still unsure. Something is missing. Not a bigger number or a better strategy. A way to connect the pieces.

If you’re just starting out, the calculation above is your first piece.

If this helps you see those connections a little more clearly, or make better decisions along the way, that’s enough.

— Brad

Ready for the next step? Continue here. It gets at the feeling most people have when the progress is real but the clarity isn’t.

Or read more at The FI Equation.

If this way of thinking about financial independence resonates, subscribe to get future posts like this.

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This is meant to help you think through financial decisions and tradeoffs—not tell you exactly what to do. It’s general in nature and not personalized advice.

Spending an extra $20K per year in retirement might not seem like a big decision. But it can quietly reshape everything that comes after it.

That’s because financial independence (FI) is a series of decisions, tradeoffs, and assumptions played out over time. I’ve come to view it as an ever-changing equation. And small changes in one part of that equation can shift everything else.

Most people focus on the number itself. How much they need, whether they’re on track, and when they can get there. What gets less attention is how the assumptions behind that number are built. Specifically, what you’re assuming about how you’ll actually spend your time when you get there.

That’s where the equation starts to get personal.

The Slow-Go Years Are Real

I’ve had three back surgeries. Last year I had a flare-up of sciatica and back pain that lasted three months, followed by another that stretched to seven. There were stretches where doing much of anything was difficult.

I’m not sharing that for sympathy. I’m sharing it because it changed how I think about retirement timing and what I want to do with the time I have when I get there.

I’ve always wanted to retire early if I could. But the back issues have sharpened that instinct. I’ve told my wife that I need to prioritize my health, and part of that means not spending the best years of my life in front of a desk. Time has a cost too. And health has a way of reminding you of that when you’d rather not think about it.

You may have heard of the go-go, slow-go, and no-go years of retirement. You go hard early when you have energy, excitement, and hopefully good health. You slow down as the novelty wears off, priorities change, or getting around becomes less enjoyable. Eventually, some things just aren’t possible anymore.

I believe this. Not as an abstract concept but as something I’ve watched play out and something I think about for myself. The go-go years aren't guaranteed. My back has made sure I don't forget that.

Change the Inputs; Change the Outcome

Let’s walk through an example:

Tommy is 55 and spends about $100K a year. He’s planning to spend about the same when he retires at 62. Using a conservative 4% withdrawal rate—percentage of total investments needed to cover annual expenses—Tommy’s FI number is $2.5M.

But now let’s say Tommy discovered he loves to travel and wants to do more when he retires. He increases his annual travel budget by $10K. Tommy also learns he needs a new prescription that will cost another $10K each year.

Tommy’s expected spending has increased to $120K. His new FI number jumps to $3.0M.

The Tradeoff

If Tommy assumes that $120K holds every year, his FI number jumps to $3.0M. That likely means working longer or saving more today to make up for that extra $500K.

But future Tommy also gets something for it:

• More travel and experiences

• More time with family and friends

• More of what he values

That may be worth it. It depends on what Tommy wants to prioritize.

The problem is this tradeoff assumes his spending stays constant throughout retirement. It won’t.

The Assumptions Behind the Tradeoff

Tommy’s taking a conservative approach and assuming a permanent $20K increase. Some expenses, like that prescription, will likely remain consistent. Others, like travel, tend to change over time.

There’s no way to know how long anyone will be healthy enough to travel or if that desire will fade with time.

So instead of assuming a permanent $10K increase for travel, we adjust for how it’s likely to play out over time:

• $10K extra for travel in the first five years

• $5K for the next five

• Little to none beyond that

Tommy’s required savings may look more like ~$2.7M instead of $3M. That’s about $200K more than his original plan but $300K less than if we assumed the travel expense increase was permanent.

When the Assumption Goes Wrong

That $300K difference matters.

It’s several more years of work, more aggressive saving today, or both. And it doesn’t give Tommy anything he actually needs to enjoy the retirement he wanted. He could have done it all while giving up much less.

This is the result of a flawed assumption, not a conscious decision.

The biggest cost in FI isn’t running out of money. It’s building a plan around assumptions that were never true.

What This Looks Like in Practice

I’ve made adjustments to my own retirement spending assumptions because of this. My wife and I have updated our travel budget to allow for a little more. Things like booking nicer hotels, choosing direct flights over connections, or not having to think twice about a dinner reservation. Small changes that add up over a trip and over a year.

