Welcome to Q & A Wednesday on Millionaire Habits, where I answer one of your weekly questions for everyone’s benefit. Have a question?
💡 Question: “I saved all my life and have $2.1 million. 42 years old and bored. Can I let off the gas yet?”
Here’s a great question. Imagine you’re in your early 40s. You’re living comfortably. Over $2 million in net worth. Overall, things are good.
But your job is boring. Yet, you robotically commute into the office every damn day to do the same damn thing over and over again.
And you’re getting sick of it.
With a $2M nest egg, can you let off the gas, relax, and coast to retirement? Or is it too early?
Let’s find out.
When Can You Coast To Retirement?
With $2.1 million, you’re in a great position to coast. Not only is it possible, but there’s an entire school of thought around this subject called CoastFIRE. It’s actually pretty cool. Here’s how it works.
CoastFIRE essentially front-loads your wealth-building to the first half of your career.
You’ll spend the first 15 to 20 years of your career working your butt off and earning as much money as possible.
Then – somewhere in your 40s or early 50s, you can let off the gas by working a less stressful job, stop contributing to your investments, and live off that lower salary. You’ll make less, but you will also regain much more of your time. Your freedom expands exponentially.
And your investment nest egg you built continues to grow in the stock market during this time. Just let it do what it does best: Grow.
Yes, you CAN let off the gas at 42 with a $2.1 million nest egg provided you can fund your lifestyle with a lower-paying, less stressful job.
That’s the key.
If your expenses are too high, coasting won’t work as well. If your expenses are low, you’re in a prime position to coast.
For instance:
You’re spending $150,000 a year. Taking a lower-less job making $65,000 a year means you gotta make up $85,000. Where’s that coming from? Probably your investments, which means you’re drawing down that nest egg early in your career. That isn’t necessarily a problem, but you gotta be okay with touching your investments while still in your 40s.
On the other hand, if you can reduce your spending to around what you’re earning with your “coast job,” you get to live off your salary and let your investments continue growing.
CoastFIRE: Earn a crap load of money early, then take a low-stress job and let your investment nest egg build while living off of a lower salary.
This is the recipe for a rich retirement.
Enjoy coasting!
Chat next week,
– Steve
