Once upon a time I didn’t know a thing about investing. As a young nurse I was guided by my nurse mentors to contribute to my 403B work pretax retirement saving. I always contributed about $3000 annually. My works matches at 2%, so I get extra $1000 annually, yay!
I was referred by my nurse mentors to EA Buck, my financial adviser who helps me with tax and retirement planning. They told me to invest in Midland National index universal life insurance, which I did. I got a policy for $313,000. I remember he told me to start a Roth IRA and pay off my debt, which I didn't. I didn't talk to my advisor afterwards because life happened... I just knew I needed to keep savings for retirement no matter what. My parents didn’t talk about investing. My friends didn't talk about investing. I had no clue!
In 2014 my work 403B started to offer target index fund so I had changed from a short term conservative stable fund to Target 2050 fund. This had dramatically affected the growth in my account! Now I was actually investing, but I didn’t really know what that meant.
In September 2019, after getting married, having my second daughter and returning back to work, I went back to see my financial adviser. Again he reviewed my taxes and current retirement savings. He offered me life insurance again, but I passed on it since I was fine with whole life I got from State Farm for my kids. Yes kids don’t need it, but I decided to get a policy for $25,000 for each child. He did talk about better managing my investments to have it follow the SP 500 or DJI. I still didn’t understand these terms, but I agree to have half of my work 403B actively mange by them. They put me into a semi-aggressive mutual funds with Pacific Financial Group. I wanted my accounts to grow and wanted to see what they can do to help! But why? I wanted to be like my nurse mentors who retired before 60! Wish I knew more about active investing before I did this…
2020 was fun! Stocks dipped in March due to COVID-19 and I thought giving half my retirement savings/investments was a fail! My accounts did not fully recover until September. In the mean time I learned everything I could about investing and personal finance. I decided to switch the half of my retirement savings/investments that I manage myself into stock index fund. I changed from Target 2050 index fund to VIPX which tracks very similar to SP 500 or VTSAX. I was so excited to make this move that I even increased my work contributions to 4%! I meant to break up with my financial adviser, but I didn’t. I just won’t give them more money to manage!
I decided to cash out my index universal life insurance. The cash value was $10,000 which went to pay off my debt. I didn't close my account yet since I still have $5,000 cash value that pay itself for now. This saves me $200/month.I paid off my personal loan, credit card and car loan thus improving my net worth! Luckily this money is after tax money and not taxable!Maybe I will resume it... In the mean time I have State Farm 30 year term for $300,000. Do I need to have 2 life insurance? Yes, I am my family's primary income earner!
In 2021 I hit $100,000 in my work 403B! I was ecstatic! Maintaining annual $3,000 for 30 years with 7% growth, I could reach 1 million! Along with my work pension of $300,000, I would be all set! Set for slow FI. Now if only I could just work part time, or retire early! I need to grow my F-U money!
I met up with my financial adviser again who validated this. He reminded me that the tax savings for 403B is awesome now, but you are going to be taxed when you withdraw. He recommend again that I start Roth IRA since I still qualify for it! He also congratulated me for having 529 plan for both my kids. I currently only contribute $20/month per child. He said that is good place to start!
So I dropped my work retirement contributions to match, opened up my own Roth IRA with Vanguard and started contributing $200/month. I chose Vanguard because my work uses this brokerage for the 403B so I was familiar with them. I funded my account with $600 and bought 2 ETF of VTI! My goals is to buy 1 ETF of VTI a month. Once I pay off my debt, I will max out my Roth IRA then work on maxing out my 403B. Maybe I will put some money to my Roth 403B 🤭. Once I can do all these I will be closer to Coast FI! For now I’m just proud to be at this financial milestone!
Warning: Please consult with a financial adviser before considering any type of investing!
What is Slow FI?What is Coast FI?
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FAQs
With the Coast FIRE strategy, you minimize your spending and invest as much as possible until you reach a target amount of savings that lets you “coast” toward an eventual retirement in your 60s. The “coast” part means that you keep working after you attain your target savings amount.
How much is needed for Coast Fi? ›
What is this? If you are able to have $590,000 invested by age 40, you're Coast FIRE! Again, this assumes your comfortable living expenses now (and in the future) are around $85,000 per year. This is adjusted for inflation.
