FI-eligible wealth: which assets count towards financial independence?

Net worth is everything you own minus everything you owe. It is a useful measure of your overall position, but it includes things you would not sell to pay for groceries, such as your home or a car.

FI-eligible wealth

The part of your net worth that you intend to draw on to fund your spending once you no longer rely on a salary. It is the figure measured against your FI target.

Every pound of net worth is counted once: either in FI-eligible wealth or outside it. Within FI-eligible wealth, it helps to see separately how much is accessible now and how much is held in pensions.

Against a £1,050,000 target, FI-eligible wealth of £391,400 is 37% of the way there. Using net worth instead would suggest 65%, overstating progress and bringing the estimated date forward.

• Investments: shares, funds and ETFs in tax-advantaged accounts, taxable investment accounts and overseas accounts.
• Defined contribution pensions: workplace and personal pensions you will draw on. See the pensions section below.
• Cash you plan to live on: savings that form part of your long-term plan, as distinct from an emergency fund.

• Your home: it has value, but you need somewhere to live. If you plan to downsize, the released money can be added to your plan when it happens.
• An emergency fund: money for unexpected costs. The UK's MoneyHelper suggests three to six months of essential outgoings.
• Money set aside for a specific goal: such as a house deposit or school fees.
• Personal possessions and illiquid stakes: cars, collections and private business interests you could not reliably sell.

Defined contribution pensions are usually a large part of the wealth people intend to live on, so most plans count them. The catch is timing: pensions usually have a minimum access age. In the UK, for example, most private pensions cannot be drawn before the normal minimum pension age, which rises from 55 to 57 on 6 April 2028. Your provider can confirm the earliest date for each pension.

If you plan to stop work before then, you need enough accessible money to cover the years in between. That is a separate question from whether your total is large enough, and it is worth checking on its own. For the UK, our guides to bridging to pension access and ISAs, SIPPs and pensions go into the detail.

Defined benefit pensions and state pensions work differently. They pay an income rather than holding a pot, so they usually reduce the spending your other wealth must fund from the age they start, rather than adding to FI-eligible wealth.

• Rental property: it produces income and could be sold, but selling takes time and costs money. Many people keep it outside FI-eligible wealth and treat the rent as income.
• Cash: some include all cash; others keep an emergency fund and short-term savings separate.
• Business interests: a stake you expect to sell at a known point can be added to your plan when the sale is realistic.

The right answer depends on your intentions. The test is simple: would you sell or draw on this asset to fund your everyday spending?

Because pension pots count from today, a separate check highlights the gap before your first pension becomes available, comparing your retirement spending over those years with your accessible investments and cash. The methodology explains this in full.