Thoughts? Are we CoastFire? Are you?

[PBandJelli]

Am I/we Coast Fire?  I think the answer is yes, but really appreciate everyone's help checking my math and assumptions.

We want to have 150k per year in retirement.

We have 2,200,000 currently saved.  About half in tax advantaged accounts.  By our calculation, we need 3.75 million upon (both of) our retirement.  I plan to stop working at the end of this year (so I would be coast fire) but my husband wants to work another ten years.  During those ten years he will contribute an additional 25k per year to savings (401k)

So, 2.2Million today, plus an additional 25k for 10 years at 6% growth per year should be around 3.9 Million in ten years.  Right?

If so, I should be able to quit my current job and pursue my alternate (basically extremely low paying) job at the end of this year.

Also: if you are practicing Coast Fire, I'd love to hear how it's going...


Thanks!

[gpyros85]

Sounds about right!!

Don't forget any Social Security Income!

[okits]

Have you accounted for inflation, taxes, and health insurance?

[gpyros85]

Have you accounted for inflation, taxes, and health insurance?

The 4% rule accounts for inflation already.

[Hirondelle]

Good job! I think you can persue the lower paid job for your coast-FIRE.

However 150k is a load of money to need each year. Are there any ways you could reduce this number or situations where it would reduce automatically (e.g. you're paying a mortgage now but it will be paid off in X years). 2.2M already gives you 88k/year to live on so that's a pretty sweet income already.

[PBandJelli]

Thanks all! 

150k is a lot a year.  Right now we earn 330k together.  We live in a high cost of living area, and save a good amount.  I want 150k because I'm worried about healthcare costs, and that is a number that I mentally need to see in order for both of us to not worry we'll outlive our money.  Is it more than we'd need?  Yes.  But will it give us the flexibility to do some nice traveling and gifts to deserving charities?  Also yes.

I'm mostly so excited about this next step. I'm going from 160k this year, to 16k next :)  SO....coast fire it is :)

[DutchGirl]

Starting with $2.2 million and adding 25k per year @ 6% per year gets me to $4.3 million, using a compound interest calculator. So it seems like you're more than there.

Of course, the stock market may be favorable, in which case you'll reach that number even sooner, or it may be unfavorable, in which case it'll take a bit longer. But I'd say you're CoastFire indeed.

[mxt0133]

Is your assumption of 6% annual returns or real rate of returns?  If you are assuming it is annual returns then that 3.75 million in 10 years won't be worth the same as it is today.  However if your assumption is that it is real rate of return then you should be good.  The difference is how you invest your stash, 6% real rate of return is closer to all stock allocation of 7% (S&P500)*. 

One benefit of lowering your income is you get to keep more of your money at a lower tax bracket, which means you gross will be higher than just simply cutting it in half.

Like other's have said, have you taken SS into account?  Your husband might be able to downshift earlier if that was not part of your estimates.

What are you downshifting to?

https://www.investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp

[Hirondelle]

I totally get your worries about healthcare. The US healthcare system is insane so better have a safety cushion on that side. Are you currently also spending 150k/year? Maybe it would be a nice challenge to see if you can bring this further down and save up the money faster to allow your husband to downshift earlier too (if he wants to).

[PBandJelli]

Hi- we're currently spending about 80 per year.  The 2.2 doesn't take into consideration our real estate, which has about 300k in equity.  We plan on keeping almost all of our cash outside of tax advantaged accounts in S&P or total market indexes. About 10% is in a NASDAQ index.  We always keep about 25-30k in cash liquid.

Good point on my husband.  If he wants to go downshift, fine with me.  I can get work again; or he can downshift provided we keep contributing 25k to retirement accounts.

As for what I'm doing: I'm going to do research to finish a phd, and teaching a college course on the side.

[PBandJelli]

Also, I'm working with real rates, which I get is somewhat dangerous.   (if I understand.)  To mitigate, we're not counting/including social security in our calculations.