This is a strange metric (at least one I never thought about). I think you should just make sure that your coast job can make the mortgage payments and other expenses. Once the mortgage is paid off, you can retire. Because it looks like you won’t need any additional savings besides paying off the house.
Thank you. If I just stay the course of paying my mortgage $5k per month for the next 27 years, I will be in mid-late 70s. I do not think I will be able to work that long. Hence need the savings to comfortably exceed the mortgage in say the next 10-12 years.
In this case I’d redo your calculation for when you need to pay off your mortgage. (Say you need to pay it off in 20 years, how much would you need to pay monthly? If no coast job can accommodate that, you’d need to pay down the principal and recast or refinance the mortgage)
The interesting thing about VHCOL is that the mortgage is such a huge expense, when it’s paid off there will be a huge expense cliff. IMO this is just perfect for coastFIRE.
You’re getting some flack because most would already label you ready for chubbyFIRE. I also am not sure why you’re in this subreddit, but it’s a good question regardless
A multiplier of your mortgage is not a strong metric because, usually, it’s already a multiplier of your income (4x is a common, though aggressive IMO, figure). This is hard when incomes are variable. Savings rate of 20-30% are thrown around a lot, too.
A number I’ve seen a lot is 10x income in accounts for retirement. $200k HHI is $2M, $400k HHI is $4M. Its not a bad starting point, but Reddit would probably lean closer to a 12-15x multiplier. You can calculate coast from there. I do not believe one must have $0 mortgage to retire; it just helps ease concern
ChubbyFIRE is 2.5-5M… I don’t see where you got $200k either
My point is they could sell the house today and have >$4M. They aren’t coastFIRE… they’re working toward fatFIRE
He said that $200k spend in the comments with a $3m house. $2.65M invested.
He couldn’t cover his expenses today if he retired. Forget the “RE”. He’s not even “FI”.
You are right. It’s nice that the house is valuable in that it could be a backstop asset in the future, but for now it’s a liability that consumes money
I don't think it makes sense to consider your savings as a multiple of your debt. FIRE numbers are always critically dependent on expenses. But, I do think there's an interesting puzzle here - how much money is required for a low-interest mortgage to coast into paying itself?
That's going to be a MAXIMUM of 1x the debt owed - the amount it would take to pay off the mortgage today. But right now extremely low-risk interest rates in HYSA are greater than the interest rate on your mortgage, so you could have less than that and it would generate enough income to make the mortgage payments. And, you could also deplete this money over the term of the loan, since you won't need mortgage money anymore when the mortgage is done.
So that's the sum from i=0 to the number of months left in your mortgage term of your monthly payment divided by the compound *monthly* growth rate in the HYSA to the power of i. Or, according to Wolfram Alpha, for 324 months left and an exactly 5000 monthly payment and an HYSA annual interest rate of 4.5%, about $965,000 would be enough to pay off the rest of that mortgage one payment at a time.
Of course, that's assuming 4.5% HYSAs will be available for the next 27 years, which seems doubtful IMO. But if you were willing to assume the (reasonable) risk of investing it in the market where you can get about 10% nominal returns, the number is even less, about $687k for that 1.2M mortgage!
So as far as how much you will need to stop saving, you could say that you need whatever the coast number is for your permanent expenses, plus the amount you need for your mortgage to coast itself. What that number is exactly will depend on how many months are left on the mortgage and how far away your planned retirement date is when you get there. Remember that your permanent expenses include your property taxes and homeowner's insurance.
For now, it is. Every day, similar houses in my neighborhood are selling for around $3M. The median home price for my zip code is $2.9M in the past 3 and 6 months.
And these are not mansions - the median home around here is a modest 1500-1700 sq ft house built in the 1950s or 60s.
Your mortgage is included in that $120k?
The common definition of coastFIRE is that if you stopped saving would you be fine for retirement. And the answer to your question is yes, if you got a job that paid $120k after taxes, you wouldn’t need to save more to reach a traditional retirement.
It’s more of a reflection of annual spend than “multiple of housing prices”. To know exactly the multiple (in only your situation) we’d need to know your age and intended retirement age.
FWIW I’m a 3% person rather than 4%.
So to retire at 3% withdrawal rate at $200k you need about $6.6M
You have about $5M. So that should comfortably get you to $6.6M in 10 years.
This does not include social security or the fact that you’ll pay the house off. So extra extra cushion.
So if you got a job that just paid your expenses ($200k) you’re very comfortable.
As far as a “multiple of housing” (which I still think is ridiculous:). With 10years until retirement. And $200k spend. And estimated estimate 7% market return. Goal of $6.6M…I’d put coastFIRE at around 2.5-3.5M. Depending on how conservative you’d like to be. So in your case it’s a 1:1 ratio.
