Deliberately coasting to FI?

[FBeyer]

Once you have even a few years savings stashed away, you're free to choose any strategy towards FI that you desire.
Contrary to popular belief, you're free long before 4% WR.

[SustainableHappiness]

You can look up my journal if you want more details, but my wife and I are implementing a very very similar outline to what black_son_of_gray stated. We've been off for about 8 months with our first baby and are not planning on returning to full-time work, or even the same employers. We'll be teaching/freelancing (me), starting part-time small business (her). The 8 months has been a good test at very reduced income as we've been on only Unemployment cheques, which is how Canadian maternity leaves work, and I brought in my first $500 of contract income last month...woo woo!

Anyways, we've been still accumulating net worth and our anticipated income should have us still straight-up accumulating $5-10K a year still, without market growth. I'll be working ~15-25 hours per week, depending on the week and she'll be working...??? no idea, but not much, Baby SH and his future siblings are the priority for the next ~10 years, then once they are all in school who the hell knows?!

Interestingly though, it took me 5 or 6 months before I fell into a comfortable life groove, literally, I now wear sweat pants a lot.

[SustainableHappiness]

Oh, and we are doing all this with roughly 15x spending. We're FI in mind, therefore numbers are less relevant.

[FBeyer]

... I now wear sweat pants a lot.

Hallmark of the free

[7Wannabe5]

Good plan, so long as you aren't semi-depending on passive income from continued sales of rare book inventory as opposed to conservative return from stock market equities (sigh.) Still, highly unlikely that I will persevere at working full-time-for-other again even long enough to hit 10X spending, and if I do it will likely only be because I switched jobs 10X too. That's one of the perks of not giving a rat's azz about having a career or a coherent resume, because it's just about the stash/roll. Of course, it's easier to just hop from one new curve to another if your overall spending is low enough that $15/hr full-time = 75% savings rate.

[black_son_of_gray]

@Augustus

Long answer in my journal. (Thanks for spurring me to update it!)

Short answer is that I'll probably be implementing a transition to this strategy in a couple of months. I can sympathize with the decision calculus of part time for a long time or full time for a short time. I'm still open to high-paying full time job for 3-5 years if one just falls in my lap. I'm leaning a little bit away from that right now, though, simply because I've never not had a full time job as an adult, and I want to experience what that is like before I make a judgement as to what better fits me.

[SustainableHappiness]

I'll be honest the switch to sweat pants was not deliberate. My jeans (which should not even be called jeans because they only lasted me <2 years after purchasing for a redneck wedding) wore away in the crotch from biking around with them on so I switch to sweats and slush pants over top from riding in the snow/rain. I've just never looked back because it's just a better way to live...

Stupid crotch-less jeans.

[wolf]

I am planning on going "semi-ERE" at only 12x. I will leave the job and switch to part-time freelancing.

Did you switch to part-time freelancing?
How is semi-ERE?

[TopHatFox]

I like this idea. Save up some $ and then enjoy your life while saving up some more. The less time we can spend stressed out in offices, the better. I’ve found that work mates that you meet while volunteering or doing part-time, supplementive work tend to care about you more. That compared to colleagues in a full-time office job, who tend to to take you and the work for-granted, like something that just is and doesn’t need to be shown appreciation.

Truthfully, relying on standard asset classes is starting to seem more like a religion compared to the security of « can I live simply and show up to freelance this week for 10-20 hours »

[AnalyticalEngine]

What do you all think of the coasting strategy in today's investing environment? If we are looking at 10+ years of flats/minimal returns, is coasting still a good idea?

