Catch a Wave: How to SRFF Your Way to Financial Freedom
The FIRE movement has its shortcomings. Instead, try the SRFF-er lifestyle. Combine high-value consulting and semi-retirement to live your fullest life.
Independent consulting in semi-retirement is a proven path to quicker financial freedom. Photo by Kristin Wilson on Unsplash.
Deconstructing FIRE
I’ve been a FIRE (financial independence retire early) fanatic for 20 years. I’m in my late 40s now. But, the movement has its shortcomings. I’ve struggled with both the “FI” and “RE” parts.
First, let’s look at financial independence (FI).
I’m not a flashy spender, but I live an expensive life. It starts with living in the Bay Area. But it’s more than that.
I was married at 25 and had a kid at 35. Families are the way to go, don’t get me wrong. But they are expensive.
Health insurance is important to us and is used (a lot) in our household. It’s expensive.
My son attends a private school because it teaches to his unique learning style.
We love the lakes of Northern Wisconsin, so we spend money to live there in the summertime.
Apart from a summer place, our life is pretty standard…and expensive. You may find yourself in the same situation. My financial independence # is big! Using the 4% rule, I would need to save $5 million to live on $200,000 yearly.
Recently, I’ve become troubled with retiring early (RE).
I like working. I enjoy contributing. I feel good when I accomplish things. I like being great at my job. I like the structure that work provides. I like engaging with people. I don’t want to give up any of that. Because once you’re out of the game, for even a year, it gets harder to get back in. Your skills become obsolete.
Also, I don’t like constraints. “I’m on a fixed income.” I’m sure you’ve heard that from a retiree. It’s as if you’re cast back to college and its tight budgets. You fear overspending. An early retiree who doesn’t work can no longer earn to cover an impulse purchase. Your investment portfolio constrains you. You’re at the mercy of the markets. If you’re Type A, or even somewhat Type A like me, losing control stings.
Here are my biggest beefs with FIRE.
Financial independence takes too long.
Financial independence requires too much sacrifice now.
Retiring early constrains my spending.
Retiring early means losing my professional identity.
“With FIRE, I skimp on life now and sacrifice my present happiness, only to leave my profession early, lose my identity, and relinquish all control.”
Instead, I want to maintain my professional status but work on my terms. Then I can enjoy everything life has to offer sooner. I want to have and eat my cake. I guess I’m greedy.
From Fire (FIRE) to Surfing (SRFF)
So, what do I do?
Let’s start with retirement.
I prefer semi-retirement (or mini-retirements) to retiring early. In semi-retirement, you choose to take months-long breaks from work. Refreshed and rejuvenated, you resume working better than ever.
Work gives us purpose, status, and our social circles. When working on our terms, we can design it to cut the crap: stress, workplace politics, and whatever else you hate. Semi-retirement is the answer. No more “RE”. Instead, we’ll “SR” and design a semi-retired lifestyle!
Next, financial independence.
Here, I prefer the concept of financial freedom. These phrases are often used interchangeably. But I draw a distinction:
With financial independence, you live solely on your savings. With ample portfolio income, you no longer need to work. At all. Compare this to…
Financial freedom (which I will deem “FF”). With “FF,” you have enough savings so that while you must work, you can be more selective in the work you do. You work on your terms: part-time or partial year with sprints and breaks.
Financial freedom suits me better.
I can achieve it faster. (Many of us are financially free even now.) My savings need only support part of my family’s living expenses. In my example, to live on $200,000 yearly, I no longer need to save $5 million.
I feel less constrained when spending. It’s more flexible. I can ramp up and down how much I work based on today’s life goals and living expenses.
It’s much safer should personal or economic conditions change. I keep my professional skills fresh, maintaining more options for future earnings.
Lastly, I keep my professional identity which drives my sense of purpose. I’m not at risk of becoming a shriveled version of my former self. Instead, I’m an expert with the luxury of working part-time and taking extended time off.
