Deliberately coasting to FI?

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flying_pan
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Re: Deliberately coasting to FI?

Post by flying_pan »

I am also contemplating about coasting to FI.

I am really far from it (right now I have about 2x savings, so literally first steps), but I have a rough plan how to do it. I am planning to get save about 10x, then earn 1x and keep it in cash, and live 1 year on it, with just a bit of work during a year to max our roth IRA. Then repeat the whole thing: work full-time couple of years, then not working for 1–1.5 years. I am not planning to get into savings at all and keep extra money to live on during coasting in cash/HYSA (depending on the rates, since it will happen in ~6 years).

If returns are spectacular, I can think about living partially on dividends, but there is a big chance of recession/significant slowing down, so I don't count on it. I don't like risks and prefer to be confident in my ability to weather any events, so my preference is to keep living expenses in cash.

Toska2
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Re: Deliberately coasting to FI?

Post by Toska2 »

I have 12x saving and chose to coast. My idea of coasting is more enjoyable and interesting work, not necessarily less work. I am not taking away from my stash. I do not fret about my savings rate, its somewhere between -20% to +30% on a monthly basis. Im only 36 so I felt like having a slight detour while still being able to amass enough.

classical_Liberal
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Re: Deliberately coasting to FI?

Post by classical_Liberal »

@mooretrees
I really think personality plays into this decision more than anything. Some people just love to save and accumulate, but realize doing so at breakneck speeds has other detrimental impacts on their life. I think for people like this (ie me), it's healthy to moderate, or risk the potential of being rich but miserly. In my case I wouldn't have felt comfortable slowing down until I was at least halfway to my number.

Others (like my GF), really don't like to plan more than a few months out. In this case what does it really matter how much you have saved, as long as you are living the life you want to live and still maintaining a positive savings rate. Of course the risk here is running into a situation where time gets the best of you and you end up nearing a traditional retirement age without enough assets. Age discrimination or health gets in the way of continued earning.

IMO, each side of this coin needs to compromise towards their weakness. Of course, this is a simplified model/false dichotomy, there are people all over this spectrum and probably outside of it.

Equally important to "how much" in "coasting"/Semi-ERE is the "how am I going to structure it". This seems to be just as difficult to balance. So it's worth some thought as well, before jumping off. Make sure you have structured the situation so that is plays towards your particular weak point. IOW, If the main concern is that you will never want to go back to work, make sure some type of paid work is baked into the plan. If it's that you're worried you'll get readdicted to accumulation, make sure you have your preferred lifestyle or some general goals set up with your off time so you feel progress in life, lest you risk just choosing to go back to high paid work again.

Western Red Cedar
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Re: Deliberately coasting to FI?

Post by Western Red Cedar »

I thought I'd give this thread a bump and encourage any of the original posters to chime in. Have your thoughts on coasting to FI changed?

Here is another data point from the journals for those looking for inspiration to coast:

viewtopic.php?t=11777

I think this is a very good point:
black_son_of_gray wrote:
Tue Sep 27, 2016 9:54 pm
My opinion has evolved since my OP. I see it as more of a way to learn a set of ERE Wheaton level 6+ skills years earlier while getting paid to do it! What has changed most for me is an internalization that I don't want to purely rely on financial assets, for two reasons.

One: As far as I'm concerned, 25x, 33x, or 50x are approximately equally useful to me, so I would much rather have [15x expenses plus a bunch of useful skills and experience]>>[50x expenses and less time left in my life]. Of course there is an individual calculus here, and not everyone values the same things as much, but I see this as an important form of diversification.

Two: A key point here that I think draws me to this idea concerns my desired lifestyle. I'm learning that I really derive a lot of meaning out of "creating" and contributing to the community around me in some obvious way (does not include crafting derivative financial products, for example). Doesn't mean I want to do that 40 hours a week, but I see myself wanting to do that at least a few hours a week (maybe 10-20) for the rest of my life. I have a habit of getting really absorbed by hobbies, so who knows maybe I'll end up working lots! Not being mega-wealthy keeps me with at least a tiny amount of skin in the game. Furthermore, if 1) I'm always learning new skills and 2) deriving enough income from the learning of new skills and 3) plan to keep on doing that in some capacity until I am traditional retirement age (at least)... then what do I care about any return rate over inflation? The money is primarily just FU money and buffer to carry me from one interest to the other. So maybe the 'coasting' doesn't need a destination.
As is this:
Fish wrote:
Tue Jun 18, 2019 8:23 am
I view coasting as a lifestyle decision, not a wealth strategy.
As is this:
classical_Liberal wrote:
Wed Jun 19, 2019 1:54 am
Many people on the forum use their form of ERE without FI level financial assets and, in my opinion, kick my butt in terms of ERE. As a result of those anecdotes, along with a plethora of others where folks who reached FI found they end up earning such a surplus of wealth it becomes a burden, there may be a better way than 100% salaryman ----> FI---->100% renaissance man.