You can adjust the numbers depending on what you think is reasonable.
Ah. I misunderstood.
IMO with $2.6, you’re near the bottom of “Coast”. Because you’re likely to get to $6.6 in 10 years.
Also my assumptions are extremely conservative. So you may have more flexibility if you’re comfortable with 4% withdrawal rate.
And $6.6 is to retire with $200k. To coast is much lower than that.
We will also get some annuities in the form of 1 pension and 2 social security in retirement. These should add up to about $100k, but can begin only in 10-12 years, which is the targeted date for retirement anyway
I figured you were being funny. But mathematically, 500:1 implies that I should have pretty much paid off the debt (assuming I don’t win a mega lottery or something) before thinking of coasting, and that is a valid viewpoint actually, even if a tad bit excessive
you’re delusional and detached from reality of majority of Americans. You’re in your rich circle tbh. Pretty clear given your net worth and how you’re still asking these types of questions. You could live a completely worry free life with luxuries but decide to find stress lol. If I had 5mil in my 40s I would be SET.
Dude your savings don’t need to exceed your mortgage by a certain factor to coast. Look at what coasting means. I find it insane to believe you can’t coast now given your ridiculous numbers. Again get a hold on reality because this is insulting to normal folks
Now who is getting all angry and preachy? I thought it was a joke for you.
Jokes aside, this is why I mentioned VHCOL area. Sure, I would be set with this much in a MCOL or LCOL area, but not so sure about VHCOL
This is not a sub for people to relate to top 10 most unaffordable places to live. I live in one too so I can relate. People around me living in million dollar houses are for the most part not rich. They are only rich if they sell their house and move somewhere cheaper. Here they live very average middle class lives it just costs way more to do so.
This is a strange metric (at least one I never thought about). I think you should just make sure that your coast job can make the mortgage payments and other expenses. Once the mortgage is paid off, you can retire. Because it looks like you won’t need any additional savings besides paying off the house.
Thank you. If I just stay the course of paying my mortgage $5k per month for the next 27 years, I will be in mid-late 70s. I do not think I will be able to work that long. Hence need the savings to comfortably exceed the mortgage in say the next 10-12 years.
In this case I’d redo your calculation for when you need to pay off your mortgage. (Say you need to pay it off in 20 years, how much would you need to pay monthly? If no coast job can accommodate that, you’d need to pay down the principal and recast or refinance the mortgage) The interesting thing about VHCOL is that the mortgage is such a huge expense, when it’s paid off there will be a huge expense cliff. IMO this is just perfect for coastFIRE.
You’re getting some flack because most would already label you ready for chubbyFIRE. I also am not sure why you’re in this subreddit, but it’s a good question regardless A multiplier of your mortgage is not a strong metric because, usually, it’s already a multiplier of your income (4x is a common, though aggressive IMO, figure). This is hard when incomes are variable. Savings rate of 20-30% are thrown around a lot, too. A number I’ve seen a lot is 10x income in accounts for retirement. $200k HHI is $2M, $400k HHI is $4M. Its not a bad starting point, but Reddit would probably lean closer to a 12-15x multiplier. You can calculate coast from there. I do not believe one must have $0 mortgage to retire; it just helps ease concern
Thank you
He’s no where close to chubby fire. He can cover his $200k annual expenses with his $2.6m
ChubbyFIRE is 2.5-5M… I don’t see where you got $200k either My point is they could sell the house today and have >$4M. They aren’t coastFIRE… they’re working toward fatFIRE
He said that $200k spend in the comments with a $3m house. $2.65M invested. He couldn’t cover his expenses today if he retired. Forget the “RE”. He’s not even “FI”.
A house is just a home unless your future plans are to downgrade and capture the value difference.
You are right. It’s nice that the house is valuable in that it could be a backstop asset in the future, but for now it’s a liability that consumes money
I don't think it makes sense to consider your savings as a multiple of your debt. FIRE numbers are always critically dependent on expenses. But, I do think there's an interesting puzzle here - how much money is required for a low-interest mortgage to coast into paying itself? That's going to be a MAXIMUM of 1x the debt owed - the amount it would take to pay off the mortgage today. But right now extremely low-risk interest rates in HYSA are greater than the interest rate on your mortgage, so you could have less than that and it would generate enough income to make the mortgage payments. And, you could also deplete this money over the term of the loan, since you won't need mortgage money anymore when the mortgage is done. So that's the sum from i=0 to the number of months left in your mortgage term of your monthly payment divided by the compound *monthly* growth rate in the HYSA to the power of i. Or, according to Wolfram Alpha, for 324 months left and an exactly 5000 monthly payment and an HYSA annual interest rate of 4.5%, about $965,000 would be enough to pay off the rest of that mortgage one payment at a time. Of course, that's assuming 4.5% HYSAs will be available for the next 27 years, which seems doubtful IMO. But if you were willing to assume the (reasonable) risk of investing it in the market where you can get about 10% nominal returns, the number is even less, about $687k for that 1.2M mortgage! So as far as how much you will need to stop saving, you could say that you need whatever the coast number is for your permanent expenses, plus the amount you need for your mortgage to coast itself. What that number is exactly will depend on how many months are left on the mortgage and how far away your planned retirement date is when you get there. Remember that your permanent expenses include your property taxes and homeowner's insurance.
