Coasting to retirement?

[retireatbirth]

I was looking at a different view of early retirement today while I was at work. What if we stopped thinking about accumulating money so fast and relaxed and enjoyed the journey? My calculations show that once you get to about $100k in your mid-30s, you can pretty much coast to the finish line just by leaving your money alone. I know this isn't a novel insight, but it made me stop and think. Why am I worried about growing my money so fast? Realistically, that's going to take 8-10 years to truly be FI, but I already have enough in some sense. Why not find a dream job and not have to fixate on salary?

I assume 7% inflation adjusted returns in the attachment. Just find the line corresponding to your expenses and check if you are above or below that line. If you're above it (longer time horizon or higher net worth), you could scale back to just a job that pays your expenses.

[Shanksy]

That's a very comforting way of looking at financial independence. I go back and forth on whether I want to 'retire early' or not, because I believe I have a tendency towards laziness and worry that without the structure of a work week I might go complete couch potato. So in a sense I'm not in a huge hurry to retire but I do want to have a nice safe nest egg, and a healthy retirement set up so that I feel comfortable. Thanks for the info!

[BTDretire]

I have no problem with the idea, although it's not the MMM way.
 It also has the advantage that you are many years closer to collecting SS.
It took my wife and I about 35 years to accumulate 45x the proverbial
$40,000 spending. And yes, we are much closer to SS.
Also note, our net worth doubled in the last 7 years.
ie. we jumped from 22x to 45x in the last 7 years.
 I didn't find MMM until two years ago, I probably would not have
thought about retiring until FRA, 66y 2mo for me, if not for MMM.
 My wife has no interest in retiring for at least another 5 years.
 I had semi retired in Jan, working about 10 or 12 hours a week.
But, had a slight change in our business and now I'm working
about 25hrs, not what I want, but, I surf the net, watch TV or walk
most of the time I'm working, so it's rather easy.

[GenXbiker]

I was looking at a different view of early retirement today while I was at work. What if we stopped thinking about accumulating money so fast and relaxed and enjoyed the journey?

You can relax and still think about saving money.  I have my whole life.  It's like a game - I've enjoyed it, and I've enjoyed my job.  I hadn't even bothered to post to this forum until very recently.  Just don't let yourself get stressed out about it.

My calculations show that once you get to about $100k in your mid-30s, you can pretty much coast to the finish line just by leaving your money alone.

I hit $100K in my mid-30's just as in your example.  I wouldn't say I coasted.  Nearly 15 years later, the S&P 500 adjusted for inflation was lower than when I had hit the $100K threshold in late 1999.  But during those years and since, I continued with a very high savings rate and continue to do so to this day so that I was able to hit FI regardless of poor gains during that long stretch.

Realistically, that's going to take 8-10 years to truly be FI, but I already have enough in some sense. Why not find a dream job and not have to fixate on salary?

Did you mean 8 to 10 years after hitting $100K?  The $100K I had hit in my mid 30's was at an S&P 500 peak.  Nearly 15 years later, the S&P 500 sat an inflation adjusted loss, and that $100K from 1999 was far from providing FI.  I think it's unrealistic to expect $100K today to make someone FI in 8-10 years from now.  Continue to earn, save, and invest as much as you can to make that dream come true.

I assume 7% inflation adjusted returns in the attachment.

You know what happens when you assume.  My personal real life example shows the S&P 500 had no real gains from my mid 30's in late 1999 until 15 years later in late 2014.  This can easily happen again to a greater or lesser extent.

Fortunately, I re-invested dividends and continued to invest/save heavily every year to reach FI a few years ago.  By doing that, I went from 100K to FI in less than 14 years despite a crappy market.  Ironically, I reached FI in 2013, when the inflation adjusted S&P 500 was still down significantly from when I had my first $100K about 14 years earlier.

Today, stocks are expensive, CAPE is high, so don't expect this run to continue indefinitely.  The odds are heavily in favor of lower returns over the next 10 to 15 years.  See this post:

https://forum.mrmoneymustache.com/welcome-to-the-forum/cfiresim-severely-overestimates-success-rates-for-mustachians/msg1627934/#msg1627934

S&P graph that will show inflation adjusted historical gains:
http://www.macrotrends.net/2324/sp-500-historical-chart-data

The lesson from the story - don't expect to save $100K in your mid 30's, let it set, and think that investment will make you FI in 8 to 10 years, not even 14 to 15!  Keep earning, saving, and investing as I did, and FI is obtainable over the long haul despite some sorry ass years en-route.

