Brian Preston (2:38)

But the. The Flamingo Fire Flamingo I had to think about and had. I love the content team. This is why it's so great that we have a team and it's not just us two old guys on the front porch here is because they said, hey, it's because you're. You're saving half. So you're standing on one leg, kind of like a flamingo.

Bo Hanson (2:54)

Look, you nailed it. You got it.

Brian Preston (2:56)

Now, you know, no matter which one.

Bo Hanson (2:58)

Of these you've heard of or you're familiar with, they all kind of sit around this central concept. And the concept is financial independence, this idea that you own your financial future, your financial future no longer owns you. And when you get there, it's not just your future that you own, but you actually own your financial present as well.

Brian Preston (3:18)

Yeah, I love the parts I like is that we have always talked about the three main ingredients to wealth creation is discipline, Living on less than you make so you can create that margin in your life that creates the money, and then you give that money enough time it really does create. And that's why if you look at the key tenants of fire, the first thing is living below your means. Hello. Discipline.

Bo Hanson (3:42)

Hell.

Brian Preston (3:42)

Love it.

Bo Hanson (3:42)

Some folks in the fire community take this to the extreme and it's all about, like, living frugally. I want to have live as far below my means in the most minimal way possible. But other folks say, hey, that's not what it is. Not about living frugally. It's not about having the smallest footprint possible. It's about living the life I want to live. But the common trait, no matter where you fall, is if you're going to do this and if you're going to be able to live below your means, they do so in such a way that they are able to save a huge proportion of their income towards this goal.

Brian Preston (4:19)

Well, we're math nerds, so we even put some numbers to this because it's not uncommon to see these super high saving investment rates. Think about if you wanted to reach the level where you could retire and live off, essentially, if you're saving 70% and living off that 30%, you could do it. If you save 70% of your income in 11 years, it's wild.

Bo Hanson (4:39)

Just over a decade. So think about it. You could be financially independent in just over a decade. Most people have to work for like 40 years to be able to be financially independent, retire. And yet folks who subscribe to this can do it in a quarter of.

Brian Preston (4:52)

The time, but you're saving 70%. Remember, we're always talking about that fine line between financial mutant versus financial miser. If you're saving 70%. There's lots of sacrifice going on. I thought it was, even if you bring it down, still part of this movement. You could take somebody who's just going to have an accelerated savings rate that's twice of our 25% of 50%, meaning they're going to live off of 50% of this. They could potentially reach this financial independence level within 23 years. Much more accelerated than the 30 plus to 40 years of savings and investing that the traditional American plans for.

Bo Hanson (5:30)

But in reality, the actual savings rates and timelines of FIRE can vary drastically because, and we say this all the time, personal finance is very personal. Some folks want to retire in their late 20s and some people are perfectly content retiring in their mid-50s. Some people think that they can live off of $50,000 a year and some people want to construct a retirement where they get to live off of $500,000 a year. And none of these are right or wrong. It's more about what your ultimate goals are and are you able to live below your means in such a way today that you can build towards your future. So that first tenet of fire that we can take away is living below, living below your means. But there's another tenet, and this is beautiful because it's a wonderful money guy. Echo a lot of fire proponents. A lot of people who participate in this movement believe in investing in diverse long term and tax advantaged investment strategies.

Brian Preston (6:27)

Yeah, let's talk about this. You know, tax advantage, you know, you want to load up obviously the Roth accounts, those important accounts. I love that. It's very common. You hear when you talk about these movements, index funds.

Bo Hanson (6:39)

I love it.

Brian Preston (6:40)

Go look at our portfolios. You're going to find a lot of index funds because they're low cost, they're tax advantages, all kinds of benefits. Also, I love the fact that it's buy and hold as a key strategy. These people are hyper accumulators. But they're also people that understand, hey, volatility is your friend. Even when you reach volatility, if you buy and hold, you're going to be okay no matter what the market throws at you. These are all healthy things that help you build your army of dollar bills.

