You will choose a target version of financial independence and record the reasons and trade-offs.
You now have three ages from your model: the year you could coast, the year you could switch to part-time work, and the year you could stop entirely. It is tempting to keep all three open, and to tell yourself you will decide when you get there. The trouble is that each version asks for different things now, from how much you save to which skills you keep fresh to how you talk about the future with the people around you. This exercise makes the choice and writes it down.
Allow about twenty minutes. You need your three dates from lesson 5.3, Full independence and the cost of the last stretch, and a blank page.
Write one sentence: the version you are aiming for, and the age or year you are aiming at. "Barista FI at 48" or "Full FI in 2041" is enough.
If you are torn between two, pick the one you would choose if you had to decide today with what you know now. You can switch later, and step 4 says when. A plan with a clear target is easier to follow than one that keeps every option open.
Compare your chosen version with each of the other two. For each comparison, write what you gain and what you give up.
Be concrete. "More freedom" is too vague. "Two more years of school holidays with my kids before they are teenagers" is useful. "Less risk" is vague. "No need to find part-time work in my fifties, in an industry that hires younger people" is useful. Use years and dollars from your model wherever you can.
Look again at the trade-off from lesson 5.3, certainty against time, and say which way you lean and why.
A financial independence plan in a couple is a shared plan, even if only one of you is stopping. Lesson 8.2 covers the conversation in detail. Here, write the version and date you think your partner would choose, then ask them, and write what they actually said.
If they differ, note how. One partner may want full FI for the certainty, the other may prefer barista FI to stop sooner. Both may be reasonable, but the plan has to fit both. A spending base, a number and a model built for one person will not fit a couple who want different things.
Finally, write the condition that would make you change versions. It should be specific enough that you would recognise it if it happened.
Health is a common one: a diagnosis, or the health of a parent. So is work: a job loss, a burnout, an offer of part-time work you had not expected. Markets matter too: returns well below your central case for several years, which would push your full FI date back. A change in family, such as a child, a marriage or a divorce, almost always reopens the decision.
Priya, 34, used made-up figures throughout. Her model, at a 4% real return, gave coast FI at 38, barista FI at 48 and full FI at 50.
Her decision reads like this:
"I am aiming for full FI at 50. Compared with barista FI at 48, I give up two years of shorter weeks, and I gain freedom from needing S$18,000 a year of part-time income for fifteen years. Given my industry, I am not confident of finding that work in my fifties. Compared with coast FI at 38, I give up twelve years of choosing lower-paid work, and I gain a plan that does not depend on returns being kind for over two decades. I lean towards certainty, mainly because my mother may need more support in her seventies.
I have no partner now. If that changes, I will rewrite this together with them.
I will switch to barista FI if, by 46, my model shows full FI later than 53, or if my health or my mother's health makes another few years of full-time work unrealistic. In that case I will look for part-time work from 50 and plan the bridge around it."
That is about half a page. It names the version, the date, the trade-offs in years and dollars, the reason she leans one way, and a condition she would recognise.
Read your draft as if a friend had written it. Is the reason for the choice their own, or something they read online? Would the switching condition actually trigger, or is it so vague that it never could? If a sentence would fit anyone's plan, rewrite it so it only fits yours. The activity asks for exactly this half page, so keep it tight.
Write a half-page decision naming your version, target year, trade-offs and the condition that would make you switch.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).