We’ve reached Coast FIRE!

What is Coast FIRE?

For those who aren’t aware of the term, Coast FIRE (Financial Independence, Retire Early) is when you have enough in your retirement/investment accounts that without any additional contributions, your net worth will grow to support retirement at a traditional retirement age.

We were recently on holiday and the time off usually kicks my “outside the box” thinking into overdrive. Having the time and space to take a step back from the everyday and look at things from a different perspective. I hadn’t really had coast FIRE in our plans but had the thought “what if we didn’t invest anything else and just lived off our whole salary, when would we reach FIRE?”. Out came the spreadsheets.

The numbers

The way our investments currently stand, we have about 120k between different investment and retirement accounts combined. Growing at a rate of between 6% and 8% after fees and inflation and earning dividends of between 0.5% and 2% – I have the estimated portfolio performance broken down per investment vehicle as some are tax-deferred and have higher growth while others do not – our portfolio should grow to 850k by the time I am 61 and Mr. MH is 65 without investing another cent between now and then.

Using the safe rate of withdrawal of 4%, that should give us enough to withdraw 32k/year. This is our expected cost of living once our mortgage is cleared and Little MH is grown. This does NOT include any state pension which we would not qualify for, for another 2 – 6 years at current projections.

What about current markets and inflation?

Of course, this is all based on assumptions on certain market performance and inflation, and many things could go wrong along the way but similarly many things could also go right. The goal of early retirement for us is really about financial security and being able to live a life of intention.

If for whatever reason our retirement pot doesn’t grow to a certain value by a certain age, the worst case scenario is we keep working to normal retirement age, which is the status quo anyway. And if we’re honest, neither of us think we will give up work in full, unless we have to, even if we do reach our FIRE goal. Work may just take on a different form, in that we could work on things we choose, things that make a contribution to society and feels valuable.

Our plans

So, does this mean we will stop cutting expenses where we can and stop investing from today going forward? Of course not. However, it does give us the freedom to choose and do things differently. It gives us options.

Besides, our current level of spending is somewhat optimal in that we feel we spend enough to be happy. Spending more would not bring more happiness.

Options

Some of the other options we’re considering:

If we stay in our current house.

Scenario	Stop Saving In	FIRE Reached In
Coast FIRE	Now	25 years
Flamingo FIRE*	13.5 years	20.5 years
I leave work and Mr. MH goes back to work		24 years
I work 4 days a week, Mr. MH stays off		15 years
I work 4 days a week, Mr. MH work 3 days a week, 3k in childcare		13 years

Another option we are quite seriously considering is moving out of the city. The main criteria would be a better schooling district for our son and cheaper housing. The house would need to be well serviced and within walking distance of school and shops to ensure we would not need a second car. This is more feasible now due to the availability of remote work.

We have our eye on a number of communities, one is even within the same estate as some of our best friends. A house of similar quality and size to ours recently sold there for 220k while a house in our own estate recently sold for almost 360k. If we sold where we were and moved out of the city we could free up some equity to invest and reduce our timescale significantly.

Scenario	Stop Saving In	FIRE Reached In
Coast FIRE	Now	20 years
Flamingo FIRE*	5 years	11 years
I leave work and Mr. MH goes back to work		17 years
I work 4 days a week, Mr. MH stays off		11 years
I work 4 days a week, Mr. MH work 3 days a week, 3k in childcare		9 years

*Flamingo FIRE is where you save 50% of your FIRE pot and then coast from there earning just enough to cover expenses which usually gets you to your full FIRE goal in less than 10 years from that point.

Realistically, we will probably toggle between these options along the way. Some years we may take it easy and spend more, others we will both work and invest more.

Ultimately we are tracking towards a goal and we’ve already reached a certain degree of security which has made these options available to us while still working towards the goal of early retirement. When exactly we get there doesn’t really matter as long as we are living life in line with our values along the way.