Bo Hanson (7:08)

It almost seems like people who are part of this movement recognize I don't have a lot of time to waste. If I'm going to try to do this as quickly as possible. I'm not going to go try to figure out how to chase the hot dot or pick the individual stock or find the next get rich quick scheme. They Just go and fast forward to the type of wealth building that actually works. So that's the process that they apply. And then the other tenet, and I think this is something that we can all learn from, is that a lot of folks who subscribe to the fire movement, they believe in living a very intentional life. The reason they are most often pursuing this type of aggressive saving strategy, aggressive retirement strategy, aggressive financial independence strategy, is because they want the time that they spend doing the things they care about to matter and they want to be able to do it on their terms.

Brian Preston (7:53)

Well, I think this is something definitely Americans can learn about here. We are driven by this consumption society where it's telling everybody to fake it until you make it put it, you know, you can live your best life right now. And I think a lot of these movements recognize that is a lie. You know, if you really want to live your best life, figure out what's important to you is that, is that you know, you want to spend more time with your family members. So if you are, maybe you're going to make some sacrifices where you put it in the hard work now so that when you're in those child raising years, you're actually around more. Maybe you want to actually not just be stuck in an office, you want to travel more. So these are things. Now I will tell you, sometimes I pause a little bit is because it's back to my point. I like financial mutants. I get nervous about financial misers is because if you are working a job that you absolutely hate, I mean, you literally have dread and you're chewing on your fingernails every night to go to work, but you make a great income. And I don't know that. I love the fact, even if you're only doing that for 10 to 15 years, is it that necessarily healthy? But I do love that these people are very intentional. They're taking an active role in their financial life. Whereas most Americans typically don't wake up until they're like in their 40s and say, hey, wait a minute, that retirement is right over the horizon. I better start paying attention. I love the intentionality that most fire or fine movement people figure this out at a pretty early age.

Bo Hanson (9:27)

Well, I think that intentionality allows them to recognize that it's more than just money. Money is nothing more than a tool. And it's just a tool that they have figured out how to effectively use to accomplish the goals that they have. And so the question becomes, okay, well, what does this really look like? How do I want to actually pursue this if this is Something that's interesting and intriguing to me. There's all these different ways to do it. How do I actually reach this? So we thought it'd be helpful. Let's just kind of break down to start traditional fire, just like a standard financial independence. Retire early. What would be required and how would I need to behave if I wanted to be part of this movement?

Brian Preston (10:07)

Well, let's, let's get, let's get into the numbers because this is money guy style. But let's make it as simple as possible. You often hear if you start doing any type of this, this, this type of off the napkin, planning to be part of the fire or fire movement, safe withdrawal rates. The simplest, you know, road tested one that's out there is 4%.

Bo Hanson (10:27)

Yep. So the mathematics is okay. If I want to think about what does financial independence look like, I just take the amount of money that I've saved up, whatever my portfolio value is, and I multiply that times 4%, and then that tells me how much I can live off of annually, how much my portfolio should be able to sustain for the rest of my life, inflation adjusted. So if you have, for example, a portfolio with $2 million in it and you just took $2 million times 4%, you would be able to surmise that I can live off of $80,000 a year, every year for the rest of my life and I should be able to sustain that with keeping up with inflation over the long term.

Brian Preston (11:10)

We even did a mini show on this BO and once again got a great picture of you. But we talked about, and this is one of those things because we talked about safe withdrawal rate. 4% is kind of like the accepted sort of the standard, standard rule out there. But there are all kind of rules out there, you know, including up to 8%. And we wanted to kind of walk through the math. So I'd encourage you, if you haven't checked out that mini show, you would benefit from seeing. Hey, why, what does the math say? So that you can balance out what life needs and the numbers need. But also so you don't get too far out over your skis and use projection that are dangerous.