[scantee]

I think it's unrealistic to expect $100K today to make someone FI in 8-10 years from now.

I think he means that once you get to $100k you can fully retire in 8 to 10 years if you continue to have a high savings rate. Or, once you get to $100k in your 30's you can coast and expect that in another 30 years, around traditional retirement age, you'll have around the same amount. Coasting allows you to work a lower paying job, part-time, or take sabbaticals rather than fully retiring.

This is basically my plan.  I plan to work another year or two and save as much as possible and then downshift to part time work for another decade and a half, retiring fully in my mid 50's.

[GenXbiker]

I think it's unrealistic to expect $100K today to make someone FI in 8-10 years from now.

I think he means that once you get to $100k you can fully retire in 8 to 10 years if you continue to have a high savings rate.

The devil is in the details (numbers), but that's possible, although it took me a few years longer, and I wouldn't call that "coasting."

Or, once you get to $100k in your 30's you can coast and expect that in another 30 years, around traditional retirement age, you'll have around the same amount. Coasting allows you to work a lower paying job, part-time, or take sabbaticals rather than fully retiring.

Yes, that sounds more like "coasting," and I wouldn't count on reaching FI in 8 to 10 years if someone is sitting at 100K today based on my previous explanation.  Traditional retirement age certainly makes it easier if you're in your mid-30's with $100K because the stock market has shown positives returns over most longer time slices, which often hasn't been the case in 8 to 10 year time slices.

This is basically my plan.  I plan to work another year or two and save as much as possible and then downshift to part time work for another decade and a half, retiring fully in my mid 50's.

Hopefully you have a lot more than $100K now, and good luck in any event.  Traditional retirement for me is 67, but I should be retired by my mid 50's.  I'm already FI as noted earlier.

[channtheman]

This is kind of what I plan on doing.  In fact, I've already found the lower stress job and plan on doing it (I'm a nurse in an acute rehab setting) full time until my mid 40's when I plan on going down to 2 days a week for appx. 1o years and then 1 day a week indefinitely after that or until I get sick of it.  I enjoy my job and find it rewarding enough that I don't mind working longer.  Plus, I just don't have the drive to take a higher paying job in a more stressful setting like I did in the past. 

[Khan]

You can search for "BaristaFI", and you'll have to try some google-FU but they may also be using "Coast FI" as well, which will bring you to some r/FinancialIndependence reddit threads about the concept. 100k will push you to very likely not have (too bad) money problems retiring by normal retirement age, but personally, I'd rather be further along on the exponential, so myself and some others have settled on ~300k as a key number heading into/during 30's, which mathematically is around 1/2 to a million time wise(due to investment returns, for anyone between ~20k-60k/year savings and calculations of ~3-8% returns), 300k means on average...

-Double in 10 years, 600k -> 2k/month 4% rule withdrawals, which personally I'm fairly certain is an easy LeanFI cabin innawoods number
-Double double in 20 years, meaning at anytime in the 50's could very easily rip the RE cord.
-Supplement long term vacations/sabbaticals throughout life. Taking a year off with 300k of assets means you could 4% yourself 1k/month, so you're really only damaging your stash for every dollar over that amount.

Personally I'd be a bit more comfortable with 150-200k and stopping savings if normal retirement assurance was your goal than 100k. 100k *1.07^35(retire at 30) would only be a hair over a million, which if you were spending your way through your life, you might have more extravagant tastes than that, and a pessimistic(or conservative depending on your view) 5% real return would only give you 550k @ 65.

Copying and pasting from some other threads of this nature and my posts...
https://livingafi.com/2015/08/04/taking-a-gap-year/
https://forum.mrmoneymustache.com/post-fire/early-retirement-vs-serial-mini-retirements/

The following topic was exactly about this!
https://forum.mrmoneymustache.com/ask-a-mustachian/how-much-would-you-need-to-be-fi-if-you-kept-working-(for-fun)-and-only-lived-of/
And I think this topic moved in that direction:
https://forum.mrmoneymustache.com/ask-a-mustachian/where-are-you-in-your-fi-journey/

[Laura33]

I think this approach can work for some people; if you really love what you do, why not build a solid foundation and then enjoy the ride?

