When to coast?

[dallas27]

Dial back work can be called "coasting", but dial up spending is "speeding".



And once you are used to spend more, can you retire on schedule according to the original plan, if your lifestyle is now higher?

It's not speeding if you lbym'd hard early on, saved a lot, and then want to relax. Then it's called consumption smoothing. Most people blow their cash in their 20/30's. I'm just planning to spend some of what i make as i enter 40's / 50's. We are dinks, high earners, healthy, and have 700k NW. I don't think upping our spending to 50k a year is outrageous.


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[Car-Guy]

And once you are used to spend more, can you retire on schedule according to the original plan, if your lifestyle is now higher?

It can be done. However, there are probably some things that a rapidly increasing salary/income can't solve.

 

[NW-Bound]

... I don't think upping our spending to 50k a year is outrageous...

Upping to 50K a year total?

My, my. You cannot talk about coasting yet my friend, meaning shifting to Neutral. You have been stuck in Park.

 

[Whisper66]

Upping to 50K a year total?

My, my. You cannot talk about coasting yet my friend, meaning shifting to Neutral. You have been stuck in Park.

+1 on the above comment. Back when I was 40 (~ 2010), I was spending ~3 times that amount (including all taxes) and still saving a significant amount of my income. I did have 3 kids and eventual college expenses so not exactly same situation but it gives you some idea of one person's situation vs yours. By the way, my net worth also increased by a factor of 3 between when I was 40 and 50 so those were important saving years for me.

 

[dallas27]

By the way, my net worth also increased by a factor of 3 between when I was 40 and 50 so those were important saving years for me.

Would you have been ok with a increase of a factor of two instead of three to work only minimally those ten years and get things off the bucket list early?


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[NW-Bound]

Sorry if my joke was taken as disparaging. What I meant was that of course you should live a little.

I don't think one should have his mind set too hard on ER and forget about living a little for today. I am sure there are people who are extremely frugal, and who do not feel that they need anything else. Happiness is a state of mind. But once you entertain the thought that perhaps you are missing something, then splurge once in a while so that you do not feel deprived. You will be fine.

 

[Whisper66]

Would you have been ok with a increase of a factor of two instead of three to work only minimally those ten years and get things off the bucket list early?


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That would not have worked for me and my family. But everyone is different so my situation may not be reflective of yours.

Edit: Upon further reflection, I guess the result of factor of 2 vs 3 would have been a few additional years of work to get the savings I wanted to be safe in retirement. So it all would have worked out ok one way or another. I just retired earlier (at 55) this way.

 

[Lakewood90712]

I think of it more like gliding. Coasting will decay eventually. A glider can soar a lot higher, stay aloft indefenately with a just little guidance and wind

 

[Andre1969]

I've been toying a bit with the idea of coasting, on the 401k front at least, but can't bring myself to do it. I've gotten too accustomed to the tax break, I guess. Right now, every dollar I put into the 401k only costs about 67 cents, because of the tax break (25% federal, ~8% state/local). Of course, that means I'll be paying regular income tax rates when I withdraw it, rather than long term capital gains rates, but that's still a ways off for me.

If I scaled back on the 401k though, I'd probably take that money and do after-tax investing. So, I guess it's really not coasting. Just investing, but paying more taxes up-front in the process.

I might be willing to try coasting if I was planning on still w*rking for a good long time. But, I'm at the point where I want to just get to my target goal as quickly as possible, and then I'll look into phasing out w*rk.

 

[Totoro]

I'm sort of in a "coasting mode" right now.

35 years old, around 750k$ saved up and haven't worked in 7 months or so. Looking around for starting to do new things here and there, maybe a full-time job. But not in a rush. My expense level excluding long distance travel is somewhere around 30k$ currently (which I can easily drop to 25k$).

Chances are also high I either won't go back to work, or work on a project basis irregularly. I'll probably do a small consulting job for 5k this year for example. A few hours a week.

Certainly expect I won't reach my former rather high savings rate. In any case, I wouldn't work primarily anymore to achieve high savings rates, that part is getting lower priority now. And while I can always force myself to increase spending, I'm pretty happy where I am.

