Have I saved enough for Coast FI?

[OmniaProPatria]

I would appreciate the insights of this group. Here is my situation:

In 2022, my consulting side-gig brought in $100,000, leading me to seriously consider quitting my rather stressful day job, which pays $150,000 + 10% 401k match + excellent health insurance. I’m under contract at the job until June 30, 2023, so I have a six month runway to gear up for a departure and to work on acquiring new consulting clients.

I have no doubt that I can live on my consulting income alone —*but doing so would essentially require me to stop saving for retirement.

Currently, between 401k contributions and match, IRA contributions, and after-tax investing, I put ~$10,000/month into investments, all low-cost index funds. If I were to quit my day job — and if my consulting income doesn’t jump — I’d invest only ~$1,000/month at most.

Here are my numbers (as of 12/17/22):

Age: 42, single, no kids
401k: $800k
Roth IRA: $425k
After-tax brokerage account: $1,325k
Cash: $100k
Home value: $550,000
Debt: 60k mortgage at 2.5%; no other debt

Current expenses: 45k/year
Expenses without my day job: 65k/year (largely because of health insurance)

I could easily sign on with the day job for another year — and stay until June 2024. But I don't want to. And I wonder: If I can’t confidently make this move now, after earning $100k/year in side-gig income, will I ever be able to make the move?

Thoughts on quitting the day job — and coasting for a decade?

 

[bloom2708]

In a way, it is an FI luxury to be single with no kids.

Ball is 100% in your court. You control all the spending.

You are way ahead and can certainly do it on $100k. Most families do it on less than $75k.

As usual, is health insurance tied to your J-O-B? With $100k income, you won't qualify for a subsidy, but plans are still reasonable with a high deductible.

If I was single/no kids, I wouldn't own a house. Just extra cost. I'd rent something all the amenities I like/want.

Good luck!

 

[njhowie]

Go for it. Single you can easily do it. You have flexibility and $100k consulting is great.

If you go in to a market-based health plan or from healthcare.gov, I don't think you'll be anywhere near $20k/year, unless you have some underlying health issue(s) and/or need something better than a bronze plan.

You should also look in to professional organizations for consultants which may have lower cost plans.

 

[aaronc879]

You could probably retire outright if you wanted to so you can easily quit your W2 job and go out on your own as your only income. You don't need to grow it beyond what it is now. $100K is plenty for you to live on while you let your investments grow even if you don't add to them.

 

[Sunset]

....

Thoughts on quitting the day job — and coasting for a decade?

What happens after the decade ?

I have a friend that was in IT, she quit work and coasted for a decade, which is why your statement struck me.

She enjoyed her decade, earned a degree, and did what she wanted.
Then she asked me to vouch for her for a job making a lot less than when she quit work

So, after the decade, what is the plan ? Will you retire or go get a job

 

[ImaCheesehead]

What happens after the decade ?

I have a friend that was in IT, she quit work and coasted for a decade, which is why your statement struck me.

She enjoyed her decade, earned a degree, and did what she wanted.
Then she asked me to vouch for her for a job making a lot less than when she quit work

So, after the decade, what is the plan ? Will you retire or go get a job

LOL, OP’s idea of coasting for the decade is doing their side gig for 100k per year.

 

[Mr. Tightwad]

You have 2.5 mil and a side gig that yields 100k.

You never need to work again.

 

[ImaCheesehead]

So you have 2.6 million in investments and 500k equity in your home. You will be earning 100k and live on 65k while your investments grow.

I would say you can quit your stressful day job.

 

[aaronc879]

LOL, OP’s idea of coasting for the decade is doing their side gig for 100k per year.

I know, right. That is a solid full time income. Coasting would be only working enough to get paid half that or less.

 

[W2R]

I would appreciate the insights of this group. Here is my situation:

In 2022, my consulting side-gig brought in $100,000, leading me to seriously consider quitting my rather stressful day job, which pays $150,000 + 10% 401k match + excellent health insurance. I’m under contract at the job until June 30, 2023, so I have a six month runway to gear up for a departure and to work on acquiring new consulting clients.