Bo Hanson (11:46)

Now this is something we want to bring to your attention though, because we talk about 4% as kind of like the standard, as like the typical safe withdrawal rate based on a standard retirement timeline or maybe even a standard slightly early retirement timeline. But a lot of fire proponents still want the standard or even slightly better than standard. They want to exit the workforce in their late 20s, in their mid-30s, in their early 40s. And so what we know the 4% withdrawal rate can withstand is a normal lifespan in retirement. But if we are going to begin expanding those lifespans, how long these dollars need to take care of us, then we ought to rethink, okay, how should we adjust our safe withdrawal rates if we're going to have an substantially longer retirement than traditional? So we actually have a small adjustment to the 4% rule when it comes to figuring out what you believe your portfolio can sustain. And we think it should be age based. So if you think that you're going to retire at age 55 or later, then a 4% withdrawal rate seems perfectly plausible. That seems to be reasonable and you would likely be okay with that being sustainable if you are someone though who's going to retire earlier and maybe it's between like ages 45 and 55. So now you're talking about a 50, maybe even 60 year retirement time horizon. We do think you should decrease that safe withdrawal rate down to three and a half percent. If you're someone who is like uber fire and you're thinking you're going to really exit the workforce and you're going to need to live off of these dollars beginning before you hit the age of 45, we think a sustainable long term withdrawal rate probably falls closer to the 3% range.

Brian Preston (13:23)

Look, you want to be conservative with this. This is definitely one of those measure twice, cut once. Because a lot of you know when you're in your peak earning years, because let's face it, the fire movement, the fine movement, a lot of these people are in high income positions. That's really the driving factor for a lot of people to be able to save 40 plus percent towards retirement is that you want to be careful about leaving the workforce too early because the opportunity that you left might not be there. Especially like if you're in technology, the medical field, a lot of these things, the moment you're out and you take a year, two years, three years off, it's hard to get fired right back in and have the same peak earning years. So that's why we like adding a level of conservatism to this safe withdrawal rate so that you don't find yourself caught in a bad situation.

Bo Hanson (14:14)

So how can we practically use these? What sort of math can we employ to figure out how this works? Well, we've already told you that the way you calculate what your portfolio can sustain is you just take your retirement portfolio or the pot of assets you've built up and you multiply it times your safe withdrawal rate. So if we're going to use 4%, you would take portfolio value times 4%. You can actually reverse engineer the math though. If you know what you need to live off of, if you know what your annual living expenses will be in retirement, you can do the reverse math. You can take your annual retirement expenses and you can divide by 0.04. And what that's going to show you is, okay, how big does the portfolio need to be in order to provide me with this sustainable cash flow for the remainder of my life? So you don't have to just do the portfolio value can also back into the expenses. So maybe it'd be helpful to walk through a little case study to see what this looks like.

Brian Preston (15:08)

Well, I think also I want to tell people, don't skip the homework. A lot of people, I mean, it's amazing when we have prospects reach out and I say how much? You know, you tell me you want to retire, how much do you need to live off of? And they go, I haven't done that exercise. I think I give credit to what I like about the fire movement, the fond movement is that they consistently people catch that they need to really fine tune where each dollar is going on expenses. So that's key step in here is actually what is your annual retirement expenses going to be if you haven't actually done a budget, if you haven't actually tracked your expenses, that's the first key part because that is going to be the driving factor to a lot of this math.

Bo Hanson (15:47)

And when you know that number, then you can begin to actually put some pen to paper and figure out what your number is. So let's do this. Let's say that you assume that you need $100,000 of cash flow in retirement and we're going to apply the money guy adjusted safe withdrawal rate. So if you thought that you were going to retire at age 60, we know that a sustainable long term withdrawal rate is 4%. So if you need $100,000 and you're 60 years old today, you need a portfolio of about two and a half million dollars. If you're someone who is 50, we're going to decrease our safe withdrawal rate down to 3.5%. And so if I'm a 50 year old today, that's going to retire and I need $100,000 to be able to last me for the remainder of my life. My total portfolio I need to have accumulated at 50 is about $2.85 million. If I'm someone who's 40 now, I'm going to drop my safe withdrawal rate down to 3%. And again, if I'm 40 years old and I need $100,000 every year for retirement, I'm going to take 100,000 divided by 03. And I actually need a $3.3 million portfolio if I'm 40 today. But there's a problem with this.

Brian Preston (16:54)

Well, I will say I like that. People will say why? Why is there a difference? 60 versus 40. There's a lot of life that happens there. We'll get to even more details. And there's also sequence of return risk. There's just so many things. And to be conservative, if you are retiring early, it is like I said, measure twice, cut once. You're going to need to make sure to give yourself enough Runway of protection. You're going to need more capital.