It’s not extravagance for its own sake. It’s a deliberate choice about what the go-go years should look like for us, while my back hopefully holds up. The math changes a little. The tradeoff is worth it.

The $200K increase in Tommy’s example is an intentional choice. The $300K on top of that is the cost of an incorrect assumption.

Have you put real thought into your assumed spending in retirement? Have you accounted for how it’s likely to change—not just the number, but the timing?

What This Shows

Your FI number goes up when spending increases. That part is obvious.

What’s less obvious is how much that depends on the assumptions behind it and the tradeoffs you’re actually making.

Some of those tradeoffs will be worth it. Some won’t.

The difference isn’t the amount. It’s whether you’re choosing them—or just accepting them.

Either way, the equation is still changing.

— Brad

New here? Start here.

Or read more at The FI Equation.

If this way of thinking about financial independence resonates, subscribe to get future posts like this.

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This is meant to help you think through financial decisions and tradeoffs—not tell you exactly what to do. It’s general in nature and not personalized advice.

Financial independence (FI) is usually framed as a number. Once your savings reach it, you no longer need to work unless you choose to. Save enough, hit that number, and you’re done. You’ve arrived.

Arrived at what, exactly?

My wife and I honeymooned in Italy and have gone back several times since. There’s something about sitting in a piazza with a glass of wine or a small cup of espresso that we’ve never quite let go of. It’s easy to romanticize. And honestly, I’m not sure it’s entirely off the table as part of what retirement looks like for us.

But it couldn’t fill the whole thing.

And that’s the problem with framing FI as just a number. It puts most of the focus on saving and not enough on everything else that shapes what you’re actually saving toward.

Rethinking FI

A better way to look at it is as something you’re constantly solving. Financial independence is the result of inputs—decisions, assumptions, tradeoffs—that produce a certain outcome. Through that lens, FI expands beyond just reaching a number and becomes more about understanding the variables behind it.

Most people focus on the obvious ones: income, spending, time, savings. The ones you can measure and even model. But they’re not the only variables that determine the outcome. Some of the most important ones don’t show up on a spreadsheet at all.

Thinking through what’s behind your decisions reveals what’s actually driving the equation.

If you’re new to how the FI number is actually calculated and where it comes from, this is a good place to start before going further.

Where the FI Number Falls Short

The calculation gives you a starting point. But treating your FI number as the destination comes with limitations.

That number is built on assumptions. Will they hold for 20 or 30 years? Priorities change. New decisions are made. The version of you that calculated that number may not be the version of you living it.

I’ve lived through one major market-moving event after another. My first accounting job came right before the 2008 housing and financial crisis. I had to change jobs. Then a global pandemic shut down the world in 2020. How I worked changed.

Markets, jobs, health—they all can change. No plan plays out exactly as expected.

The problem isn’t calculating a FI number. It’s treating it like the answer. Financial independence evolves as your decisions do, requiring flexibility.

Embracing Flexibility

Don’t get me wrong. I enjoy calculating my FI number. It’s one of the first things I did when I started thinking seriously about retirement. And I still revisit it.

As an accountant, I enjoy that part. As long as I don’t pull my wife into the details too often, she’s perfectly happy to let me fixate a little too much over our finances.

When we reach our FI number, how many of us will actually say done? More likely we hesitate as the fear of being wrong creeps in. Maybe our savings should be a little bigger. Maybe we should work a little longer.

I’m guilty of this myself. Every few years I revisit what it would take for me to feel secure, and without fail the number goes up again. Sadly, I never seem to consider that we might need less. Some of that is lifestyle as our spending has grown over the years. But a lot of it is because I want to know that if I retire early, my wife and I won’t end up in a bad spot. So I build in more cushion. And then a little more.

I’m not sure the number will ever feel final. That might just be part of it.

But I treat it as a tool, not a destination. Just one variable. One input that shifts as everything else does.

Your FI number is the result of multiple variables: income, spending, time, priorities. Those things can and will change. And that’s the point.

It means you have options.

Financial independence needs to be about more than solving for a single number. It’s about understanding how your decisions, assumptions, and tradeoffs shape the outcome. And being willing to adjust as they do.

That’s how you start to build the FI equation that fits your life.

— Brad

New here? Start here.

Or read more at The FI Equation.

If this way of thinking about financial independence resonates, subscribe to get future posts like this.

Subscribe now

This is meant to help you think through financial decisions and tradeoffs—not tell you exactly what to do. It’s general in nature and not personalized advice.