The results of the 2026 White Coat Investor survey were published last May, and in the blog post about it, Dr. Jim Dahle wondered why more WCI readers don’t report being financially independent (FI):
“If more than half of you spend less than $200,000 per year and more than 1/3 of you have $4 million+, why are only 1/4 of you financially independent? You do know how the whole FI thing works, right?” . . . Here’s another one that’s hard to reconcile with your reported spending. You spend less than $200,000 a year, but you think you need at least $10 million? That’s a sub-2% withdrawal rate. You certainly won’t run out of money using that. Can I be your heir? I find it interesting that very few of you think $2 million-$3 million is enough, given that’s how much most retiring doctors have.”
One simple explanation is that the data are aggregated, so the connection between spending and net worth may not exist. Even though the majority spend under $200,000, for example, maybe the people with a $6 million net worth are the ones spending $600,000 a year. That combination would not work for financial independence. Maybe the 32% of respondents who feel like they need a portfolio of $5 million-$7.4 million are the ones spending $250,000 a year.
But I think he’s probably right that, for some people, a disconnect exists between the numbers on the page and that person’s feelings about them. I am one of those people.
Why You Don’t Think You’re FI
We achieved financial independence when I was 45. Then I happily worked two more years, then slightly less happily for another year, and I am now continuing to work in another country despite the fact that we are far beyond our FI number. If I were to retire now, we would be at about a 3% withdrawal rate. I have been steeped in the FIRE community for nearly a decade. I fully buy into the idea, and I have spent a significant amount of time preparing mathematically and psychologically for retirement.
But I continue to work—partly to add to our portfolio and partly because I believe I am making the world a better place, giving me a sense of purpose. So, I have some insight as to why WCI survey respondents report such high net worth with reasonable spending but don’t consider themselves FI.
You’re on the Edge
When we first hit our FI number, we were spending about $60,000 a year and had a net worth of $1.5 million. That put us right at the edge of being FI. If we had a big expense, inflation came in higher than expected, or anything else unexpected happened, we didn’t have much flex in the budget. Maybe you’re spending $200,000 a year, and your portfolio is just at the edge of $5 million. That’s an uncomfortable place to be. You may be FI but not feel it.
High Valuations
Big ERN is a blogger who has written an extensive analysis on the safe withdrawal rate and has the perspective that the withdrawal rate should be based on current valuations. He says, “All failures of the 4% rule occurred when the CAPE was above 20!”
The cyclically adjusted price-to-earnings ratio (Shiller CAPE ratio) is the stock price of a company divided by its earnings. A company should be valued (price of the stock) on the basis of how much it earns. Historically, this has been around 16. As we publish this, the Shiller CAPE Ratio is 41, close to the peak before the dot-com crash (44) and higher than before the Great Depression (31) or the Great Recession (28). If your net worth has ballooned in the past couple of years due to the rise of the S&P 500, it may not feel real because it probably isn’t. As Jim says, “trees do not grow to the sky.” On paper, you may meet the 4% rule criteria for FI, but you realize your paper assets are likely not to stay that high forever.
More information here:- Here’s How Much the Man Who Invented the 4% Rule Actually Spends in Retirement (Spoiler: It’s More Than 4%)
- The Silliness of the Safe Withdrawal Rate Movement
Uncertainty
All of the safe withdrawal rate data is based on the past, and we all know the future may not resemble the past. Other countries have had safe withdrawal rates as low as 0.47% (Japan). The past 140 years have seen one of the greatest expansions of wealth in history, concentrated in the United States. It’s not guaranteed that will hold true for the future.
Hoarding
For those of us who have saved our whole lives, enjoy frugality, or have anxiety about being poor (often from being raised without much financial security), seeing the net worth number go up triggers a dopamine release and provides comfort. You want to have a $10 million net worth, not because you need it for your spending but because it’s a bigger number. Like I tell students about treating bradycardia—a heart rate of 40 for a big dog is closer to zero than a heart rate of 80, so I would rather the rate be 80.
Change Is Hard
You’re good at what you do. You’ve worked hard to become a competent professional, and you know how to do that. I can place an arterial catheter in a three-kilogram decrepit cat with renal failure or an 800-gram puppy with a PDA. I’ve somehow become a foremost expert on a few rare anesthesia complications (like spontaneous hyperkalemia) and some research techniques (like means-end analysis). Being an academic clinician is easy; I’ve been doing it for 25 years. But you know what I have no experience doing? Being retired. It will be like being an intern again.
People don’t like change, and going from being an expert to being a novice sounds hard.
Unbelievable
Even though the math works out and you hear anecdotes of people living off their assets, it all seems a little unbelievable. I only stumbled upon FIRE in 2017. Although financial independence technically has existed since the founding of contemporary economies, the modern movement really gained steam with the Your Money or Your Life book in 1992.
That introduced the idea that you could live simply on passive income from investments and not work. That is, you could be financially independent and retire earlier than the traditional age in your 60s. My parents didn’t grow up with the idea. I didn’t grow up with the idea. I’m supposed to believe that an economic principle which is only 30 years old will work for my 40+ years of retirement? Call me skeptical.
More information here:Ignorance
I think most WCI readers—and those who answer the survey—are probably fairly financially savvy. But maybe they don’t read all the blog posts or listen to the podcasts or spend much time thinking about retirement. Maybe they just don’t know that they are FI.
It’s easy for purely quantitative analysts to look at the data and say “a bunch of you are FI.” But surveys rely on self-reported information, which introduces all sorts of cognitive biases into the responses. You can look at the numbers all day long, but if you don’t believe it’s true, it isn’t for you.
What are some other reasons people don’t believe they’re financially independent? Do you believe you’re FI? Why or why not?
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