Here's How Much Money You Need to Coast to Financial Independence.
But first, let me tell you why you should care.
If you want to pursue Coast FI to build a life you love, then you’re going to need to answer this question: how much money do you need?
But, before we dive into the numbers, let’s explore why you should care.
Why should you coast to financial independence? What could it mean for your life? Who really cares?
For me: I’m coasting to financial independence so I can do what I want, when I want, with the people I want, for as long as I want—which as best-selling personal finance author Morgan Housel writes, is “the highest dividend that money can pay.”
A few days ago I returned home from 2 weeks in the South of France—an epic adventure with my wife and daughter. This was a trip that never would have been possible if I was still working the old 9 to 5, relying on 1 week of vacation per year. But now, as a freelancer and seasonal tax preparer, I can leave the country for weeks at a time, no questions asked, no approval needed.
Having that level of freedom and autonomy is deeply satisfying as I can build a life I love, without having to ask a boss for permission.
And that’s what’s possible when you reach a point where savings becomes optional—allowing you to work flexibly to cover living expenses, seasonally, part-time, freelance, or whatever you decide.
But it begs the question: how much do you need to save before coasting to FI?
This Coast FI Grid offers some quick answers 👇👇👇
Let’s explore how to use this grid to quickly calculate your coast FI number.
First, estimate how much you plan on spending each year in retirement on the left-hand side.
Then, find your current age on the bottom.
Where those two meet, is the amount you need invested right now to coast to financial independence (in thousands.)
For example, assuming you plan to spend $60k per year in retirement, and you’re 32 years old, you would need $311k invested right now to start coasting. Alternatively, if you plan to spend $40k a year in retirement, and you’re 32 right now, then your coast FI number is just $207k.
And here’s something cool to consider: you can decrease your annual spending in retirement number by any amount of Social Security, pension, or other passive income you will have in retirement.
So, if you plan to spend $60k per year in retirement, but estimate that you’ll have about $30k in Social Security income between you and your spouse, you really only need $30k per year from your investments—that takes your coast FI number from $311k at age 32, to just $155k. OR, if you have rental properties that net you $24k per year in income, then you can reduce your $60k needed to just $36k per year, taking your number from $311k to roughly $181k.
Ultimately, this grid is a great way to get a quick look at how much money you need invested to start coasting to financial independence.
Interested in Coast FI but don’t know where to start? Here are 3 easy steps 👇👇👇
1. Define your “why” of FI.
One of the keys to staying the course on any difficult journey is to have a strong why. Your why is what will keep you going when the going gets tough, and it’s the most important part of this entire journey. So, take some time to write down why you want to coast to financial independence, using the following questions as your guide:
If savings were optional, how many hours would you like to work each week?
What would a day in your ideal life look like? When would you wake up? How long would you work? How would you spend your free time?
What could coasting to financial independence mean for your life?
2. Use this Coast Fire Calculator to take a closer look at the numbers.
If you’re looking to get more granular with your coast FI number, head over to this free Coast FI calculator to crunch the numbers. This should give you a clear understanding of how much money you need invested to start coasting, providing you a clear target to aim for.
3. Join the Slow FI movement.
Lastly, join a community of people that are working towards financial independence at a sustainable and balanced pace. If you’re on facebook then join the Slow FI Enthusiast FB group, and consider RSVPing to the upcoming Coast FI meetup on July 20th at 7pm ET, hosted by Jess from The Fioneers. Or if you prefer Reddit, consider joining the Coast FIRE Reddit group. By joining a coasting community, you can explore ideas, share your thoughts, and help others on their coasting journey.
What a sexy article!