The last thing I wanted to hear when I started trying to figure out how to navigate the world of personal finance was, "well, it depends." To that end, contrary to what my 20-something year old self wanted to be told, my 30-something year old burnt out self yearned for someone to tell me exactly what to do and in what order. But no one hands you a manual, we're just expected to know about retirement accounts, how much to contribute to them, how to manage loans and their respective interest rates, consequently get out of said debt from said loans and then be told we're failing and should be ashamed of ourselves if we don't figure out this formula that was specifically created to not be solved so the never-ending cycle to guilt, shame, and consumption could do what it does best, create problems and then sell us the "fixes" in pretty and sexy packaging.
Phew ok, now that I got that rant out of the way about how modern systems are failing us at every single level, I want to talk about what became a motivator for me to finally get it together, self regulate enough to be able to stick to boring systems, and acknowledge that if I ever wanted to escape this hamster wheel, I'd need to do something very different than what those around me were doing because that is what we're expected to do and what we're told to do is, in my humble opinion, utter bullshit. Enter, Coast FIRE.
Let's start with the FIRE movement first which began focusing on strategies historically meant for retirees to be able to calculate how much they'll need in retirement and how much they can comfortably withdraw from their investments to last them after they're no longer contributing regularly from a paycheck. As such, this number tends to be pretty hefty given it assumes a person has worked most of their adult life, contributed to these retirement savings and is now able to withdraw at a rate of 4% to not run out of money for 30 years. It is also based on how much they estimate to spend in retirement. So if you plan to spend $100,000 a year in retirement, you multiply this by 25 (to account for that 4% withdrawal rate) would give you $2,500,000 needed in investments to feel comfortable withdrawing $100,000 a year for 30 years after retirement.
When I learned I could try to reach this number prior to age 67 and tell any one person or situation I wasn't enjoying that I would see myself out, I was all in. I was ready to reach that FU number and never have to find myself in a situation I didn't like and money wouldn't be a barrier, it would be a tool at my disposal to say "see ya never!" I quickly realized, however, that allocating most of my income to my future self meant making significant sacrifices in the now and that I would be hard pressed to enjoy spending that money in the future if in the meantime I lived in extreme frugality, saving every dollar to the point that I wouldn't even know how to spend it intentionally in the future. Finding a balance in life is difficult, but I believe absolutely necessary when it comes to personal finance in order to not overspend and constantly feel anxious about money and your spending but also not become so frugal that you're not able to enjoy the now through experiences and with people that fill your cup.
That's when I started learning about Coast FIRE which seemed like a good middle ground — an attainable goal that wouldn't require you to stop your life in the now. This concept refers to when you have enough money in your retirement accounts that your net worth will grow to support retirement at a traditional retirement age without additional contributions. You're able to still have a goal in mind to work toward but are also able to let go off the gas pedal at some point before retirement.
In the example below, someone aged 30 that plans to spend $100,000 in retirement and already has $160,000 invested with monthly contributions of $3,000 can expect to stop contributing to their retirement at age 49 and their investments would grow to $2.5M by age 65 without them having to contribute another dollar. They would then be able to allocate those $3,000 or $36,000 a year to something completely different, maybe work part-time and "coast" until retirement.
If you want to try different scenarios, this calculator will allow you to enter the 5 numbers above and calculate when you could reach Coast FIRE. I eventually found a way to stay as balanced as I could, not obsess over future me and a scenario I had no control over so I could enjoy the now, while not being completely reckless but rather paying future me first with enough cushion for present me to still enjoy life.
I think one of the main reasons personal finance feels so scary is because as the name suggests, it's extremely personal and forces you to ask yourself some serious questions about your values, your money mindset and behaviors to unlearn. We think it's just about numbers in our bank account, but it's rarely that easy, it's about how those numbers make us feel, what we think they tell us about ourselves and the stories we've created in our minds that could be far from reality, the life we want to create, the intentionality we want to bring into our spending based on our values, the freedom we can reach if we learn to use it as a tool to empower ourselves and others. Coast FIRE may be right for you or at least a goalpost to try to reach but remember that this is your journey to create as you want, to learn as much as you can and have some fun in the process.
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