I’m digging the idea of Coast FIRE–which is basically what my goal has been for a while, I just haven’t had a name for it. By “Coast FIRE-ing,” basically you save enough that you no longer have to keep saving. You just work to pay expenses and your savings grow to support your expenses forever. I like the sound of that.
One of my commenters reminded me that at two million in savings, I might already be there. But then I realized I don’t actually have two million in savings. So I need to figure out how much savings I need to Coast FIRE and then focus on getting there, versus some meaningless arbitrary number that sounds good (like five million, though that still sounds good.)
- Cash – 185k
- Home Equity (After Sale) – 226k
- Taxable – 508k (726k at 30% tax)
- IRA – 211k (353k at 40% tax)
- Roth – 103k
- 529 – 90k
Total Actual Family Networth: 1.3M
Minus home equity and 529 = 984k
So… we’re not really at 2M. I think where I’m going is that we need to get to 2M after tax, not including home equity and 529, to be Coast FIRE. I need to run some more numbers, but the above is a more realistic breakdown of our actual family net worth.
It can definitely grow over the next year with my vesting a chunk of company stock, but it will be a while before we hit 2M… and even then I’ll have to make enough income to afford about 12k a month in expenses for the next 30 years without any savings on top of that. I guess if we get to 2M after-tax net worth (minus our home equity and 529 funds), then we have to earn 250k a year together to cover 12k a month in expenses. If my husband makes 90k, that means I need to make 160k to Coast FIRE, once we’ve saved 2M.
Just curious, are you leaving any 401k or similar space on the table in favor of taxable investments, or are they not options for you? Is your cash position usually this high, or is it related to new house / baby on the way / pandemic caution?
Anyway, you are doing great, and your future self is going to thank you!
Next year due to company stock vesting at high value I am planning to max out after tax account at work (Roth) and 401k (pre tax) and my husband will max his solo 401k, so that’s a total of about 50k pre tax and 30k Roth next year. What is leftover I plan to put into super funding my 2 kid’s 529 (75k-150k each depending on how stock does.) My cash position is normally not this high, but as first time homeowners I’m leaving room for the unexpected for a while until I get a sense of what home ownership actually costs. The cash I note here is actually after about 70k in updates that we plan to do, which I also have in cash right now.
I don’t feel like I’m doing great… but maybe I will in a few years!