On the other hand, who knows .. I'm basically using this time to reflect alot (besides relaxing) and trying to re-imagine myself. At 35 there are still quite a few roads and adventures to be explored (also at 40, 45, even 50?) so nothing is excluded.

Even a stressful job for a year or two if some of the experience is worth it. Was just looking at a job for the European Investment Bank for example, just out of curiosity.

 

[dallas27]

I'm sort of in a "coasting mode" right now.

35 years old, around 750k$ saved up and haven't worked in 7 months or so. Looking around for starting to do new things here and there, maybe a full-time job. But not in a rush. My expense level excluding long distance travel is somewhere around 30k$ currently (which I can easily drop to 25k$).

Chances are also high I either won't go back to work, or work on a project basis irregularly. I'll probably do a small consulting job for 5k this year for example. A few hours a week.

Certainly expect I won't reach my former rather high savings rate. In any case, I wouldn't work primarily anymore to achieve high savings rates, that part is getting lower priority now. And while I can always force myself to increase spending, I'm pretty happy where I am.

On the other hand, who knows .. I'm basically using this time to reflect alot (besides relaxing) and trying to re-imagine myself. At 35 there are still quite a few roads and adventures to be explored (also at 40, 45, even 50?) so nothing is excluded.

Even a stressful job for a year or two if some of the experience is worth it. Was just looking at a job for the European Investment Bank for example, just out of curiosity.

I think you and I are thinking alike. "Let's see what the world has that is interesting, work or otherwise."





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[kaudrey]

We aren't coasting, really, but we did start saving less. I am 46, DH is 41. Five years ago, my very conservative projections showed that we would overshoot our target $ at our planned retirement date (when I am 57), by a lot, if we kept saving as much as we were.

We thought about balance, and about what was important to us, and we ended up buying a cabin in the mountains 2 hours from where we live. We have enjoyed in on countless weekends since then, and I don't regret the extra mortgage/expenses one bit.

We still save quite a bit (max our 401(k)s and Roths, and a little extra in taxable), but as a percentage of income, it's lower. My thoughts might have been different if I felt that the retirement date could be earlier, but I'm "handcuffed" to my retirement health benefits.

 

[RISP]

33 years old here; off to a good start, but nowhere near FI (or even 50% of that).

Simply put, I want to achieve FI ASAP with as few uncontrollable variables as possible. Once I'm there, I will evaluate reducing savings, loosening purse strings, etc. but I have no intention of coasting into that point.

I'm with Nash here, for the following reasons:
- I have a pretty decent job, but it's in a declining industry. Since I have no idea how many more rounds of layoffs I will survive, I'm saving aggressively while I can.
- I want to spend a lot more in retirement than I do now. Every dollar I save today will buy more of the good life 20 years from now.

Once I will reach bare-bones FI (meaning investment income covers then-current expenses at a WD of maybe 3.5%), I will re-evaluate my situation. If I still like my job, I'll continue working full time, while reducing the savings rate somewhat and starting to treat DW & me to some of the things we are currently denying ourselves. If I don't like my job, but it's bearable, I'll look for a different one or cut back to part time. And if I hate it and can't find a better gig, I'll find a way to retire on what I have already saved.

For me, the most precious aspect of FI is security, and options.

 

[NW-Bound]

Come to think about it, I did coast for about 9 years, from 2003 to 2012, when I worked only sporadic part-time, and my wife then quit. That period covered my children college years, so we could not have saved very much at all. My book keeping was very loose in that time, so I did not have accurate records.

 

[Jay_Gatsby]

Coasting sounds like a great idea if you're at or near FI. My only concern would be to build up a contingency fund in addition to being FI.

 

[YoungSaver]

I often think about coasting. I have a high percentage of my savings in retirement accounts. If I stopped contributing to them (actually I changed to do the minimum), in 25 years when I am 60, they will be worth a lot.

So I've been trying to build up non-retirement money, and basically hope to retire early and coast until 60.

An extreme example would just be to sell your belongings, invest all that money, go to prison for a few years, free room and board, weight lifting, still have to pay income tax, but eventually you will get out and your investment accounts should be fantastic.