I think, if someone realizes they are going to produce value and/or they are planning to spend some time in one or more of the other three quadrants anyway, waiting until FI to make lifestyle changes can be huge mistake. Particularly if current lifestyle is not providing adequate happiness, stimulation, or purpose. It also causes too much focus on "the number"/FI, which inherently shifts focus to E-ER from ERE, even if that's not what was intended. Someone making this lifestyle choice should be careful to examine any other causes of life dissatisfaction though. Often times internal changes are what is needed, hence should be the first order of business. It's only when the end goal is only FI that asset valuations, as a proxy to the time to goal, really matter. Otherwise all one really needs is enough to buy into preferred lifestlye, sufficient cashflow to maintain lifestyle, and systems in place to ensure the cashflow isn't disrupted.
I'm currently at 75% of the household goal (66% might be more accurate), and had initially planned on coasting when I reached 75-85% of the FI goal. I think I'll only know in hindsight whether I've leaned into the coasting or mini-retirement strategy (viewtopic.php?t=7032). Both of these seem to fall under the umbrella of SemiERE.

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Lemur
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Re: Deliberately coasting to FI?

Post by Lemur »

+1

Though I’ve wondered previously…the saying goes you know you’re at the top of the market when celebrities start talking about stock picking. Someone’s I’ve wondered if CoastFI was analogous to that but in FIRE terms. It is a branch from the same tree that believes stocks will always go up.

Intermittent income solves the latter problem anyway.

black_son_of_gray
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Re: Deliberately coasting to FI?

Post by black_son_of_gray »

The gist of my current thinking, if you really want to wade through it, is found in this post that I wrote mid-2019, in the section titled "Perspective on ERE/Finances": viewtopic.php?p=194073#p194073

The TL;DR is something along the lines of: I believe the safety of having a lot of money decays the further out into the future you make plans. In that sense, FU money is very powerful and useful. Having three times more than that is <<3 better, though. But because of this decay function, I don't believe in FI at all any more, and I'm mostly concerned about ~5 year-ish planning and timescales financially*. I'm a heretic, I suppose.

Ironically, it doesn't really change how I want to spend my time or how I want to go about living the rest of my life. That is, it probably still looks from the outside like I'm "deliberately coasting to FI". Hope that addresses the question?

*Although, I do consider much longer time scales in non-financial decisions (e.g. environmental/climate stuff).

ducknald_don
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Re: Deliberately coasting to FI?

Post by ducknald_don »

Five years is fine when you are young but those of us who can see employment opportunities withering away as we age will be looking further ahead.

not sure
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Re: Deliberately coasting to FI?

Post by not sure »

I am considering scaling down on full time work/pursuing a sort of sabbatical for a couple of reasons:
1) there are things I want to do now and people I want to spend time with which may not be there in the future (a friend's serious car accident brought this very much to the forefront of my attention!)
2) my personality needs a degree of external motivation to set and achieve goals. If I work till full "fat FIRE" and $ aspect of the puzzle becomes very very comfortable, I'll lose that external motivator in the future

Jin+Guice
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Re: Deliberately coasting to FI?

Post by Jin+Guice »

Coasting to FI has more or less always been my strategy. My plan differs from the OP in that I'm not relying on investment returns at all and I'm not doing jobs for fun, I'm still working a high renumeration but boring job, just part-time. I stopped tracking CoL and savings rate and I stress a little less about spending money. Every once in awhile I check my bank account to make sure I'm still hitting my minimum savings target.

The most stressful part is as I get closer to FI it becomes tempting to try and hit the gas on income a bit to reach my savings number. Hopefully I can continue to resist this temptation.

2Birds1Stone
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Re: Deliberately coasting to FI?

Post by 2Birds1Stone »

Taking a year or two off and working intermittently was how DW and I jumped off the treadmill. Once you get to a certain point (10-15X) it really doesn't matter how you get to the finish line (if you even believe in a finish line).

7Wannabe5
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Re: Deliberately coasting to FI?

Post by 7Wannabe5 »

2Birds1Stone wrote: Once you get to a certain point (10-15X)
Do you think this is simply due to the magic of compound interest, or does it have more to do with a level of Optionality, Security, FITB achieved?

2Birds1Stone
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Re: Deliberately coasting to FI?

Post by 2Birds1Stone »

Not to rehash old conversations, but I think it was c_L who pointed out years ago that the money is useless without the courage to take a different path or action. For many of us, we just needed the courage associated with 25X+ to start thinking outside of our predisposed quadrant and start leveling up skills, introducing other forms of capital into our system, etc etc. MMM wrote a blog post on the topic, something along the lines of "Money and confidence are interchangeable".

10-15x to me was a point where critical mass was reached and my inputs made less and less of a difference. If you know you're going to be ok for a decade if things don't work out, it makes experimenting with things less risky.