[Fish]

@AE - I view coasting as a lifestyle decision, not a wealth strategy. For someone who hasn’t yet “made it”, going from saving+compounding to compounding only is a huge loss of financial firepower unless SR was low to begin with (<20%). Assuming flat returns takes compounding out of the picture and makes coasting even worse. Then the relevant question is not “can I still coast from 50% to 100%” but rather “do I have the right asset allocation?” This is because the AA becomes more influential for time to FI at lower savings rates. For analyzing coast FI, I find it helpful to use the Portfolio Charts portfolio growth calculator with these settings (start=50% progress to 4% SWR):

• Starting value = 12,500
• Annual contribution = 0
• Goal = 25,000

Some example portfolios which demonstrate variability in years to FI are: 1) 100% TSM, 2) 100% LT bonds, 3) Permanent Portfolio (25% each of: TSM, LT bonds, ST bonds, GLD)

On another note, coasting seems remarkably similar to the recent “semi-ERE” phenomenon with the one difference that coast has a destination while semi-ERE *is* the destination. It doesn’t surprise me. The FIRE movement seems to emphasize achieving financial security by multiple means: job, assets, low expenses. If paid work is a given, may as well choose something enjoyable and/or sustainable.

[classical_Liberal]

I think it's always a viable strategy, but it depends on you. I completely agree with @fish, this is a lifestyle decision. FI in itself is only part of ERE. So is the goal to reach FI, or to reach a lifestyle that is spent more in renaissance-man quadrant? I'm going to use @fish's excellent comment from a different thread to try and illustrate the difference. viewtopic.php?p=120448#p120448

I also feel somewhat called to defend the idea of semi-ERE, since I'm the one who started using it regularly in my journal. Please note, that when I began to use the term to describe my goals, I did not take the time to create an exact definition for the term. It simply seemed like the best way to describe my goals. I view semi-ERE as a form of ERE, without FI. Where as semi-retirement is a form of E-ER, without FI. Where one wants to place costing to FI on that spectrum is up to them, I don't feel obligated to clarify that term.

If goal is ERE, in both the book and blog posts, Jacob clearly points out FI is not a prerequisite for this lifestyle. Although the freedom FI brings from a time and choice perspective makes it easier to pursue and simply living ERE will likely create a surplus of wealth leading to FI. 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.

[mooretrees]

When people who are considering this 'coasting' path, do they plan on drawing down some from saved assets? Or are they planning on covering basic living expenses and saving small amounts from part time work?

[2Birds1Stone]

I can only speak for myself, so take this with a grain of salt....

Our plan, now that we have significant assets (15-20x annual expenses) is to live off the cash/bond portion of our portfolio while not earning income, supplementing with paid work sporadically (whether that's PT/FT/Seasonal etc), and letting the equities side grow. There may be a year or two with a positive savings rate (adding to the portfolio), years of 0 earned income, and years where we live off of the income and simply let the portfolio grow*.

Were were in a situation where another 2-3 years of FT white collar salaryman type work would have gotten us to "our number". But what I've noticed with myself and others here and elsewhere, is that often times we keep moving the goalposts further and further out, never actually decoupling ourselves from our high incomes. Therefor, we are experimenting with Semi-ERE now, and really focusing on designing the type of lifestyle we believe will give us satisfaction/happiness/purpose or whatever you want to call it. It also gives us practice in optimizing our spending to possibly bring our overall number down (to bring 3% of assets closer to our actual spending), and to learn other means of getting shelter, food, hobbies, than simply spending income or saved assets.

*unless we are in a bear market and assets tank while we spend our monies! (which is looking like the scenario for 2020)

[Jin+Guice]

@mooretrees:

My "plan" is to work intermittently and part-time. I'd like to not draw down on savings until I have an investment plan (my ERE weakness is investment knowledge), but I'm not opposed to drawing down on savings if I need some time off or start up capital. Currently I'm working a job I don't really like but, it's highly paid and has a lot of time off. I can maintain a 50% savings rate working 1-2 days/ week. Eventually I hope to leave this job to do something I like more. I really don't like working less than 1 day a week or more than 3 days a week (unless I'm getting paid to do something I am really into, which I doubt will happen again). I'm planning on working at least 1 day a week, basically until I die. I also believe I'll hit 33x annual barebones spending sometime in my 40s (I'm currently 32 and am about 50% of the way there). I plan to take at least one year off per decade. Once I think I've figured out how to make money off of my investments, I'd like to spend a year drawing down on them to see how it feels.

[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]

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]

@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]

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:

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:

I view coasting as a lifestyle decision, not a wealth strategy.

As is this:

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.

[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.