 

[hnzw_rui]

An extreme example would just be to sell your belongings, invest all that money, go to prison for a few years, free room and board, weight lifting, still have to pay income tax, but eventually you will get out and your investment accounts should be fantastic.

That's quite an interesting plan...

 

[NW-Bound]

You forgot to mention the free health care inmates get. What a deal!

There's a poster in another thread who was totally unimpressed when he was told that he could get ACA subsidy by doing Roth conversion to count it as income. But that means he has to pay some income tax, and he does not wanna. He wants totally free health care, and said he had figured it out but would not bother to tell the dumb people here in this "typical" forum. Maybe he stumbles across this same solution.

Now, one will have to research the law to do the right crime to get a sentence for the number of years or decades that he wants to coast. If you don't get that right and stay locked up too long, it would not be called ER when you get out.

PS. Pick a crime that gives you some additional money to add to your retirement stash before going to jail. That's a double bonus. Something like drug dealing.

 

[dallas27]

If we can make it a womens prison, helll, i just might try that for a year.


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[NW-Bound]

Sex change operation for you?

 

[dallas27]

Sex change operation for you?

Well that would defeat the purpose, now wouldn't it?


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[NW-Bound]

Well, some women manage to entertain each other. You may figure out a way.

 

[ProspectiveBum]

We're about to start coasting. My DW and I have been married for 20 years, and she is seriously burnt out at her IT job. After long conversations, and running the numbers, we decided that after she collects a bonus in August, she'll quit and be a stay-at-home Mom to our 2 kids (8 & 11).

I think the whole family will benefit, because she'll take care of a lot of the household chores that we currently both do on evenings and weekends. The kids won't be stuck in after-school care and summer camps, as they are today. Effectively, we're trading her income/additional savings for more free time now. To make our budget work, our savings rate will be slashed by 3/4 (along with a lot of belt-tightening in other discretionary spending).

Based on our investment balances, we're only about halfway to FI today. I plan to work another 14 years, which would put my retirement age at 56. If I have to work another year or 2 at that point, I think I'd be fine with that trade-off. The one ace in the hole we have is that we'll have a paid-for house probably worth ~$1M at that point. If the stock market doesn't cooperate over the next 14 years, we should be able to downsize and extract a significant amount of equity to make up any shortfall. DW can always go back to work for a few years, too, especially once the kids are older.

For now, we're going to take it year-to-year. We'll try out what we're calling a "sabbatical" for a year, and adjust as we go. My DW is highly motivated to make this work, so I think it will.

 

[Closet_Gamer]

We're a few years older than the OP, but in a similar situation. We've had the hammer down on saving for a long time, but really were able to crank over the last few years. House paid, kids college fully funded, substantial emergency fund and enough retirement assets that if I get a 4% real return from now until I'm 55 I could retire then with a 2.75% SWR even without putting another penny into retirement savings from this point forward.

I'm not using this runway to coast, but I am using it to lighten up a bit. In particular, it gives me the option to consider different (more rewarding jobs) at a substantial pay cut. Combined with LBYM, we could take a 50% income cut and still LBYM without changing anything.

Ideally, I will find a new role that lets me continue saving but with a bigger smiler on my face. Continued savings at a decent rate should pull that RE age into 52 or so...and provide some dollar cost averaging should the market get manic again.

To the OP: one big risk of truly coasting from here is that the markets are quite high. You could have a sequence of returns risk and miss the opportunity to buy low over the next few years. Just a thought. Good luck.

 

[DaCounselor]

"I'm 37, planning to stop saving heavily at 40 and let compounding do the work while I either dial back work or dial up spending or both.

For others planning similar, how are you analyzing the numbers to decide when and how much you need?"

My analysis is based on how long it will take to hit my fully FI lump sum number. In my situation, if I keep grinding as is I estimate I will hit my number in about 11 years. If I scale back work in a few years and "coast", I estimate I will hit my number in about 14 years. I am leaning heavily toward "coasting", which for me equates to about 500 less hours of work a year but adds an extra 3 years to my FIRE date.