I have no doubt that I can live on my consulting income alone —*but doing so would essentially require me to stop saving for retirement.

Currently, between 401k contributions and match, IRA contributions, and after-tax investing, I put ~$10,000/month into investments, all low-cost index funds. If I were to quit my day job — and if my consulting income doesn’t jump — I’d invest only ~$1,000/month at most.

Here are my numbers (as of 12/17/22):

Age: 42, single, no kids
401k: $800k
Roth IRA: $425k
After-tax brokerage account: $1,325k
Cash: $100k
Home value: $550,000
Debt: 60k mortgage at 2.5%; no other debt

Current expenses: 45k/year
Expenses without my day job: 65k/year (largely because of health insurance)

I could easily sign on with the day job for another year — and stay until June 2024. But I don't want to. And I wonder: If I can’t confidently make this move now, after earning $100k/year in side-gig income, will I ever be able to make the move?

Thoughts on quitting the day job — and coasting for a decade?

If it was me? Assuming you live in an area with average cost of living, I'd quit in a heartbeat. You have far more $$$ than I do, and I can't even manage to spend half of what I can afford to spend.

But it's NOT me, it's YOU!!! What do you think? What do you envision your life to be like without your day job? Will it be more expensive than your present lifestyle? If it was me, I'd GO FOR IT. At your young age I think you could probably get another job easily after a year if things don't work out for some reason.

 

[Richard4444]

Since you can totally FIRE now, you could choose either your present or a similar consulting job only if you would like to have something to do. I FIREd 28 years ago from my primary profession, returned to school to pursue an interest, obtained another degree, did that P/T for 21 years as a total volunteer one to two days weekly to have purpose, and that turned into income (part time) 2 years ago and I love it. Choices! Freedom to choose!
Rich

 

[OmniaProPatria]

So, after the decade, what is the plan ? Will you retire or go get a job

That's a fair question, and I'm not sure. I imagine health care will become increasingly expensive once I'm 55+ so, at that point, perhaps I'd look for something part-time with health care, or even move abroad.

LOL, OP’s idea of coasting for the decade is doing their side gig for 100k per year.

I know that sounds crazy, but I live in a VHCOL area. Example: I pay $16,000/year in property taxes and $8,000/year in HOA fees on the $550k condo.

 

[aaronc879]

That's a fair question, and I'm not sure. I imagine health care will become increasingly expensive once I'm 55+ so, at that point, perhaps I'd look for something part-time with health care, or even move abroad.



I know that sounds crazy, but I live in a VHCOL area. Example: I pay $16,000/year in property taxes and $8,000/year in HOA fees on the $550k condo.

With your assets you could fully retire and do ROTH conversions to get your income high enough to qualify for full ACA subsidies so you pay very little or nothing on health care. Then use your large taxable account savings to fund your expenses. Not that you need to but you could move to a different location since you wouldn't need to worry about employment prospects. You have a lot of options.

 

[aja8888]

That's a fair question, and I'm not sure. I imagine health care will become increasingly expensive once I'm 55+ so, at that point, perhaps I'd look for something part-time with health care, or even move abroad.
.

"Something part time with health care" is a pipe dream these days.

 

[luckydude]

I would appreciate the insights of this group. Here is my situation:

In 2022, my consulting side-gig brought in $100,000, leading me to seriously consider quitting my rather stressful day job, which pays $150,000 + 10% 401k match + excellent health insurance. I’m under contract at the job until June 30, 2023, so I have a six month runway to gear up for a departure and to work on acquiring new consulting clients.

I have no doubt that I can live on my consulting income alone —*but doing so would essentially require me to stop saving for retirement.

Currently, between 401k contributions and match, IRA contributions, and after-tax investing, I put ~$10,000/month into investments, all low-cost index funds. If I were to quit my day job — and if my consulting income doesn’t jump — I’d invest only ~$1,000/month at most.