Let’s all get fired and go SRFF.
Consulting is the Key to Surfing
What’s the secret to Semi-Retired Financial Freedom (SRFF)?
For fun, look at the early FIRE bloggers and podcasters, like Mr. Money Moustache. These individuals made their names by telling stories of their FIRE journeys. Many have achieved it. They no longer need to work.
Yet so many do return to work. Is it wrong? No! They work on passion projects and on their terms. When it’s time to re-energize, they take long breaks.
If you look more closely, you realize that they didn’t FIRE. They are semi-retired and financially free. They SRFF.
“I believe that independent consulting makes the SRFF lifestyle a reality.”
You like the idea of surfing your way to (and through) financial freedom.
Here are three steps to making SRFF a reality.
1. Embrace your “Be Different” mindset.
We must first decide to be different and free. This is easier said than done. Conventional thinking promotes working a 45-year-long career. Fortunately, if you’re already on the FIRE train, then SRFF won’t be a stretch. You’ve already waded through the human herd mentality. You know how hard it can be when your friends just don’t “get” how you can take 3 to 6 months off each year. Truth is: if it’s a priority, it can be done!
2. Exploit your hard-earned savings and investments.
I make a big assumption that is nearly always true of my readers. Like me, you have worked hard for the better part of 20 years, on average. As a mid-career professional, you’ve done what convention teaches: worked hard, got promoted, earned more, and saved more. I assume you have $1–2 million saved. It’s not enough for a traditional retirement, but it’s a good chunk of money. Just make sure you can access those savings before age 59 1/2.
3. Seek out a valuable part-time profession.
It can be tough to find high-value, intellectually stimulating, professional work available part-time. Companies, societies even, are built on the backs of full-time workers. This is where independent consulting comes in.
Consulting is your superpower to achieve SRFF. I call it “Choosy” consulting.
Consultants excel in niche, project-based work that aligns perfectly with SRFF. So flex those entrepreneurial skills and start your independent consulting business.
Your Financial Freedom Formula
You may be wondering, “What does Semi-Retired Financial Freedom look like for me?”
First, my situation.
My living expenses must support two mortgages.
I’m middle of the road in what I have saved already. And my retirement accounts have trapped 65% of it.
My consulting business is valuable, and I enjoy working.
Also, my son has another six years of school in front of him. We need to be stationary for his education, so I can’t be away traveling.
Therefore, my SRFF life is tilted toward consulting for the next six years until I’m 53. Then, I can pull back.
Let’s look at some numbers. Here is my baseline SRFF calculation.
To cover my $200,000 yearly living expenses, I use the 50/50 rule:
I earn 50% or $100,000 by drawing on my savings.
I earn 50% or $100,000 through high-value Choosy Consulting.
And I’m opportunistic. If I love the consulting I’m doing, I may earn more than $100,000 in a given year.
Now, you.
Your life goals and living expenses will vary. Your invested savings and consulting income required will vary. But we can still make your baseline SRFF calculation.
“The financial freedom formula:
Yearly living expenses = 50% portfolio income + 50% Choosy Consulting”
To calculate:
Take your living expenses when financially free.
Live on half using 4% (or 5%) of your investment portfolio. Learn more about the 5% forever safe withdrawal rate.
Your high-value, part-time consulting covers the other half.
Of course, adjust to meet your specific needs.
It’s simple math. The revelation is in learning that a lifestyle like this is possible for you.
Let me know what you think.
Does the semi-retired, financially free lifestyle hold appeal?
Is independent consulting your key to unlocking this lifestyle?
What variations of the 50/50 rule for financial freedom are you using?
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Brian Herriot SRFFs (not surfs!) from his home in Alameda, California, and cabin in Hazelhurst, Wisconsin. He also prepares financial freedom plans for consultants and other mid-career professionals in one-week sprints. Check out his take on a new and different kind of retirement at choosyconsultant.com.