Bo Hanson (17:23)

Yep. And most people say okay, they're not looking at the situation. Okay, I want to retire today. How much of a retirement portfolio do you need today? They're normally saying something like, hey, I'm 30 years old and I think I might want to retire when I'm 50. Well, obviously when, if you're a 30 year old today, when you get to 50, $2.8 million will not be the same then as it is today. So we have to take the formula just one step further. This is going to get a little mathy and a little nerdy, but I think you're going to like it because what we're ultimately.

Brian Preston (17:54)

I think you're up to it though, Bo. I think you can do this.

Bo Hanson (17:56)

I think I'm going to. I think what you're going to appreciate is this will inform you of how to actually figure out what is a realistic number for you. So let's assume that you are a 30 year old today and you want to retire at age 50 with $100,000 in today's dollars. We want to account for today's dollars, but it's not going to be for 20 years in the future. Well, here's how you do the math. You would take your cash flow need and then you would divide that by your sustainable long term withdrawal rates. When the example we just did, $100,000 cash flow need in today's dollars divided by.035 or a 3.5% withdrawal rate because I'm going to retire at 50, then what I want to do is I want to take that number that I get and I want to inflate it out into future dollars. So I just multiply it times one plus my inflation rate. So you can assume a 3%, 4%, 5%, whatever number. And then you're going to raise the one plus inflation rate to the number of years until your goal. So the math would be, if we assume 3% inflation, 1 plus 3%. So 1.03 raised to the 20th, which is 20 years into the future. And if I do this equation, I'm going to arrive at the conclusion that my number is not actually $2.8 million. I need to save for the fact that it's 20 years in the future. I need to save 5.1. I need to save 2.5.12 million by the time I get to age 50. I'm sorry, 5.16 million by the time I get to Age 50.

Brian Preston (19:28)

What I love about this is that.

Bo Hanson (19:30)

I thought you were checking my math.

Brian Preston (19:31)

No, no, no. It's like, because it's. I'm a financial calculator guy. Whenever. You always have amazed me, you can write equations out and actually in a really good way. And it's important to understand how things are done so you can have a good foundation underneath you. But if you're somebody who uses a financial calculator or maybe you got sheets or Excel, really all we're doing is we're doing the easy retirement of taking what you need, dividing it by the safe withdrawal rate. But then we're just. That's the present value. That's what it's worth right now. But we've got to gross it up for inflation. We're just taking the years in the future and figuring out what that future value is. And that's why you can take the $2.8 million. If you just did 100,000 divided by.035, it comes out to be 2,857,000. To gross that up for the next 20 years. So you have the same purchasing power in retirement. Now. You see, your actual savings goal, surprisingly, is 5.1, close to 5.2 million. Don't skip that step. That's why when people tell me I just think I need to save $3 million. If I have $3 million, I'll have it. I'll be like, you sure?

Bo Hanson (20:40)

Like 3 million a day.

Brian Preston (20:43)

1 million. You know, people who come up with just a number without understanding the why or why you have to gross things up, you're skipping a step in the whole process.

Bo Hanson (20:52)

Okay, so as a reminder, we're talking about traditional fire proponents. Let's talk about some of the practical application here. One of the things we want you to recognize is while there are wonderful tenants that we can take from fire. We want you to be careful not to rush toward the end goal too quickly. Brian, you talk about this all the time for us in our time on this planet. You get one run at your twenties and you get one run at your thirties and you get one run at your forties and one run at the so on and so forth. And so if you are so hurried and so rushed and forcing yourself to sacrifice so much today so that you can reach financial independence in your 40s or 50s or whatever, one of the questions you have to ask yourself is, did I give up too much and was it really worth it?