Here are my numbers (as of 12/17/22):

Age: 42, single, no kids
401k: $800k
Roth IRA: $425k
After-tax brokerage account: $1,325k
Cash: $100k
Home value: $550,000
Debt: 60k mortgage at 2.5%; no other debt

Current expenses: 45k/year
Expenses without my day job: 65k/year (largely because of health insurance)

I could easily sign on with the day job for another year — and stay until June 2024. But I don't want to. And I wonder: If I can’t confidently make this move now, after earning $100k/year in side-gig income, will I ever be able to make the move?

Thoughts on quitting the day job — and coasting for a decade?

How sure are you that your side-gig will always be there and earn you $100k a year for the next 10 years? If it were me, I would be hesitant to quit my day job unless I am absolutely sure that the side-gig is rock solid, especially in the current economic environment.

The issue I see is that while $3 million is a very nice stash and can easily support your current 2.1% withdrawal rate ($65k spending per year), you're only 40 and may live another 50-60 years. You may be single now, but who knows, you may want to start a family and have kids in the future. Also, about half of your liquid investments are in retirement accounts, so you can't touch them until you're 59. If your side-gig goes sideway, you'll need to live on your post-tax $1.4 million for the next 19 years (at about 4.5% withdrawal rate with $65k spend per year). Given all these, I wouldn't be comfortable quitting without being assured that the side-gig is rock solid to earn enough income for the next decade.

 

[FREE866]

If I'm reading the numbers correctly you have approximately 3 million dollars, of which 2.5 million is liquid,and your expenses are $65,000.



If that's correct you're golden....


Stop working immediately

 

[DrRoy]

So you have 2.6 million in investments and 500k equity in your home. You will be earning 100k and live on 65k while your investments grow.

I would say you can quit your stressful day job.

+1

 

[aaronc879]

How sure are you that your side-gig will always be there and earn you $100k a year for the next 10 years? If it were me, I would be hesitant to quit my day job unless I am absolutely sure that the side-gig is rock solid, especially in the current economic environment.

The issue I see is that while $3 million is a very nice stash and can easily support your current 2.1% withdrawal rate ($65k spending per year), you're only 40 and may live another 50-60 years. You may be single now, but who knows, you may want to start a family and have kids in the future. Also, about half of your liquid investments are in retirement accounts, so you can't touch them until you're 59. If your side-gig goes sideway, you'll need to live on your post-tax $1.4 million for the next 19 years (at about 4.5% withdrawal rate with $65k spend per year). Given all these, I wouldn't be comfortable quitting without being assured that the side-gig is rock solid to earn enough income for the next decade.

You CAN touch retirement accounts before 59.5 you just have to pay the 10% penalty. If he has 10% more money than he needs then he can retire anytime.

 

[ncbill]

If the OP wants health insurance subsidies you could also setup a traditional tax-deferred plan and divert a large chunk of that $100k/year income into it.

Though I'd just pick the lowest out-of-pocket cost unsubsidized ACA plan instead.

The OP could also find another job with better work-life balance, good health coverage & not care about the salary (local government?)

 

[NgineER]

...Also, about half of your liquid investments are in retirement accounts, so you can't touch them until you're 59. If your side-gig goes sideway, you'll need to live on your post-tax $1.4 million for the next 19 years (at about 4.5% withdrawal rate with $65k spend per year). Given all these, I wouldn't be comfortable quitting without being assured that the side-gig is rock solid to earn enough income for the next decade.

You CAN touch retirement accounts before 59.5 you just have to pay the 10% penalty. If he has 10% more money than he needs then he can retire anytime.

Quitting this early with that amount in after tax he should be able to set up a Roth ladder for lets say $65k, or $65k plus taxes and convert the tIRA well before 59.5 and after five years start pulling out the conversion amounts. This can be done without any penalties at all.

 

[Koolau]

I agree with most that you can go. Only real question is health care. If you can lock in something, you should be golden - side gig or cold turkey. By the way, what will you DO all day?