Chuck Groot Financial Consulting

Knowing your FID -financial independance number

It is amazing how many people don’t know what their FID number is — many more than those who do not know their net worth. Back to our trip analogy, if we don’t know where we are going, then how in the world will we know how and when we will get there?

Chances are you are asking, "What is a FID number? Simply put, it is your financial independence number, or, in other words, how much money you will need to  invest to be able to retire in the style you want.

Retirement is a big step and if you are not properly prepared it can come as a shock to you.Important areas you need to look at include:

 a yearly budget for your retirement years eliminating as much of your debt as possible inflation

checking out your insurance policies and determining if they are better off cashed-in or kept as is

researching post-retirement medical costs, pharmacy costs, and what it will cost if you need long-term care

Retirement is one of the things in the back of your mind that will come along someday. And that day will come quicker than you think - ask your parents! Not only is retirement a bit of a shock but realizing the amount of money you need to live post-work can be staggering. Add to that the fact that people are living longer than they expect, which means more years of bills and medical expenses.

Another surprise that comes along is how much your government pension will be. In Canada, in 2021 the average monthly payment is about $ 595. Old Age Security pays out around $ 635. In the United States you would be looking at around $ 1000.  

An Investopedia article explains that the most difficult thing today is “striking a balance between realistic returns expectations and a desired standard of living.” And if 2020 showed us anything it was the uncertainty that we have in life, markets, economies, and the political landscape. With that in mind it is imperative that we take as much control over our futures and retirement as possible. We need to plan, and plan to be flexible. The trite words, “it is never too late to plan” are never more relevant than today.

That brings me back to eliminating debt as much as you possible can. When you are retired, or have to retire, you do not have the same opportunity to make large amounts of money to pay off debts. Start looking at what you owe and pay off as much as you can to reduce interest rates, loans, leases, and focus on owning all your assets outright. Not only does it make you feel good but it helps you to live longer by reducing the stress.

In point three above, I raised the idea of inflation. Over the last few years inflation in North America has been very low, but that can change in the blink of an eye. It has been said that inflation hits the elderly harder than any other groups. The costs associated with what you need when you retire are much higher and more expensive than when you are younger. Think about drugs, healthcare, gas, and of course groceries. If your assets are only returning slightly higher than inflation you need to look at them more closely.

Let’s get down to the business of planning for the future now.


Steps in determining what your FID (Financial Independence Number) is





  1. Approximately how many years are you going to live? You can look at your family history and see how long your dad or mom lived, how long your maternal and paternal grandparents lived, and then provide a good guesstimate as to how long you will live.

What age do you want to retire at?



  1. What age do you want to retire at?



  1. How many years longer you will be working for?



  1. how many years will you need to fund?



  1. How much money do you have in your savings?


$ 30,000

  1. How much money do you have in your retirement savings?


$ 200,000

  1. How much money is in your investment portfolio?


$ 60,000

  1. Now add in the amount you will get from your pension, Old Age Security and multiply it by the number of years your life expectancy is after you retire.

$ 7000 CPP

$ 6000 OAP

$ 12000 rental income

$3000 interest, dividends etc



$ 28,000 x 20

$ 560,000

TOTAL amount of money available


$ 850,000

  1. Create a budget for your living expense per year to live the style you are now.


$ 60,000 x 20

$ 1,200,000

  1. Then add how many trips or vacations you would like a year and how much the average cost will be for these.

2 at $ 6000 each

For 10 years

$ 600,000

  1. Can you foresee any major expenses in the future, after you retire — new car, new roof?


$ 40,000

$ 40,000

  1. Look at your family history and see what type of extra cost may be involved for healthcare per year.


Last 5 years @ 10,000

$ 50,000

TOTAL amount of money needed


$ 1,890,000

  1. Subtract the amount of money available from the amount you will need. This is your FID number — the amount of money you will need to accumulate in order to retire the way you want.



  1. Then divide the FID number by the number of years of years you have left to work. This gives you the amount of money that you will have to put aside per year, in the next 10 years approximately.


$ 104,000


If you would like to learn more click here

or you can use the

Canadian Retirement Income Calculator

Top of Page