Brian Preston (21:35)

Yeah, I don't want you to have regrets. You get one day you're going to blink and you'll be my age in your 50s and you'll go, did I really? Did I enjoy my 20s? Did I enjoy my 30s? I want you to have a special sweetness for every decade you're on this planet. And that's why, balance that out. I get well done that you have obviously exercised and you have a great discipline muscle. But just make sure you don't have regrets because look, I think in my 50s, I'm actually in great shape for my age, but I'm still not the same person and I can't handle the same things as I could in my 20s or 30s. I'm Bougier now. I expect a nicer hotel, hotel rooms and all kind of other things. If I go on a guys trip, I want my own bathroom. When I was in my 20s, I would have slept in the closet on a mat. It's funny how life changes and I just want you to take that. Don't sacrifice also relationship wise, I don't want you to lose key people in your life because you missed out on a moment because you were so disciplined. Look, the early part of my career I missed out on going to some really cool things because I was studying for certification exams and other things. And I still have some regrets that I missed going to some of those celebrations because I had to take all these certification exams and it just didn't allow me. I can't imagine if I took a whole decade of my life just so I could live like this super disciplined decade so I could retire. It's very valuable if the why aligns with your life. But just make sure it doesn't hit into that miser category.

Bo Hanson (23:11)

And then another practical application is there's still a lot that can change when you have a long time horizon. If you're thinking about retiring in your 40s, there's a lot of life that can happen between age 40 and age 100. So as you're thinking through this and as you're planning for fire, as you're trying to navigate your numbers, make sure that you build in some conservatism. Make sure that you don't get too aggressive. Make sure when you're doing your 3D glasses, you don't just focus on the dream outcome, but you are being true to yourself and focus on the down to earth outcome and even the doo doo outcome. So that if things don't quite go the way that you thought they would based on the brochure, you're still going to be okay if you make this decision.

Brian Preston (23:50)

I think we've done a good job of setting the table so people now understand, okay, what is this whole fire movement? How does it work traditionally, but now let's add some flavors in there. Bo, what are some. Because we talked earlier about there's lean fire, there's fat fire, there's slow fire. What do these flavors mean?

Bo Hanson (24:07)

So, yeah, so there's some different flavors of fire, and they're generally based on two. Two different metrics. Some of them are based on expenses, and some of them are based on timeframe. So, for example, if we look at leanfire, this is really focused on frugality and sort of minimalist living. So these are folks who say, hey, I want to get to the point to where my portfolio, my army of dollar bills can create for me a lifestyle of somewhere between like 40,000 to $60,000 a year. It's not extravagant. It's not going to be huge lifestyle, but I want to focus on that minimal living. Or maybe you're on the other side of that and you're someone who subscribes to fat fire. This is also based on expenses, but this is more extravagant. This is a more comfortable lifestyle. This might be someone who wants hundreds of thousands of dollars. Obviously, if you're going to fall into one of these camps and you're going to subscribe to one of these flavors of fire, it's going to dictate and impact the type of strategy that you employ to end up reaching them.

Brian Preston (25:05)

And then so that covered the expenses. I want to talk about the timefra because this one was intriguing to me because I was like, did I qualify for this? Because you think about slow fi. This is where you're working towards financial independence, but you're not necessarily in a rush to achieve it.

Bo Hanson (25:22)

Not trying to do it in a decade.

Brian Preston (25:23)

Yeah. You're not trying to do it in 11 years, like we showed in an example. You're not even trying to do it in 15 years. Now, look, this could be. I think this is something that already people in the fire movement or fine movement movement have going for them is that a lot of people who are part of this movement discovered personal finance and the power of compounding growth in their 20s, maybe even earlier than their 20s. That's why I said when I graduated at 22 from college, I right then set the goal that I was going to retire at 50 years of age.

Bo Hanson (25:54)

That's still going to be early, that's still going to be fire, but that is a little bit more slow fi. You're not.

Brian Preston (25:59)

I was actually just turning it upside down in the fact that I knew I had decades of compounding growth that was going to work for me. Have to do some crazy 50% savings rate. I knew as long as I was saving 20, 25%, I was going to be in a great place. Now, what I love about any of these type of things is it does give you additional flexibility no matter what changes. Because as everybody can see, I'm still sitting here, I'm still working. That's the great thing of making great financial decisions young. It's not like it hurts you. It actually gives you more flexibility and.

