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Financial Independence Is Not The Holy Grail

As a seeker of financial independence, have you placed FI status on a pedestal? Do you see it as a solution to a slew of problems you’re facing?

If so, Dr. Jim Dahle says, you may very well be disappointed when you get there. Maybe not as disappointed as the crooks who drank from what they thought to be The Holy Grail in Indiana Jones & The Last Crusade, but still, it could be more of a letdown than a cure-all.

Dr. Dahle first shared his thoughts on this topic before he was financially independent and revisited the post with a recent update now that he’s easily post-FI. He’s sort-of-happy to report that his original hypothesis does indeed ring true. Rather than focusing on reaching FI, it’s best to fix what’s not working for you in your life right now.

This post was originally published on The White Coat Investor.



In the financial blogosphere becoming financially independent and sometimes retiring early seems to have become the end-all and be-all of our financial, and sometimes even non-financial existence. I think we’re giving it too much credit.

I don’t think becoming financially independent in the traditional sense is actually going to make you dramatically happier than being almost financially independent. If it does, it likely means you are currently leading a terrible life.

Let me explain.


What Is Financial Independence?


First, let’s define financial independence. We’ll do it very simply—you can live the rest of your life without changing your lifestyle or receiving earned income. Traditionally, using the 4% rule, that means having a portfolio that is something like 25 times what you are actually spending.

If you have passive sources of income (Social Security, pension, rental property, etc.) then a portfolio 25 times the difference between your spending and your reliable passive income.

Now, let’s assume you have a portfolio that is 24X your income and so you work and save a little more and compound interest does its thing and WHAM! You hit your number, 25X, and you are now FINANCIALLY INDEPENDENT! You’re FREEEEEEE!

The next morning you go into work, flip off the boss, moon your co-workers, take your Bobblehead dolls out of the cubicle, and you’re off to a life of leisure, fulfillment, and happiness!

Really? That’s how this is supposed to work? I just don’t buy it.

Hitting your number isn’t going to increase your happiness much, if at all. Hitting that number allows you to do only one thing that you couldn’t do before hitting it—stop working. If stopping work is going to dramatically increase your happiness, I would submit that you have allowed yourself to live a terrible, regrettable life. Life is short, you cannot plan to live a significant portion of it doing something you detest and expect to have a happy life.

As Seth Godin says,

“Instead of wondering when your next vacation is, maybe you should set up a life you don’t need to escape from.”


My Perspective on Financial Independence


Let’s take a look at financial independence from my perspective since that’s the person I know best. I may or may not be financially independent. It really depends. As George Foreman says, “The question isn’t at what age I want to retire, it’s at what income.”

If I had to retire 5 years ago, when this post was first penned,  on just the investable assets we have had accumulated at that time, we could do have done it for the rest of our lives. We would have had an income higher than that of the average American household. But that would be have been a significant drop from our then current standard of living.

In 2016, I was certainly independent of any need to practice medicine given the income from WCI since it now makes more than my practice, but in some ways, I’m just exchanging one job for another. The retirement police would deny that’s really retired.

I don’t really know what this site’s residual income would be if I quit writing, interacting with others, going on speaking gigs, marketing, writing books, and writing for other sites and publications. I would guess I would still get at least half the income for quite some time, which we could also quite comfortably live (and save) on. But in reality, given our desired lifestyle/spending, if we had to support it just from investable assets in 2016, we would have been just fine.

Guess what? I no longer care.


Over the  years, I’ve been trying to mold my life into exactly what I want my life to be. I cut back from 15-16 shifts a month to 12 (and now 8). I no longer work the overnight shift.

I’ve offloaded many of the unpleasant tasks associated with WCI onto others. I’ve scheduled more trips. In fact, as I write originally wrote this we are were en route to Zion National Park to do some canyoneering, my fourth of nine trips/vacations in a three-month period.

About half are with my family and the rest are “adventure trips” with friends. I have nearly aligned my actual life with my ideal life. Being financially independent today doesn’t change my life or my happiness level one iota. As I think of ways in which my life would be even happier, I implement them.

Crossing the threshold to financial independence did not make me any happier. In fact, it may have made me less happy. Mo’ money, mo’ problems. The more money and stuff you have, the more time and effort you have to spend taking care of it.

