For a long time, I viewed retirement planning as a distant worry, and something that was largely out of my hands. I took my employer’s 401(k) match, automated my investments, and figured that was enough. But when my partner and I decided we wanted to have our second child, I realized that saving enough money for retirement is something that provides me with the agency to determine what I want my future to look like.
When I first started learning about the Financial Independence Retire Early movement, I came across stories of people with all types of backgrounds pinching their pennies and living extremely frugal lives to help them retire at younger-than-traditional retirement ages. For many people, retirement isn’t possible until age 65. Those working toward FIRE often try to reach retirement in their 30s or 40s.
That path isn’t for everyone, myself included. In my life as a parent, there isn’t much more I can cut out of my budget to achieve FIRE, except for the lattes that keep me awake when my children refuse to sleep, and that won’t be happening anytime soon.
So when I heard about the concept of CoastFIRE, I was over the moon.
CoastFIRE is an investment strategy that involves front-loading your retirement accounts as early in life as possible so that you can “coast” to retirement. If you create an extensive enough portfolio in your younger years, your investments could grow to hit your target retirement balance well before 65, without you having to add another dime.
CoastFIRE depends, in part, on how long you have to invest your money in the stock market. For that reason, the more years you have to invest, the better. Should it align with your budget, CoastFIRE can be a helpful investing strategy. Ultimately, my advice is to do things in the way that works best for you.
I’m 31 now, and I’m taking these three key steps to hit my CoastFIRE goal of investing $100,000 by 35.
1. I’m increasing my monthly contributions
To determine how much you should aim to have in retirement, the conventional wisdom I’ve often heard is that you’ll want to access 80% of your pre-retirement income each year. From there, I assumed a withdrawal rate between 4% and 6%.
If your annual income is $60,000, for example, you would want, as a baseline, around $48,000 per year to start in retirement. Assuming a 5% withdrawal rate, you’d need about $960,000 for retirement at 65 years old.
I figured that with an average rate of return of 8% and a plan to retire at 65, to hit $1 million, I would need to invest $100,000 by 35. To hit $2 million, I would need to invest $200,000 by 35. And if I wanted to hit $3 million, I would need to invest $300,000 by 35
Video by Mariam Abdallah
After doing the math to see how much I needed to invest each month to accomplish my goal, I found that I needed to do more. Initially, I was investing $300 to $400 each month. I now have a base monthly contribution of $500, a stretch investment goal of $700, and beyond that, if it is feasible, I will aim to contribute over $1,000 in a given month.
To do this, I put any side hustle income I earn through freelance writing and social media sponsorships toward investing. I’ve increased my workload to in turn increase my income, and currently have nine streams of income that bring in $10,000 a month.
Because this money is extra on top of my monthly budget, I don’t need to worry about using it to cover my bills. Instead, I can allocate these funds as I see fit.
2. I’m reframing my other financial goals in the short term
While CoastFIRE doesn’t require as intense of a frugal mindset as traditional FIRE, it does come with some sacrifice. This shift has required me to move some of my other less pressing financial goals, like home renovations or more expensive travel to the back burner, so I can focus more on investing.
I sometimes find myself skipping social plans I’d otherwise love to participate in — even though with the side hustle earnings I have coming in, I could feasibly cover them. But I know that this is temporary.
It’s important to me that I have a budget where I don’t feel deprived, and I’ve organized mine so I don’t have to give up some of the fun non-essentials that I’ve already worked into my budget, like ordering takeout and buying new clothes.
3. I’m shifting my approach to saving for my kids’ education
My oldest is 4-years-old and my youngest is just six months. My kids are one of the biggest reasons why I am working towards this financial goal now. I want to be able to afford to provide them with things that will enrich their lives whether it is an extracurricular activity, an annual family trip, or a college education.
Like so many parents, I felt immense pressure to start contributing to my kids’ college funds as soon as they were born. Before I landed on these current plans in 2021, I went back and forth with myself a lot, feeling guilty about considering making my retirement goals a top priority.
But I realized that one of the greatest gifts I can give my kids is making sure that my retirement is fully funded, so they do not have to worry about supporting me when they are adults.
Vide by Courtney Stith
So now, similar to the way I’ve reprioritized those other less immediately pressing financial goals, I have scaled back the contributions I am making to their college funds, knowing that when I am 35, I will still have more than a decade to ramp up those savings.
At that point, I will also have more disposable income to work with, because I will no longer be contributing to my retirement accounts.
Today, I am about 60% to my financial independence goal. I’ve learned that finding a retirement strategy that works best for you is essential. Whether it be through an employer retirement account, traditional FIRE, CoastFIRE or something else entirely, one of the most important things you can do is make a plan that prioritizes your financial future.
Alyssa Davies is a content creator and a published author living in Calgary, Alberta. She is the founder of the two-time award-winning Canadian Personal Finance Blog of the Year, Mixed Up Money, that has over 60,000 followers across social media. She has been featured in many notable publications, including The Globe and Mail, FLARE, Global News, and more. In 2021, she was host of The Dream Team featured on CBC Gem. Her first book, “The 100 Day Financial Goal Journal,” was published in 2020, and her second book, “Financial First Aid” is currently available for preorder.
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