Bo Hanson (26:32)

Opportunities where lean fire and fat fire and even slow fi are kind of like, like flavors of fire. There are some different versions of fire that actually are a little bit different. And one of those, and I think this is probably one of the most common ones that we see is coastfi. And let me explain to you what coastfi is. It's this idea that I'm going to work really, really hard to build up a certain pot of money so that once I hit that number, even though I'm not going to retire today, if I just let that money continue to grow until I reach my retirement age, I'm going to be covered, I'm going to get there, and essentially I can coast into retirement. So I'm going to work really, really hard to hit a specific number. And then I'm just going to make sure that through my working, through my income, through the resources I have, I can pay for my living expenses until one day in the future. I will then allow for my portfolio to then pay for my living expenses.

Brian Preston (27:24)

Oh. What could be really helpful, before we even talk about why you even consider doing coast file is let's walk through the numbers because I think a visual of this would probably help with the learning experience.

Bo Hanson (27:35)

So let's say that we have an individual. This is coastfi Carla and Coast Phi Carla says, you know, I'm going to start working at 25 and I'm going to work for 10 years and I'm going to be as aggressive as I can over that 10 years. I'm going to build my portfolio to half a million dollars. So building up a half a million dollars by 35 is pretty impressive. And what Coastfly Carly says is, hey, I know that if I do that and I just let that half a million dollar sit, but I'm going to let it continue to be invested, continue to grow at 8% from now until the time I turn 65, that half a million dollars by itself will turn into almost five and a half million dollars. All Coast Phi Carly had to do was have a job that could provide for her living expenses and pay for her needs and pay for bills. And that 500,000 she built up could grow to five and a half million dollars. And CoastFlyCarly knows that at age 65, that five and a half million dollars can generate about $218,000 based on a sustainable 4% safe withdrawal rate, which is the equivalent today of about $77,000. So she can do the hard work for 10 years to create a future where she can live off of $77,000 indefinitely from a portfolio.

Brian Preston (28:48)

What's intriguing about this is that first, mad props that this actually works towards building some type of critical mass. That's the biggest thing. When I find somebody who has a great income in their 20s and they're already trying to cut it off because they think that they can expand their lifestyle, I'm like, are you sure? Because you haven't built that critical mass. I do like that Kosfi at least has this number in mind of discipline that we're going to work towards and build. Why would somebody do this? Maybe you realize, hey, I'm in these peak earning years, I'm in this career. I don't necessarily love this career. I'd love the opportunity to maybe be super aggressive now and then transition to a lower paying job or maybe even volunteer or do something that I know is just not going to be as economically beneficial, but something that I think I would really enjoy doing with my time.

Bo Hanson (29:38)

I love it. Maybe this is the thing where say, okay, I know that I want to be working right now and my spouse is working, but we really want to be in a position where one of us leaves the workforce, but when that spouse leaves the workforce, we won't be able to save the same way. So we're going to approach CoastFi and while we have two incomes, we're going to save to a certain dollar figure. And then once we that dollar figure, we are then going to go down to one income and just live off that income and allow our dollars to continue to build. That's a perfectly plausible reason why someone might want to pursue Coast.

Brian Preston (30:08)

And once again, I didn't even realize because I think I was doing this stuff before these things got branded and labeled. But you know, I used essentially this type of coast fire when I started my company. I mean, it's because I saved up for two to three years. I hyper saved building up additional cash and other things so that I could have enough money to go on a new career path, start a business. So I think that these type of things, it's great. Once again you're taking active role. Instead of being like the typical American where you're just letting life happen, you are actually taking an active role so you can take on a new risk, a new career path. And then some people even use this Coast Fire so that they can increase their lifestyle. Maybe this is the part where you've saved, save, save. But now you're saying because I have this critical mass, it's okay that I'm increasing my lifestyle because I've built up this nest egg. I would caution those people though, be careful. This only works is if your living expenses stay within a disciplined amount. If you start expanding what your lifestyle looks like while you're in your 20s and 30s and that's you might outspend what that pot of money you initially started with can actually support, all of.

