What does FILE mean?

FILE stands for "Financial Independence, Live Early," and is a take-off from the term FIRE ("Financial Independence, Retire Early"), which you may have heard of. Rather than scrimping and saving to be able to stop working at a much younger age than traditional retirement, FILE participants plan their lives and finances with the goal of ensuring their money needs are met ("Financial Independence"). And rather than stopping work entirely, FILErs might pursue a career or passion that is flexible, enjoyable, and on their own terms (that's the "Live Early" part). They might have to give up certain expenses or cut back on spending for pleasure, but they're happy with the life they've chosen and designed around their own wants and needs.

Traditional retirement (in which you'd spend your entire career with one company, then retire to get a pension and a gold watch and never have to work again) really doesn't exist anymore. To have the hope of retiring and never working again while still being able to travel and pursue other potentially expensive hobbies (especially at a younger age than 65), most people will have to save and invest serious money. If you think of retirement as an "off switch" for working, FILE is more like a dimmer switch.

One Childfree example of FILE in action is a man (Ryan A.) Dr. Jay interviewed for his first book, Portraits of Childfree Wealth. He retired early, but found that he needed the stimulation of work, but wanted it on his own terms. So Ryan started his own marketing company, and now works no more than 25 hours a week, never before 10:00 am, and never on Fridays.

He gets to take on projects and clients that interest him, and as a bonus, he has the flexibility to work from anywhere (with his wife and their dog accompanying him). So he books trips to different cities and works remotely from rentals. That's the FILE life – working on your own terms, possibly starting your own business, and pursuing your own happiness, whatever that looks like for you.

Just like FIRE or even a more traditional retirement situation, you can't accomplish FILE without some planning, and ideally the help of a CERTIFIED FINANCIAL PLANNER™. If you're hoping to leave money to people or a cause when you die, FILE probably isn't a fit for your life, because the goal of it isn't to amass a pile of wealth. FILE is much closer to the "die with zero" approach to money management. It means investing in yourself and what brings you joy, and possibly taking a lower-paying job that gives you fulfillment.

And yes, this takes you away from the LifeScript approach to living that says you must go to school, get a job, get married, buy a house, have kids, and retire in a traditional sense. But if you're already Childfree, you've taken a major step away from the LifeScript, so why not pursue a life that works for you in other ways?

The main considerations when planning for FILE are long-term care and Social Security. In the case of long-term care, this means paying for long-term care insurance, to ensure that you're looked after if or when you do reach a point where you can't work to support yourself or perform the activities of daily living. And if you're going to work past traditional retirement age, you'll put off taking Social Security payments until age 70. This also means you'll receive larger payments when you do get them.

You may also want to have some retirement funds set aside, if you're truly risk-averse and afraid of outliving your productive working years. It's important to approach FILE with the same intentionality as any other life choice, and that means planning for it, with the help of your CFP® professional, accountant, and other financial experts.