What is Coast FI?

Family|Finance

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So, we’ve been on our journey to F.I. (financial independence) since 2016 and I came across an article talking about Coast F.I.

My first thought was, “Umm, what is coast F.I.?” I’ve never heard of it since starting our journey so I did a little reading. Come to find out I knew the concept, just never heard of the term “Coast F.I.” before.

In fact, by the time I learned of this term, which was early 2020, we had already reached coast F.I.

What is Coast F.I.?

Coast F.I. basically means you have enough saved up in your retirement accounts (think 401K, TSP, IRA) that you don’t need to add another penny and it will grow and compound over time to a nice sizable amount so you can retire comfortably by full retirement age.

Here’s an article from the Social Security Administration if you are curious about early, full, or delayed retirement age.

How to Calculate Coast F.I. Number

So, how do we know if we have “enough” to reach coast F.I.?

I use my boring ‘ol spreadsheets to figure it out. But, fortunately I found a calculator to help you with that. Created by Andrew over at WalletBurst, this calculator is specific for coast F.I. (not a F.I. or FIRE calculator).

Some numbers you need to know in order to calculate your coast F.I. number are:

  • Your current age (this shouldn’t be hard 😉)
  • Your retirement age (full retirement age in the U.S. for those born 1960 and after is 67)
  • Your annual expense during retirement (give it a good average based off of your current annual expense)
  • Your current net worth (total up all your cash & investments for retirement minus debt, I use Personal Capital to get our most up-to-date number)
  • Monthly contribution (how much you are putting in your retirement accounts on a monthly basis)

This calculator assumes:

  • 7% annual investment return
  • 3% inflation
  • 4% safe withdrawal rate

I think the rates are fair and left them alone. But, you can adjust these rates if you want.

Below is a snapshot of ours and you can see towards the bottom it says, “You’ve already hit coast FIRE!” Woohoo! I added the fireworks.

I want to add that I only totaled up our investments in our TSP and IRAs accounts when using this calculator. I did not include our brokerage.

chart of reaching coast FI using wallet burst calculator

How We Reached Coast F.I.

When I was working as a registered nurse, I contributed to a 403b. Never logged in or anything because at that time, I didn’t even know where to begin if I were to log in.

I just contributed because during orientation some guy in a suit came and talked to us new orientees about retirement plans. Before orientation ended, I had to tell him if I wanted to contribute to my retirement or not.

My answer was yes. Then, he asked, “How much?” I looked at him like, “I don’t know. How much should I contribute?” Then, he said, “Well, the hospital is matching at some percentage (I can’t even remember what it was), so it may be a good idea to contribute at least that much.”

I agreed. Filled out the paperwork and that was that.

Same deal with my husband.

That was the beginning of our contributions to retirement. 

Fast forward to 2016, after I quite literally stumbled upon the F.I. community, I looked into our retirement accounts for the very first time.

When I understood the basics, I rolled all my retirement contributions to an IRA since I already left my employment.

It was around this time that my husband joined the Navy, so we also rolled his previous 401K over to the TSP since we like the funds in there.

Our first year in the Navy, we maxed out my husband’s TSP and both our IRAs, which came out to be $29,000. Yea, let’s just say we ate a lot of rice and beans that year.

With our little contributions since we entered the workforce, then maxing out our IRAs every year since 2017, plus one year of maxing out the TSP, we have reached coast F.I.

We are still contributing to my husband’s TSP and we are also maxing out both our Roth IRAs since these accounts provide tax saving advantages.

Wrapping it up

That my friend, is how we reached coast F.I. in a nutshell. So, tell me. Are you gonna check out that calculator or what? Aren’t you just a wee bit curious where you stand?

Go ahead, play around with it. If you don’t know some of your exact numbers, just give it a good average.

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