The caveat, of course, is that life tends to be what happens while you're making other plans.  Some people don't have a dream job, or sometimes that dream job goes away or turns into a nightmare due to management turnover.  Sometimes you have kids and your priorities change.  Sometimes the stock market sucks, or you make poor (or poorly-timed) investment decisions.  Sometimes you get sick/injured/disabled, or have a kid with special needs, and can't work.  Sometimes you marry someone with different priorities.  Sometimes you might think at 30 that you'd love to keep this job forever, and then at 50 discover that you're burned out and desperate to quit.  Etc. etc. etc.

But all that is quibbles -- the key is to spend that first decade or so socking away as much as you can and avoiding lifestyle creep.  If you manage to save $100K by 30, you can stop and reassess at that point and decide whether the path you're on is still working or not.  Best-case, all is good and you can kick back to part-time or whatever (or decide to stay ramped up to FIRE in a few more years); worst-case, you're still way better off than if you hadn't saved that $100K.

[Lan Mandragoran]

And some people *cough*me*cough*, despise their day job and w2 jobs of any kind so the idea of any increase in time is akin to... going to the dentist every day for another 10 years or something :P.

This does tend to create some .... manicness (word?), but from what I've read others tend to slowly settle into and calm down.

[andy85]

i have a spot on my spreasheet for something similar. As in, what will my current stash be when i hit 65 at a given rate of return. More than a comfort thing than anything else...nice to know you could not save another dime in your 30s and still be more than ok to retire at normal retirement age.

[fattest_foot]

And some people *cough*me*cough*, despise their day job and w2 jobs of any kind so the idea of any increase in time is akin to... going to the dentist every day for another 10 years or something :P.

This does tend to create some .... manicness (word?), but from what I've read others tend to slowly settle into and calm down.

This is how I feel.

Sure, I could coast. But I don't like working in general. The quickest path to the exit is what I'm searching for.

[IllusionNW]

Like Andy85, I have a tab on my spreadsheet that has the present value of our liquid investments and the future value of those investments if we didn't contribute anything more.

It's nice to have something to look at to see that we have enough money that even if we decided to blow all the money we are making now, we could still have a very comfortable retirement in our early 50s.  That said, DH and I are pretty conservative and have high-paying jobs right now, so we will continue to pad the stash as much as we can and allow us to have options in the future.

[VolcanicArts]

I kind of consider myself coasting a little at this point in my life. I'm mid 30s with about 200k liquid assets. I make pretty decent money at my job and enjoy it a lot. I also have a house that is getting much closer to being paid off and I own my car. If I just let the money sit and never touch it, chances are it will be worth over a million dollars later on. I'm however very wary of surprises at this point in my life, and even though I could probably get away with working 25hrs a week and not contributing more to my investment account, I want to increase my chance of success hitting FI early, so I will contribute the max and work FT. When I do have enough to FIRE I just want to make sure that I have a surplus that allows me to live well in retirement and travel a lot. I don't want a sudden surprise that makes me go back to work and hinders my plan, that's why I'm contributing the max early on to avoid any pitfalls later. Most likely I will overkill my portfolio, but that's better imo.

[GenXbiker]

I hit $100K in my mid-30's just as in your example.  I wouldn't say I coasted.  Nearly 15 years later, the S&P 500 adjusted for inflation was lower than when I had hit the $100K threshold in late 1999.  But during those years and since, I continued with a very high savings rate and continue to do so to this day so that I was able to hit FI regardless of poor gains during that long stretch.

Just to add to that, the $100,000 I had in 1999 would be equal to $147,000 in year 2017 dollars, so it would have taken me even longer to reach FIRE if I had the equivalent of $100,000 in year 2017 dollars.

We've had a long run in the stock market of nice gains - but it's overdue for a pullback, and some experts expect minimal inflation adjusted gains over the next 10 to 15 years.

[startingsmall]

I think it's unrealistic to expect $100K today to make someone FI in 8-10 years from now.

I think he means that once you get to $100k you can fully retire in 8 to 10 years if you continue to have a high savings rate. Or, once you get to $100k in your 30's you can coast and expect that in another 30 years, around traditional retirement age, you'll have around the same amount. Coasting allows you to work a lower paying job, part-time, or take sabbaticals rather than fully retiring.

This is basically my plan.  I plan to work another year or two and save as much as possible and then downshift to part time work for another decade and a half, retiring fully in my mid 50's.