Optionality, serendipity, etc become much more easy to take advantage of. This is not a prerequisite for everyone, but someone like myself who needed that cushion to grow a pair and carve a very different path......that becomes a pretty significant milestone on the path to something we are talking about.

Compound interest helps a lot too. If you just accumulate to 12.5X and you leave it alone for just 10 years, theoretically if returns were linear and predictable you would be FI by WL3-5 definition.

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Ego
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Re: Deliberately coasting to FI?

Post by Ego »

ducknald_don wrote:
Thu Dec 22, 2022 4:05 am
Five years is fine when you are young but those of us who can see employment opportunities withering away as we age will be looking further ahead.
Withering. Yes.

Change accelerates as technologies evolve. This causes the nature of work to change and the value of skills to decay at an increasing rate. On the other hand, the newest technological skills transfer more easily between industries that were previously unrelated.

This is why it is increasingly important to keep a hand in the game. Once out, it becomes easier for the Indeed Skills Assessment Test (or the more targeted equivalents) to weed you out.

Fish
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Re: Deliberately coasting to FI?

Post by Fish »

Western Red Cedar wrote:
Tue Dec 20, 2022 6:48 pm
Have your thoughts on coasting to FI changed?
I have always taken a dim view of compounding to FI. However, coasting might be a viable strategy if expenses aren't optimized to start. For example, if you have accumulated 15x, realize that is 30x if spending can be cut in half.

To put numbers to it: suppose spending is 30k, and savings is 450k (that is, 15x). Instead of grinding it out to 900k savings, one could try coasting on 15k earned income, while drawing the other 15k from savings (which is appropriately invested to sustain the 3.3% WR). Then the challenge is to reduce spending to a target of 15k while maintaining the part-time income as a backup. If successful, FI is obtained with an ERE income score of 2.0.

More abstract way to think about this style of "coasting" by expense reduction (coast-ER):
* If at 50% of goal assets, it takes a 50% reduction in expenses to become FI.
* If at 66% of goal, a 33% reduction is needed.
* If at 75% of goal, a 25% reduction is needed.
* If at 80% of goal, a 20% reduction is needed.
* If at X% of goal, a (100-X)% reduction in expenses is needed.

So if savings rate is relatively low (<60%) and expenses are not yet optimized, at some point in accumulation the expense reduction to become FI will become attractive compared to more accumulation. And it's not necessary to replace the entire spending with PT income either, only the portion of present expenses that can't be covered by investment income when coast-ER starts. (Note: An appropriate WR needs to be chosen to match the retirement horizon.)

Reducing employment to part-time as a catalyst for expense reduction is something that I would be willing to entertain for my personal situation. Whereas "compounding to FI" seems like an inappropriate justification for going to PT work. If FI is the goal, why leave it to factors outside of one's control? Makes no sense.

classical_Liberal
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Re: Deliberately coasting to FI?

Post by classical_Liberal »

Fish wrote:
Fri Dec 23, 2022 4:26 pm
Makes no sense.
Mathematically true. Change in mentality is difficult to quantify results mathematically, rather it moves into probability. Quantum world vs Newtonian world.

PS, personally, I am very happy you are posting again. Thanks for all your valuable insight.

Laura Ingalls
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Re: Deliberately coasting to FI?

Post by Laura Ingalls »

I think there is some sort of psychologically freeing by declaring yourself retired. DH and I both did this in 2014.

I have made money as a result of paid employment since then. Before that date I worked part-time 11 of the previous 12 years but I definitely was and thought of myself as being in the accumulation phase.

I have been surprised at the resources that have “found” us. They have been of all sorts of different kinds and at all different Wheaton scale levels.

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fiby41
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Re: Deliberately coasting to FI?

Post by fiby41 »

I plan on coasting to FI by not going to work/going to work less during the four months of the raining season.

ertyu
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Re: Deliberately coasting to FI?

Post by ertyu »

My view is as follows: if I now have X amount of money, if disaster strikes at any moment, I can rely on X/600 of that per month and would have to replace the rest. I can "replace" that through incidental income, temporary employment, or I simply reduce expenses to fit thrugh a combination of frugality and skills.

guitarplayer
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Re: Deliberately coasting to FI?

Post by guitarplayer »

Laura Ingalls wrote:
Sun Dec 25, 2022 9:58 pm
I think there is some sort of psychologically freeing by declaring yourself retired. DH and I both did this in 2014.
I think this sort of re-framing can be very powerful. It could also be generalized to something like 'declaring a new chapter', and it does not have to coincide with any major change in one's immediate circumstances inasmuch as with a change in where attention is paid.

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Re: Deliberately coasting to FI?

Post by jacob »

What if the work doesn't pay enough and requires you to draw down?

What if there's a lost decade of investment returns?

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