Case Study: From Corporate Prison to Freedom in 8 Years

Today, we will take a look at a FIRE case study. We will see how important it is to think about one’s ideal retirement lifestyle early on and to answer the question “Am I planning to work during retirement?”. The answer to this question is very helpful when it comes to determining which path to Financial Independence to choose.

Money Flamingo is a really young blog (just over a week old at the time of writing!) and, naturally, we do not have an inbox full of emails from readers who would like us to discuss their situation (yet). So I used the story of a friend of mine as inspiration. The case study is “based on real events” as they like to say on TV. 

Note to readers: If you would like your own case study, please get in touch with me! * 

Now let’s get straight into it.

“This is not what I signed up for”

Meet Lilly, a 30-year old Marketing Manager from Melbourne. When Lilly was at uni, she pictured a career in a fun, exciting environment with great colleagues, creative challenges, after-work beers, lots of international travel and a good work-life balance. Of course, we all know how this story pans out. Eventually, Lilly realises that the career she pictured has nothing to do with the reality of working in a corporate full-time job. She switches jobs but this doesn’t change anything. She is stuck in corporate prison, for 40 hours a week, for the next 40 years. Lilly feels cheated – this is not what she signed up for. She wants out.

“This is what I am supposed to do for the next 40 years?”

Fortunately, Lilly recently read about FIRE in a magazine and even saw a segment on the topic on morning television. She starts to create her escape plan.

Starting point

This is what Lilly’s financial situation looks like:

Income and Super: Lilly earns $78,700 per year from her job, which leaves her with $60,000 after tax.  In addition, her employer pays 9.5% – $7476 – into her superannuation fund. After Super contribution tax (15%) and fees, the net annual Super contributions amount to around $6000.
After-tax salary: $60,000
Super: $6000

Spending and Lifestyle: Lilly spends most of her salary on things she thinks will make her feel better – luxury holidays, fancy clothes and expensive restaurant meals. She currently only saves $500 per month (in a high-interest savings account). Lilly examines her spending habits and makes a few lifestyle changes. She starts cooking at home more instead of eating out and decides to sell her car. Instead, she uses her bike and public transport to get to work. Lilly easily manages to reduce her living expenses to $33,000 per year.
Annual expenses: $33,000

Assets: Lilly currently has $35,000 in her Super account. The $500 she has saved every month since she started her first job have added up – she now has $28,000 sitting in her savings account. She goes ahead and sells her car ($22,000). Additionally, Lilly sells some of the clothes and shoes she bought during her shopping sprees but only wore a couple of times ($3,000). She adds the proceeds to her savings account.
Total assets: $88,000

Saving and Investing: After changing her spending habits, Lilly is able to save $27,000 of her after-tax salary every year. These savings and the $6000 in Super contributions amount to $33,000 per year – that is a savings rate (SR) of 50%!
Investable surplus: $27,000

The way out

Now let’s examine Lilly’s path to Financial Independence*:

Lilly immediately invests the cash in her savings account in a low-cost index fund (we will assume 7% inflation-adjusted annual returns). Every year, she adds her after-tax savings ($27,000) to this fund. Next, Lilly tackles her Super. The balance of her Super account is currently invested in a “balanced” fund. She switches over to the passively managed “diversified stock index” option her fund offers. The returns this fund delivers are in line with the index fund she invests in outside of super.

All up, $33,000 of “fresh money” is added to Lilly’s nest egg every year. Surely it will take Lilly no time at all to get to FIRE, right?

Reality Check

Lilly uses the 4% rule to calculate the nest egg she will need to accumulate to retire early. Her “FIRE number” is $825,000. If she keeps up her savings rate of 50%, she will reach Financial Independence (FIRE) in 13 years, at age 43:

“This is crazy,” Lilly thinks. “I don’t want to wait another 13 years! And I certainly don’t want to be in my 40s when I finally get out of the rat race”. Lilly starts looking for alternatives. She knows that, like most people on this path, her goal is not to simply “retire”. She just wants to get away from the corporate job she hates and to have more time to do volunteer work and travel. Lilly does not want to ever have to work 40 hours a week again – but some part-time work (2-3 days a week) in a more relaxed setting would be just fine.