Bo Hanson (31:21)

A sudden, coasting might not be enough to get you to the level that you want to be at. So how do you figure this out? How do you calculate how much you need? So again, let's kind of look at a case study. Let's assume that you want the equivalent of $100,000 of cash flow in retirement. Let's assume that when you invest, you can invest your dollars at an 8% rate of return. Again, we like to use conservative assumptions because you'd rather plan conservatively and things turn out better than plan aggressively and things turn out worse. Let's also assume that we're going to have a 3% inflation rate. And since we're planning on CoastFi, we're going to not reach true retirement until age 65. We get to apply a 4% safe withdrawal rate at age 65. So the question becomes if this is the path that I want to move on where are my benchmarks? Where are my checkpoints? Well, if you want to move on this path and by the age of 30, you need to have accumulated a portfolio of at least 432,000. If you are 40, you need to have accumulated a portfolio of 713,000. Or if you want to wait until 50 to begin coasting, you need to make sure that your portfolio has grown to at least $1.2 million in order to coast you to age 65, where you can then count on $100,000 of income.

Brian Preston (32:38)

I can already hear the peanut gallery in the audience is that people are like, okay, you gu randomly chose retirement expenses of 100,000. What if I'm going to be part of this fat fire part or fat FA and I want to have 200,000, just double the number. What if you're part of this and you're going to do it the lean side of things, then just cut it in half. If you only think you need 50,000 of living expenses, not 100,000 like we use in the example, the math still holds up, so you can customize this however you see fit.

Bo Hanson (33:08)

So where do we see this actually playing? Like, what's the practical application of Coast5? Because in reality, if we see our clients hit their coast five number, if we see them hit the number to where they're going to be able to reach all their goals, odds are we tell them to keep saving unless there are other things that they want to be doing with their dollars. There are other goals that they want to achieve. But most folks, at least if they're going to continue working for another 5, 10, 15 years, they say things like, man, I really want to max out that Roth IRA. Still, man, I really want to max out my 401k. Yeah, okay. I recognize rather than hitting Coastfi, maybe I could just continue to save for another three, four, five years, and maybe I could just hit true fire, true financial independence, and I don't have to actually just coast all the way out until age 65.

Brian Preston (33:56)

Well, you just said what the next risk is, is, you know, the problem with CoastFi is that you're not truly financially independent. I mean, like I said, life has a sense of humor. It tends to. The reason we talk about your 30s is the messy middle is that you have a lot of life things happen, whether it's family planning or just, you know, and then you get in your 40s and there's health issues that can come. There's just lots of things. That gives me a little pause because you're not truly financially independent. You got a lot of assumptions built into that, that money's going to be able to grow without you actually touching it.

Bo Hanson (34:25)

And then in reality, this is more of a concept, at least in our opinion, to help shift the mindset. A lot of people will use Coastfire as a mathematical calculation to check how they're progressing towards their goals. Hey, okay, I know if I hit this number by 40, technically I'm good if I were going to do Coast 5, but I'm going to keep saving. And then if I hit this number by 45, okay, I'm still good. Okay, this number, I fail. Okay, I'm good. It allows you to give yourself freedom to maybe take some pressure off. Say, okay, I've now done the things I need to do. I'm moving in the path I need to be moving. I know what my financial future is going to look like. Like, and even if I didn't save anymore, anything else, I'm going to be okay. But if I do continue to save, if I do continue to build, I'm just going to be able to reach my goals that much faster. That's how we see people using it much more in reality.

Brian Preston (35:16)

Okay, let's put a bow on this thing because we've made this thing seem really good. I think we've probably attracted a lot of people saying, hey, I want to own my time. I want to be able to do things on my terms. What are some of the other considerations? Because we've thrown a lot of math at this so far. Here's some things we want to make sure you don't have blind spots on healthcare.

Bo Hanson (35:34)

It's a big one. You know, one of the things that a lot of fire people are super concerned about is, okay, if I'm gonna leave this job and I'm gonna exit the workforce, but I'm not yet age 65. I now have a gap in health care. I no longer have employer coverage. I'm not able to be on Medicare yet. How do I solve that? And, well, it's gotten maybe a little bit easier over the years, but doesn't necessarily mean that it's super inexpensive.

