Financial independence fundamentals
Financial independence: what it means and how to plan for it
What FI means in practice, how a target is set, and the assumptions behind any estimated date.
5 min read · Updated
Understand financial independenceGuides
Practical guides for building and understanding your financial independence plan
Plain-language explanations of the ideas behind an FI plan, with worked examples, the evidence behind common rules of thumb and the sources we rely on.
11 guides · Written by Yield Clarity · General information, not financial advice
How our guides are researched and maintainedStart here
New to FI planning? Read these five in order. Together they take you from the idea to a plan you can test.
- Understand what FI meansStep 1: Financial independence: what it means and how to plan for it5 min read
- Calculate your FI numberStep 2: How to calculate your FI number4 min read
- Decide which assets countStep 3: FI-eligible wealth: which assets count towards financial independence?4 min read
- Build an expected pathStep 4: Expected path vs Monte Carlo: two ways to forecast FI3 min read
- Understand uncertaintyStep 5: Monte Carlo simulation explained for retirement planning3 min read
Financial independence fundamentals
What FI means, how a target is set and which wealth counts towards it.
Financial independence fundamentals
How to calculate your FI number
Turn your planned spending into a target, step by step, with inflation and withdrawal rate explained.
4 min read · Published
Calculate your FI numberFinancial independence fundamentals
Withdrawal rates and the 4% rule
The research behind the 4% rule, what it assumed, and how to choose a rate for your own plan.
4 min read · Published
Learn how withdrawal rates workFinancial independence fundamentals
FI-eligible wealth: which assets count towards financial independence?
Which assets fund your FI plan, how pensions are treated, and how it reconciles with net worth.
4 min read · Updated
Decide which assets count
Building the plan
Turning your spending and holdings into inputs you can plan with.
Building the plan
Planning your retirement spending
Build a realistic yearly spending figure from today's costs, irregular costs and changes over time.
3 min read · Published
Plan your retirement spendingBuilding the plan
Multi-currency financial planning for international investors
Bring several currencies into one plan, and think about currency risk without trying to predict it.
4 min read · Updated
Plan across several currencies
Forecasting and uncertainty
How projections and simulations work, and how to read them.
Forecasting and uncertainty
Expected path vs Monte Carlo: two ways to forecast FI
How a steady projection and a simulation differ, what each answers, and how to read them together.
3 min read · Published
Compare the two forecasting methodsForecasting and uncertainty
Monte Carlo simulation explained for retirement planning
How simulations work, how to read a probability and fan chart, and what they cannot tell you.
3 min read · Updated
Learn how Monte Carlo simulation worksForecasting and uncertainty
Sequence-of-returns risk explained
Why the order of returns matters once withdrawals begin, shown with a worked example.
3 min read · Published
Understand sequence-of-returns risk
Regional planning
Country-specific accounts, pension access and planning considerations. Each guide states the jurisdiction and effective date it covers.
Regional planningJurisdiction: United Kingdom
Bridging the gap to pension access
Size and fund the years between stopping work and drawing your pension, under current UK rules.
4 min read · Published
Plan the gap before your pensionRegional planningJurisdiction: United Kingdom
ISAs, SIPPs and pensions in a financial independence plan
How accessible ISAs and locked-in pensions work together in a UK plan, with current allowances.
9 min read · Published
Understand ISAs, SIPPs and pensions
How Yield Clarity applies these ideas
The guides explain the concepts. The methodology sets out exactly how Yield Clarity calculates targets, forecasts and simulations, and what it leaves out.
Read the methodology