It is certainly harder to motivate myself to work as I have to rely SOLELY on my passion to do so, rather than my passion plus the improvement of my financial situation as it was prior to FI.


How Much Money Is Enough?


So what’s the point of this rant? The point is that you need to figure out what is going to make you happy, and then work toward that goal. Maybe for you that does not include any paid work. Maybe it involves cutting back at work, changing jobs, or dropping some unpleasant duties.


financial independence

     4 kids, 5 days, 25 miles, all over 9000 feet. Brave or Crazy?


Who knows? But the sooner you figure out what is going to make you happier, the easier it will be to implement that. If you can figure that out, you can figure out how much “enough” is.

How much income is enough? How much net worth is enough? Once you have those numbers, it will be easy to see that, most likely and for most readers of this site, that you will hit those numbers long before you actually want to stop working.


Financial Independence Enables Financial Security


I would submit that financial security comes before financial independence and that it is really financial security that adds to your happiness. Once you have maxed that out, your life is not going to get any happier from financial sources, no matter how much you make, have, or spend.

If you want additional happiness, you will have to seek it outside the financial realm. As Bogle related in his book, Enough,

“There’s a sign in Einstein’s office that . . . says there are some things that count that can’t be counted and some things that can be counted that don’t count. And that really summarizes it up . . . the idea that you think you know something when you see a number is just greatly overdone. We think we can count everything that’s important, and we can’t do that. You can’t measure character, you can’t measure integrity, you can’t measure moral conduct, you can’t measure love, the things that are really important in our lives, in our society.


The Good News About Financial Independence

There is some good news out of all this.

  1. You don’t have to wait until financial independence to be happy.
  2. You can increase your happiness by aligning your actual life with your ideal life as much as possible.
  3. Developing and following a financial plan that is highly likely to lead to financial independence will also make you happier, even before you hit your number.
  4. Remember the concepts of marginal utility and the law of diminishing returns. The rapid rate of increase in happiness you get when you first start getting your financial life in shape will gradually slow and then stop. Like the Starling Curve, going over the top may even make things worse.



What do you think? Do you think financial independence is oversold? Are you financially independent? Did hitting that point make you dramatically happier? 


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8 thoughts on “Financial Independence Is Not The Holy Grail”

  1. Pingback: Greatest Hits: Volume 32 - Banker on FIRE
  2. Subscribe to get more great content like this, an awesome spreadsheet, and more!
  3. Well said, WCI. I too have found that it wasn’t FIRE that I was chasing but FI and the security it provides to live the life I want. Life is far too short to not enjoy the journey. Plus, if you wait until the destination arrives, things won’t magically change! I’m glad you have found the balance that you were looking for in your daily life.

  4. Sounds to me poster likes his life the way it is, but that’s a narrow view point. A lot of people would be happy with financial independence. Plus, OP is clearly privellaged… Asking anyone in lower middle and below if they would be unhappy if they reached financial independence.

  5. I think people’s perspective will vary depending on prior work and life experience, and the options you have on a given career path.

    I spent a career in corporate America in drug development as a PhD, am about to retire early at 48, and really look forward to “time affluence”. Forget about being in a leadership role in industry and working reduced hours, that option does not exist. The feeling of never having enough time outside of work for pretty much anything is something I will surely be happy to do without.

    Also, keep in mind that in larger organizations there is a tendency for politics and what I affectionately call “corporate BS”, which you may not necessarily see as a practicing physician in a small practice. Won’t miss that either, guaranteed.

    All that does not mean never working again, but only on my terms and on things that are meaningful to me and not driven by compensation. With total flexibility as to how I spend my time. Priceless.

  6. I tell my people that is about regaining agency. Once you have “enough” what you what you suffer with is largely self-imposed.

  7. I feel obligated to point out that it was the Last Crusade where they drink from the grail. Raiders of the lost Ark is when they try and get the 10 Commandments. Otherwise great post! 🍺🍻

  8. You can measure time. Not working = more time. You cut back your working hours and figure out a way to avoid nights = less work but also less free time than the person who is not working altogether. The point of retiring is not to avoid work, the point is to have more free time. Now i suppose if you have no idea what to do with all that free time you might as well be working. I had a relative who fit that description. Not me. Find a person born wealthy who never had to work. Ask if they feel if something is missing.


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