Brian Preston (35:59)

I don't want you to skip the homework. You might be surprised. I'm amazed at how many people leave employment for work for a company and leave before, like a pension vest. It's the same way a lot of big companies, if you work for a Fortune 500, they have. Like, if you work a certain number of years and plus your age or there's a whole formula there you might qualify for health insurance. So just don't skip the step of seeing what type of health insurance you might qualify as a retiree if you give a enough years of service. The other opportunity is there's marketplace.

Bo Hanson (36:33)

That's right.

Brian Preston (36:33)

I mean you can go out there on the exchange, you can check it out. There's a lot of. I know here in Tennessee we even have some bureaus and other things that offer unique opportunities to get into health insurance for your family that we see people and then don't sleep on. Barista fire.

Bo Hanson (36:48)

That's a big one.

Brian Preston (36:49)

I mean this is. You could go. I know people that go work at. I mean, I'll just say you go work for a coffee. There's a nationwide coffee shop that you could go mix all the coffee you want in the morning and they offer retirement plans, they offer health insurance. There's a potential you could go work a job part time that you would really enjoy that could cover up and give you these benefits.

Bo Hanson (37:13)

Another consideration that we often see people not think about is what does your account structure look like if you are someone who's like, oh, I'm going to do fire, I'm going to sign up for this, I'm going to leave the workforce orally. So I'm going to start just maxing out my 401k every single year. Every single year, Every single year. And maybe you do it and you hit your number and you reach financial independence and you're 45 years old and you put in your two weeks notice and you go to retire and now you're there and you're like, oh, I'm here, I've done it. And then you recognize, holy cow, all my Money's in a 401k. Uh oh, I did not think through. Not just I need to have enough money, I need to have my money in the proper place that I can actually access it when I need it. Especially if I'm going to need it before age 59 and a half or before age 55.

Brian Preston (37:57)

Well, you just talked about 401ks. I think about a lot of the people I know who are part of the fire or fine movement. A lot of them work for big companies that offer RSUs, stock options. It's not only just the account structure, it's also those type of income strategies you can optimize to make sure the money's available when you need it the most. How about deferred comps? So all of these are strategies we've worked with clients that I'm telling you Life. The more success you have, the more complexities will come your way. And when you're part of the fire or fine movement, you're going to understand a lot of these things. You're going to need to make sure you pay attention to account structure as well as additional opportunities.

Bo Hanson (38:37)

We actually have content out there. If you are someone who's interested in distribution strategies for early retirement, we have a show titled three ways to retire early that you might not know about. We walk through. Okay, here are some ways that you can access these dollars. Here are some ways you can set up your account structure so that if you are part of the fire movement, you are part of the fine movement. You can access those hard earned dollars that you've built up over the years.

Brian Preston (39:03)

Guys, we love creating this type of content because we know that. But I'm just going to be honest of where the shortcomings are. His personal finance is very personal.

Bo Hanson (39:15)

That's right.

Brian Preston (39:16)

And you have to make sure that you're taking all of these things into account. This is why we work with clients all across the country. It's one of those reasons why I want to encourage you. Go to moneyguy.com resources look at all of our free stuff. We've shared a lot with you today. We've shared with you some shows, we even have some tools to let you see if you're ahead of the curve, behind the curve, or right where you need to be if you want to go to learn.moneyguy.com but the big thing is be an active participant. Most people who are already signing up for this movement are doing that. But just make sure you're not skipping the homework. And I also want you to understand that if you really want to know what abundance is, abundance is actually the intersection of wealth and purpose. And I think anybody who's thinking about the fire movement or the Fawn movement is you need to make sure you're taking a measure of both of those elements. It's not only how much money you're building, it's also understanding what your why and what wakes you up in the morning. Thank you for tuning in. I'm your host, Brian Preston. Mr. Bo Hanson. Moneyguy Team out.

Bo Hanson (40:17)

The Moneyguy show is hosted by Brian Preston and Bo Hanson. Brian and Bo are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the securities and Exchange Commission. In accordance and compliance with the securities laws and regulations, Abound Wealth Management does not render or offer to render personalized investment or tax advice through the Money guys, can you? The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment or legal advice. All investments involve a degree of risk, including the risk of loss.