Lilly briefly considers semi-retirement but realises that there is one major problem with this approach: If you semi-retire without a substantial amount of money saved up for retirement, you will have to keep working for a very long time (most likely, until you become eligible for the Age Pension).

Plan B

One morning, Lilly stumbles across a personal finance blog with a funny Flamingo logo. She learns about an alternative approach, which combines FIRE and semi-retirement: Flamingo FI.

Lilly runs the numbers – she can reach Flamingo FI in just 8 years! She will be 38 when she gets there. After that, she could semi-retire and work just a couple of days a week in a low-key job. In the meantime, her nest egg would continue to grow and eventually make her financially independent (at age 47 if everything goes according to plan). At that point, she could quit work altogether if she wanted to, even though it is unlikely that she would want to do that. With Flamingo FI, Lilly can “swap” 5 years of full-time work in corporate prison for 9 years of semi-retirement:

Lilly decides that this is the right solution for her. She realises that since she is more interested in the “Financial Independence” part of FIRE than the “Retire Early” part, there is no need for her to stay in the rat race until she hits her FIRE number.

For Lilly, Flamingo FI turned out to be the right choice. For others, FIRE might be the better solution. Everyone’s situation and priorities are different. That is why the answer to the question “Which retirement lifestyle is right for me?” will be different for different people. We will discuss this in a future post. Watch this space!


Please keep in mind that we are not financial advisors and do not offer financial advice. Anything we write about or recommend on this site should be seen as a suggestion, not advice. If you decide to implement any suggestions we make, you are responsible for this decision and the results. 

** To keep this calculation simple and easy to understand, we will assume real (inflation-adjusted) returns of 7% per annum. This way we are able to do the calculation and look at results in 2018 dollars


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5 thoughts on “Case Study: From Corporate Prison to Freedom in 8 Years”

  1. Great read. Kinda makes me question our own plan. Our savings rate is a bit higher than the one in your example, so it wouldn’t take us long. Definitely tempting!! Would be interested to hear which super fund you used in your example, I’m with AMP.

  2. Thanks for your comment! My friend (whose story this post is based on) moved to the Hostplus “Indexed Balanced” fund: This is also the fund Scott Pape (Barefoot Investor) recommends. The fees are really low. You have to look into the insurance you have through Super before you make any changes though. I’ve heard of people moving over to Hostplus and then not getting approved for the insurance cover they want (and had by default in their old fund). That is the reason I am currently still with Australian Super (in the “Indexed Diversified” option, which also has low fees). Mr Flamingo is with AMP also and we are considering opening a Hostplus account for him. In that case we would keep the AMP fund for the insurance and make all new contributions to the Hostplus fund. The downside of this approach is that you have to pay fees for two funds. AMP doesn’t offer an index option as far as I know, and their fees are outrageous.

  3. The age & numbers for ‘Lilly’ are very similar to mine. Planning to be mortgage free in about 5 so will go more part time/ casual than my current 4 days in the corporate slog but keep saving as expenses will be lower with no mortgage. I think winding down from work is probably more natural rather than FIRE where you have too much time on your hands all of a sudden. Mind you I’m always happy to fill my spare time with travel. I still manage a couple of overseas & a few interstate trips a year because I want to enjoy life now.

  4. Sorry for the late comment here, was reading your latest blog post and thinking about my own FI, and then started looking at your numbers and didn’t quite understand the table, specifically the FIRE (green) section. I can see that YoY you are estimating 7% growth, all good there. However you also have Lilly withdrawing $33,000 so wouldn’t this mean the Nest Egg value should only grow by the 7% growth – withdrawls? For example in the Path to FIRE with Flamingo FI table, at age 48 I would expect to see the Nest Egg grow to $865543 ((839,460 *1.07)-33000).

    Sorry if you’ve covered this somewhere else, I had a look around and couldn’t see any further explanation.

    • Thanks for the comment, Mark (and sorry it took me over a year to respond, I just saw your comment today!). You are right – I just re-calculated the numbers and there is a green in the “FIRE” (green) section of the table (it doesn’t deduct the withdrawals). I will fix this up sometime. Thanks for letting me know! It doesn’t change the overall message and outcome much, but still worth fixing up sometime.


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