Young People Are Obsessed With This Simple Retirement-Savings Formula
Calculating when you can coast on what you’ve already saved comes with its own pitfalls
What if there was a single number that could tell you when you’ve saved enough for retirement? A formula going around the internet promises to do just that.
It is called Coast FI. The FI stands for financial independence, since it is an offshoot of the Financial Independence, Retire Early movement that encourages extreme saving early in your career. But instead of retiring early, it marks the point at which you can coast on what you’ve saved.
Coast FI is when you have enough in investments to fund your full retirement without any more contributions. The idea is that reaching Coast FI early frees you up to, say, take a lower paying job, take time off from work or try to start a business.
It is pleasing in its simplicity, but it also comes with lots of risk, especially if reality doesn’t line up with your calculations.
“It’s great to start early,” said Matt Coursen, a certified financial planner and relationship manager at Plante Moran, a wealth-management firm based in Detroit. “But just understand that life happens, things change. Your circumstances are going to change.”
I would guess this won’t matter much to the denizens of this board since we are mostly, uh, “of age”, but it’s an interesting idea for your unmotivated progeny, the inhabitants of those various flavors of Gen [insert letter].
“Nothing new under the sun” or “Everything old is new again”. Just new packaging for a new generation. New Coke or Coke Classic. I’m trying to instill this in my nephew, save early, save often, and you will more quickly reach a point where you can do what you want to do instead of what you have to do.
The family culture I was raised in was similar, but emphasized not spending money on stupid stuff, which translated into ignoring fashion, eating at home or taking food with you FABULOUS FOOD was emphasized, near cost free vacationing, backpacking x country skiing, etc…. NEVER buying on credit
A big emphasis held quietly was that almost everyone else was stupid in there use of money.
That is sort of what intercst did. Got his degree, worked, was incredibly frugal (eliminating skim and such), and retired at 38.
1poorkid is saving, but she’s also spending on vacations. So she will have to work longer to achieve retirement. But she’s enjoying life now with the knowledge that tomorrow isn’t guaranteed (she’s in Ireland right now).
It’s always finding the mix of living your life vs saving for your dotage.
I worked in a field I loved, made a good salary, invested it both luckily and wisely, and retired at age 48. I would have worked longer, but I got a new CEO who I thought was a moron and who thought I was arrogant.
We were both right, and I left. Been out 31 years now. Life is good.
I thought that was reserved for the immigrant ear.
I love how immigrants say they are important to the economy. Hardly. LOL If consumption is the goal. Individual capital formation counts for very little in macro terms.
