Can We Coast to Our Financial Goals?

As I continue to reflect on getting closeer to reaching our millionaire net worth milestone, I am becoming more optimistic and excited about what the future holds.

I've pondered whether we could just tread water at this point and still reach out financial goals. That is if we just earn enough to cover our living expenses going forward and left our current assets to work and compound, then could we get to our financial freedom goals? How huge is that?

While reflecting on this idea, I've found its been a huge weight lifted off our shoulders. Mentally I don't feel nearly the pressure to stay in the rat race and as a result I'm a lot more optimistic about what we could accomplish.

It you look at our net worth reports you'll see our assets include roughly $600k in stock investments and ~$450k in investment real estate (based on cost basis). Could these investments continue to grow with little or no additional investment over the next 10 years to add an additional $1 million to our net worth?

Its certainly a reasonable possibility -- our assets at this point would only need to double over the next 10 years. I will of-course continue with the rat race for now as the additional savings we earn from my career will reduce the risks and increase the likelihood of reaching our financial goals that much sooner.

The thought of being able to coast to our goals at least gives me more confidence that we are in a decent position to actually reach our goals regardless of what happens with my career going forward.

Related in Financial Goals:

Financial Freedom Plan - 2015 Update (Apr 30, 2015) I finally sat down to get an updated view of our progress towards our financial freedom plan that I laid out a few years go in terms of asset allocation. Some notes: Our asset allocation to fixed income (interest) will...

Financial Freedom Plan (Aug 25, 2013) Almost two years ago I laid out a plan for the net asset allocation I thought we needed for our financial freedom plan. It was a rough guide for asset allocation that I believe could generate enough income to cover...

2012 Passive Income: Dividends (Jan 27, 2013) Here is a summary of our 2012 dividend income. All this income comes from our taxable stock portfolio that is included in our monthly investment review. All retirement investment holdings are excluded from this dividend income summary. This passive income...

Comments (7)

I would be interested in your comments on saving for the college education for your children and the impact to your 2M goal. The costs of college are so high now (~$100K/child) that it can have a major impact on one's ability to save for retirement, especially an early retirement.

"Only" doubling in 10 years would require ~7.2% annual compounded return over that time (rule of 72). That sounds a bit high to me these days, especially for real estate.

AReaderinNY, Ah yes - college. Currently we are saving $205/mo for college in 529 plans. Likely not enough to fully pay for college in the long run, but a decent start and something that will get more attention as we get closer. I think we have roughly $9k in college savings so far, so about 5% of what we need long term per your $100k x 2 children.

Hans -- could be. I don't think 7.2% should be impossible to hit, but certainly harder the longer rates stay super low. Historically 7.2% sounds pretty reasonable long term.

I think you'll find that now that you've positioned yourself to "coast" to financial independence, you'll have less pressure on yourself to perform in your career, which may actually lead to more career success. I find that I perform much better when I know that failure doesn't mean all is lost.

Congratulations on approaching that million mark! Quite a milestone. Hope you take time to celebrate it.

MM -- I think your dead on. I certainly can feel myself willing to take a bit more risk in career moves and that might lead to greater things.

What is your income minus your burn rate = your savings/investment. I would like to cut back at work but find I need much of the income and the health care benefits. Despite all the hype about health care reform, there is no practical way to get health insurance for healthy 50-65 year olds except through work or another "group" plan. If you are not healthy the prospects are even worse.

Watch out for black swans. As an engineer I try to protect against the worst case scenario. You have two: 1) loss of your job and 2) real estate deflation. You can protect against #1 by networking, keeping up marketable skills and closely following the job market before it is a requirement. I don't know how to hedge against #2 except to liquidate some investment property. You've done an excellent job of accumulating assets but you do not appear to be well diversified or liquid.

Hi 2mm, I am in a very similar situation to yours (39, 1.6mm, but no RE, expat currently but not planning to stay abroad). I've found, as my 401k and other stock-exposed funds get bigger, I acutally experience more volatility. Certainly do not feel like I'm 'coasting' toward 2mm, but I also put little effort into optimization. I've found that there is a ridiculously small, but satisfying return on effort in trying to keep expenditures reasonable... In fact, at this point, it is focus on the big things (cars, mortage refis) that gives a satisfactory change to the picture. I take heart in the idea that the earlier 'rich' were stuck in their social staus, and I started low and am doing so well so quickly (in my lifetime!). We have the choice to buy a good car and live in a reasonable house, or vica-vesa, or buy both and be only pretending to be so 'rich', or be like the best of our generation and have money but live like monks. This was a successful path for other cultures - rich in mind, poor in earthly goods.... and once you convince yourself that money is only an earthly good, temporary, it just stacks up electronically, but does not 'burn a hole in your pocket'. I personally believe a substantial portion of my money will be 'inflated' away and my SS payments will be deposits I can only partially withdraw, but I cannot allow my family to elevate lifestyle more than we have ploddingly achieved in the past or else we will be miserable eventually when our standard of living inevitably drops....

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A personal finance weblog of my journey to reach my goal of $2 million + the value of my primary residence.
Current Net Worth: $1,574,185


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