Ignitify

FI Planner Knowledge Base

Welcome to the Ignitify Financial Independence (FI) Planner knowledge base. This guide will walk you through using the FI Planner to project your financial future and determine when you can reach financial independence.

The FI Planner helps you model your current financial situation, project your investments and savings growth, account for future income streams like pensions, and estimate how long your retirement funds will last based on your planned spending.

How to Use the FI Planner

To create your financial plan, you'll need to provide some key information about your current situation and future expectations. Fill out the sections below to build your projection.

1. Country

Select the country that is most relevant to your financial situation. This helps the planner apply relevant assumptions, such as typical state pension ages.

  • How to use: Choose your country from the dropdown menu.

2. Personal Information

Provide basic details about yourself, which are crucial for calculating timelines and age-based events in your plan.

  • Your Age: Enter your current age.

  • Retirement Age: Enter the age you are aiming to retire. This is the age when the planner will typically switch from calculating contributions and growth to calculating withdrawals based on your retirement spending.

  • Household Type: Select your household type (e.g., single, couple). This might influence certain calculations or recommendations in the future.

  • How to use: Enter numerical values for Age and Retirement Age. Select an option from the Household Type dropdown.

3. Accounts & Contributions

This section is where you detail your various savings and investment accounts. The planner uses this information to project the growth of your wealth over time.

  • Adding Accounts: You can add different types of accounts (e.g., investment accounts, savings accounts, ISAs, 401k, etc.). For each account, you'll specify:

    • Initial Balance: The current amount of money in the account.
    • Monthly Contribution: How much you regularly add to this account each month.
    • Growth Rate: The expected average annual growth rate of the investments in this account. This should be a realistic long-term estimate.
    • Contribution End Age: The age at which you plan to stop making regular contributions to this specific account (this might be your retirement age or earlier).

  • How to use: Click the "Add Account" button (or similar, depending on the UI) to select and configure each account you hold. Enter the required numerical values and select the contribution end age.

4. Retirement Spending

This is the estimated annual amount of money you expect to spend after you retire. This figure is critical as it determines how much you will withdraw from your accounts each year. A common guideline is the 4% rule, suggesting you can safely withdraw 4% of your portfolio value in the first year of retirement, adjusted for inflation thereafter. You can estimate this based on your current spending, adjusted for changes you expect in retirement (e.g., less commuting, more travel).

  • How to use: Enter the estimated total annual amount you expect to spend in retirement.

5. Pension Income

If you expect to receive income from state or private pensions in retirement, add those here. This income will supplement your withdrawals from your savings and investment accounts, potentially extending the life of your portfolio.

  • Adding Pension Sources: You can add different pension sources. For each pension, you'll specify:

    • Amount: The estimated annual amount you expect to receive from this pension (usually pre-tax).
    • Start Age: The age at which you expect to start receiving this pension income.

  • How to use: Click a button (or similar) to add a pension source. Enter the expected annual amount and the starting age.

6. Die With Zero

The "Die With Zero" feature helps you determine the maximum sustainable spending rate that would result in your portfolio reaching approximately zero by a specified target age (often 100). This can be useful for optimizing your spending in retirement if your primary goal isn't to leave a large inheritance.

  • How to use: If enabled, the planner will calculate an "Optimal Spending" amount. You can also set a "Target Age" and a "Buffer Amount" (an amount you want to still have at the target age). "Turbo Mode" (if available) might offer a more aggressive calculation. You can often view a separate projection based on this optimal spending rate.

7. Understanding Your Results

Once you have entered all your plan details, click the "Calculate" button. The planner will generate a projection and display the results in several ways:

8. Projection Chart

The chart visually represents your net worth and the balances of your individual accounts over time.

  • What to look for:

    • Net Worth Line: See how your total wealth is projected to grow, peak, and potentially decline in retirement.
    • Account Balance Lines: Track the projected growth and depletion of your individual accounts.
    • Retirement Age Line: A vertical line indicates your target retirement age. Withdrawals typically begin after this point.
    • FI Reached Marker: If your plan projects you reaching financial independence (usually defined as having 25 times your annual retirement spending), a marker will indicate the age and year this is expected to occur.
    • Portfolio Fail Marker: If your projected net worth drops to zero within the projection period, a marker will show the age and year this happens.
    • Die With Zero Projection: If enabled, you may see an additional line showing the net worth projection based on the "Die With Zero" optimal spending.

  • How to use: Hover over the chart to see specific values (age, year, net worth, account balances) at different points in time. You may be able to toggle different lines on or off.

9. Summary

This section provides a concise overview of the key outcomes of your financial plan.

  • What to look for:

    • Whether you reach Financial Independence and at what age/year.
    • Whether your portfolio is projected to run out and at what age/year.
    • Your projected peak net worth and the age it occurs.
    • Details about when and how much pension income starts.
    • Confirmation of whether the plan is sustainable through age 100.

  • How to use: Read the summary paragraphs or bullet points for a quick understanding of your plan's success indicators.

10. Recommendations

Based on the results of your projection, the planner may offer tailored recommendations to help you improve your plan.

  • What to look for: Suggestions on increasing savings, adjusting spending, reviewing growth rate assumptions, considering pension options, or optimizing your plan further.

  • How to use: Read the recommendations and consider adjusting your plan inputs based on the advice provided.

11. Projection Table

The table provides a detailed year-by-year breakdown of your plan projection.

  • What to look for: Specific values for your age, account withdrawals, account balances, pension income, total net worth, and any life events (like reaching FI, retirement age, pension starting, or portfolio failure) for each year of the projection.

  • How to use: Scroll through the table to see the numerical details of your plan's progression year by year. You can often export this data (e.g., to a CSV file) for further analysis.

12. Overlays

The overlay feature allows you to compare your current plan against saved plans or the "Die With Zero" projection directly on the chart.

  • How to use: You can typically select saved plans to overlay on the main chart. This helps visualize the impact of different scenarios side-by-side. You may also be able to toggle the "Die With Zero" projection as an overlay.

13. Saving and Loading Plans

You can save your current plan configuration to revisit it later or compare it with other scenarios.

  • Saving a Plan: Once you have entered your plan details, look for a "Save Plan" option. You will likely need to give your plan a name.

  • Loading a Plan: To load a previously saved plan, look for a "Load Plan" or "My Plans" section. You can select a saved plan to load its data into the planner. Loading a plan will replace your current inputs.

  • How to use: Click the respective buttons to save or load plans from your stored list.