My plan as well. I'm currently 38 yrs old with approx $220k in retirement accounts. Planning to keep up the high savings rate for another 3-5 years, then downshift to either PT or more-rewarding work with expected FI in my mid-50's.

[gerardc]

I think sprinting to barebone expenses then coasting to a comfortable target is nice and gives you peace of mind.

at 70% of target: allow myself to only earn what I spend, not touching stash nor dividends (aka positive savings rate)
at 85% of target: allow myself to withdraw up to 2% of stash yearly
at 100% of target: full 4% WR

[marshdesign]

"My calculations show that once you get to about $100k in your mid-30s, you can pretty much coast to the finish line "

Ok great! Looks like I will just coast then, done.

[prognastat]

If you are comfortable either risking your stache or being forced to limit your possibilities in work then this can be a great option.

I have things I'd like to try doing that may generate zero income for months and possibly never succeed. This would not work while attempting to coast.

[mcneally]

Personally I'd be a bit more comfortable with 150-200k and stopping savings if normal retirement assurance was your goal than 100k. 100k *1.07^35(retire at 30) would only be a hair over a million, which if you were spending your way through your life, you might have more extravagant tastes than that, and a pessimistic(or conservative depending on your view) 5% real return would only give you 550k @ 65.

(I'm not disagreeing with the post I'm quoting). I know 7% real returns have happened historically, but I think 7% real is EXTREMELY optimistic going forward. I would call 5% real optimistic, not pessimistic. I use 4% real for projections but don't necessarily count on that. Planning to fund your retirement based on saving a small amount by 30 and letting it sit for 35 years is a very bad idea unless you're willing to work more than just covering your current spending in the intervening years if returns aren't what you expected. (i.e. I think quitting a relatively high paying field to be a ski instructor or something that could just barely cover your low expenses is a bad idea).

That said, I plan to cut back my hours when I'm only about half way to FI. I'll still be saving a significant percentage though.  I also don't think I want to fully retire significantly before the traditional age.

[retireatbirth]

Interesting responses, guys. My inspiration for posting this wasn't that it was something I planned to do, but I am trying to convince myself it is okay to risk a resume gap by quitting my job at 35 with about $280k in savings. I find higher paying jobs more interesting at this point in my life. I just keep fearing I'll never find anything so trying to convince myself even if I end up having to be an Uber driver for 10 years, I'll still be able to retire.

[mcneally]

Interesting responses, guys. My inspiration for posting this wasn't that it was something I planned to do, but I am trying to convince myself it is okay to risk a resume gap by quitting my job at 35 with about $280k in savings.

A huge factor in this is what your spending is. If you only spend $20k, it's never going to be hard to find a job that can cover your expenses regardless of resume gap, outdated skills, etc. If you have a high paying job now making $150k but spend $70k, the number of jobs you can find that pay that much is obviously far smaller.

[CheapScholar]

I'm somewhat similar to OP and others on this thread.  DW and I are mid 30s with about 200K in investments/cash (most of that in 403b savings).  We've been maxing out 403bs and now Roth IRAs to get there.  So, this year we will put away about 60K when including employer matches.

I really don't want to retire until my son is done with college.  I'll be 51.  What's great is that I recently noticed - after playing with compound interest calculators - that if both my wife and I put away ONLY 1K per month each going forward until I'm 51, we will have financial independence.  I'm not reducing my savings just yet (after all, I love deferring taxes and if I don't max out then I pay 25% federal income tax on those dollars - FUCK THAT!).

But yeah, point very well made by OP.  Get 100K or 200K in your 30s and you realize just how easy this can all be.

[kissthesky]

Super interesting thread.

Like others I have various scenarios playing out in different spreadsheet tabs. Part of me thinks it would be nice to "coast" because not working as hard as possible seems nice. But the mustachian in me is definitely leaning towards face-punching that idea and keep working as hard as I can for as long as I can, then dialing it back when necessary.

I think my most likely scenario is a tiered coasting approach. I've only been working full-time since 2010, so for now I am going to keep working 100% as hard as I can climbing the corporate ladder. Then in 4 or so years when I'd expect a kid or two I'll probably dial it down to a more normal 40hrs 80% effort. Then when I hit FIRE 6 or so years after that I will probably go 50 or 60% part-time (to keep something to do and health insurance). Then I'll jump into full retirement when I get sick of working part-time and feel financially willing & able.