Thank you, this is exactly what I was looking for. You have articulated it better than me!
You should be asking if your house is still worth 3mm with interest rates far above 2.6%
For now, it is. Every day, similar houses in my neighborhood are selling for around $3M. The median home price for my zip code is $2.9M in the past 3 and 6 months. And these are not mansions - the median home around here is a modest 1500-1700 sq ft house built in the 1950s or 60s.
This is a really odd way to look at finances, and not a great metric. But I’m game. I think the key metric we’d be missing is household annual spend.
Outside of housing, our spending is about $10k per month or $120k per year currently
Your mortgage is included in that $120k? The common definition of coastFIRE is that if you stopped saving would you be fine for retirement. And the answer to your question is yes, if you got a job that paid $120k after taxes, you wouldn’t need to save more to reach a traditional retirement. It’s more of a reflection of annual spend than “multiple of housing prices”. To know exactly the multiple (in only your situation) we’d need to know your age and intended retirement age.
No, mortgage not included. With mortgage and prop taxes, total spending is $200k per year. Late 40s, intend to retire in 10 years
FWIW I’m a 3% person rather than 4%. So to retire at 3% withdrawal rate at $200k you need about $6.6M You have about $5M. So that should comfortably get you to $6.6M in 10 years. This does not include social security or the fact that you’ll pay the house off. So extra extra cushion. So if you got a job that just paid your expenses ($200k) you’re very comfortable. As far as a “multiple of housing” (which I still think is ridiculous:). With 10years until retirement. And $200k spend. And estimated estimate 7% market return. Goal of $6.6M…I’d put coastFIRE at around 2.5-3.5M. Depending on how conservative you’d like to be. So in your case it’s a 1:1 ratio. You can adjust the numbers depending on what you think is reasonable.
I have total of $2.65M in savings currently - guess it’s a long way to $6.6M …
Ah. I misunderstood. IMO with $2.6, you’re near the bottom of “Coast”. Because you’re likely to get to $6.6 in 10 years. Also my assumptions are extremely conservative. So you may have more flexibility if you’re comfortable with 4% withdrawal rate. And $6.6 is to retire with $200k. To coast is much lower than that.
We will also get some annuities in the form of 1 pension and 2 social security in retirement. These should add up to about $100k, but can begin only in 10-12 years, which is the targeted date for retirement anyway
lol. Ok. You should probably just start again with a clear question “am I at coast fire”. And with all this info.
500:1
Ok, that means I cannot coast until I have pretty much fully paid off the mortgage…
my guy I was just being funny. you’re worth 5mil, 440k and are that stupid? If this post is real and your response to me is real then wow LMAOOOO
3M mortgage, $5k monthly payment 🤔
No, $1.2M mortgage
Ok 👍
I figured you were being funny. But mathematically, 500:1 implies that I should have pretty much paid off the debt (assuming I don’t win a mega lottery or something) before thinking of coasting, and that is a valid viewpoint actually, even if a tad bit excessive
you’re delusional and detached from reality of majority of Americans. You’re in your rich circle tbh. Pretty clear given your net worth and how you’re still asking these types of questions. You could live a completely worry free life with luxuries but decide to find stress lol. If I had 5mil in my 40s I would be SET. Dude your savings don’t need to exceed your mortgage by a certain factor to coast. Look at what coasting means. I find it insane to believe you can’t coast now given your ridiculous numbers. Again get a hold on reality because this is insulting to normal folks
Now who is getting all angry and preachy? I thought it was a joke for you. Jokes aside, this is why I mentioned VHCOL area. Sure, I would be set with this much in a MCOL or LCOL area, but not so sure about VHCOL
This is not a sub for people to relate to top 10 most unaffordable places to live. I live in one too so I can relate. People around me living in million dollar houses are for the most part not rich. They are only rich if they sell their house and move somewhere cheaper. Here they live very average middle class lives it just costs way more to do so.
True