What is the 4% rule FIRE? ›
The 4% rule says people should withdraw 4% of their retirement funds in the first year after retiring and take that dollar amount, adjusted for inflation, every year after. The rule seeks to establish a steady and safe income stream that will meet a retiree's current and future financial needs.
What is the 7 percent rule for retirement? ›
What is the 7 Percent Rule? In contrast to the more conservative 4% rule, the 7 percent rule suggests retirees can withdraw 7% of their total retirement corpus in the first year of retirement, with subsequent annual adjustments for inflation.
What is the difference between FI and Coast FI? ›
What Is the Difference Between Coast FI and Barista FI? In Coast FI, you are continuing to work full-time while your investments compound. In Barista FI, some of your monthly income is produced by investments, whereas other income is active income.
How much will I retire with? ›
A common rule is to budget for at least 70% of your pre-retirement income during retirement. This assumes some of your expenses will disappear in retirement and 70% will be enough to cover essentials. Remember, that's a general guideline, and your needs may vary.
What is the FIRE 401k strategy? ›
Key Takeaways. Financial Independence, Retire Early (FIRE) is a financial movement defined by frugality, extreme savings, and investment. By saving up to 70% of their annual income, FIRE proponents aim to retire early and live off small withdrawals from their accumulated funds.
How many people have $1,000,000 in savings? ›
In fact, statistically, around 10% of retirees have $1 million or more in savings.
How long will $1 million last in retirement? ›
Around the U.S., a $1 million nest egg can cover an average of 18.9 years worth of living expenses, GoBankingRates found. But where you retire can have a profound impact on how far your money goes, ranging from as a little as 10 years in Hawaii to more than than 20 years in more than a dozen states.
Is $3 million enough to retire at 50? ›
Can I retire at 50 with $3 million? As mentioned above, $3 million can easily carry you through 40 years of retirement, making leaving the workforce at 50 a plausible option.
What is an 80/20 Retirement Plan? An 80/20 retirement plan is a type of retirement plan where you split your retirement savings/ investment in a ratio of 80 to 20 percent, with 80% accounting for low-risk investments and 20% accounting for high-growth stocks.
Do I really need 70% of my income in retirement? ›
The 70-80% Spending Rule
Retirement advisors at Fifth Third Securities generally agree that a good rule of thumb for estimating your future spending is to multiply your current monthly spending by 70-80%.
What is a safe withdrawal rate at 65? ›
An example of one of those retirement planning rules of thumb is the 4% rule for a safe withdrawal rate. The term safe withdrawal rate refers to how much retirees can take out of their retirement accounts on an annual basis without potentially outliving their money.
What does fi mean in retirement? ›
A financial status of having enough money and assets to pay for one's living expenses without being dependent upon employment is the generally accepted definition of financial independence, or FI.
What does fi mean investing? ›
A financial institution (FI) is a company engaged in the business of dealing with financial and monetary transactions such as deposits, loans, investments, and currency exchange.
What does fi stand for in retirement? ›
Take the first step toward financial independence
Financial independence (FI) can help to give you options—to work or retire early, to travel, to do whatever it is you love.
How does Coast Fi work? ›
With the Coast FIRE strategy, you minimize your spending and invest as much as possible until you reach a target amount of savings that lets you “coast” toward an eventual retirement in your 60s. The “coast” part means that you keep working after you attain your target savings amount.
How much money for barista FIRE? ›
One way to calculate your FIRE number is to multiply your estimated yearly expenses in retirement by 25. So for example, $50,000 x 25 = $1,250,000. That $1.25 million number is what you need to have saved in order to retire.
How to calculate lean fi? ›
Assuming a typical Lean FIRE retirement budget equal to your current expenses, you will need to accumulate 25 times your annual expenses in savings to achieve financial independence. For example, if your current annual expenses are $30,000, you will need to accumulate $750,000 in savings to achieve Lean FIRE.
What is the savings rate for FIRE? ›
The rule of 25 says you need to save 25 times your annual expenses to retire. To get this number, first multiply your monthly expenses by 12, and then you'll have your annual expenses. You then multiply that annual expense by 25 to get your FIRE number, or the amount you'll need to retire.
