Category Archives: Financial Independence

This story is part of So Money, an online community dedicated to financial empowerment and advice, led by CNET Editor at Large and So Money podcast host Farnoosh Torabi.

Welcome to So Money Hot Mic, a weekly column on my latest financial musings.

I'mnew to TikTok and the algorithm is still figuring me out. Case in point, it keeps feeding me stay-at-home mom content.

Right now, hashtag#stayathomemomlife is trending, with over 778 million views of content from full-time caregivers. Some parents share struggles like loneliness. Others show how they structure their days to include a workout.

Then there's this TikTok from the husband of a stay-at-home mom, with a million "likes." Waxing poetic about why wives should stay home to "handle business," he says, "I don't want her working." And while acknowledging the huge responsibilities of being a "housewife," he ends with a derogatory note that most women who stay at home are smart enough to "keep it quiet and let the man out there making all the dough think he's running sh--."

Stay-at-home parenting, whether you choose to pursue it because of personal values, cultural pressure or due to the high cost of child care (or all of the above), is a real pull that I understand and respect. Without expansive programs for free preschool and paid parental leave, our current system does little to support working parents.

My husband and I have two young kids, and we occasionally talk about how life could be easier if one of us left our jobs and became the primary caregiver. It's usually after a long week of no childcare, a sick child and a pile of dirty laundry.

Joyful parenting. Me with my two kids.

But if you've followed my podcast, you know my viewpoint, which is not always popular: Stay-at-home parenting is a risky move and not one I like to recommend.

Why? At bottom, it's because I care about financial independence. In many cases, the partner who doesn't earn a paycheck (usually a woman) has little to no financial autonomy in the relationship. And, while I understand that not everybody can or wants to prioritize their financial freedom, I get nervous about any household model that leaves one adult financially defenseless and reliant.

I occasionally receive emails from my audience with questions like these:

Recently, I got a message from Sabrina, a 50-year-old mom of three from California. She was splitting from her husband, but hadn't made her own money during the marriage. "I've primarily been a stay-at-home mom, which for such cliche reasons crippled me financially. I'm in the process of divorce. My ex's career is soaring, while I feel like a 1950's housewife ... in the dark and starting from scratch," she wrote.

About 11 million people, or 1 in 5 US parents, are stay-at-home parents, according to a 2016 Pew Research study. In the last few years, especially given the work-life constraints of the pandemic, stay-at-home parenting is on the rise. If you're in this camp -- or leaning toward taking on this role -- here are some important considerations for your financial health.

Stay-at-home parenting is a tireless job that involves myriad responsibilities and, according to at least one 2019 study, amounts to a six-figure salary. The Mom Salary Survey estimated the average annual value of a stay-at-home parent as $178,201.

Attaching a financial value to your household contributions as a primary caregiver is important. Prescribing to the adage that "money is power" can oftentimes leave a spouse, who is not earning a paycheck, feel they can't (or shouldn't) have an equal vote in household financial matters.

As I wrote in my most recent book When She Makes More, the partner making less (or no money) deserves a central and active seat at the table. They should have a say in how household money gets spent, saved and invested. Any resistance to this from the primary wage-earner is a red flag in my book.

You can stay financially active through other means, too. Have routine budgeting meetings with your spouse. Review monthly bank statements and credit reports. Consult with financial planners and accountants and review all tax documents.

Is stay-at-home parenting a move you're willing to afford? As a financial advocate, I always tell people to run the numbers. When you're not earning a paycheck, you're not just losing income -- you're losing out on the compounding growth of that income, as well as future retirement savings. For example, a 32-year-old woman earning $60,000 a year who stops working for five years to be a stay-at-home mom will lose $300,000 in wages, as well as another $400,000 in lost wage growth and retirement benefits, for a total of over $700,000. This calculator from the Center for American Progress helps parents understand the long-term costs of full-time caregiving.

For some, the math will make them stop and reconsider. For others, it will make no difference. My insistence on weighing these long-term financial implications has rubbed some people the wrong way. This summer, I received an angry email from a stay-at-home mom who had listened to my podcast on the subject. "I choose to sacrifice for my kids, not sacrifice at the altar of financial success," she wrote.

To be clear, my argument is not that money is more important than kids. My main point is that our choices have trade-offs. Like with any financial decision, it's important to be clear on the costs and proceed with eyes wide open.

Banking your own money -- either through a part-time job or by taking an allocation from your spouse's income and depositing it in your own account -- can ensure some financial independence as stay-at-home parents, experts say.

According to Tracy Coenen, a forensic accountant who has worked on many divorce cases, it's crucial to have your own money during a marriage and in the event of a divorce. "You need to be able to make some autonomous spending decisions," she said recently on my podcast. "It's also important because, if the marriage ever goes south, you need to have a source of money to pay an attorney to get the divorce filed, to potentially go get an apartment of your own, and feed yourself."

One of the most heartbreaking things Coenen sees during a divorce is when the wage-earning spouse cuts off the stay-at-home parent. No one should feel trapped in a marriage because they don't have the resources to survive on their own, she said.

Along those lines, having a personal credit card ensures that if the couple breaks up, the nonworking partner has access to their own line of credit for emergencies. And it's better to apply right away, said Coenen, "while you have the earnings of your spouse that help you qualify for that credit card."

If you're a stay-at-home parent, it's a good idea to prepare for re-entry in the job market somewhere down the road. In her book Off Ramps and On Ramps, author Sylvia Ann Hewlett found in her research that a vast majority of women who leave the workforce eventually want to get back to their jobs and careers.

Regardless of why you want to get back into the workforce -- whether it's because you change your mind or your kids are all grown -- one of the best ways to get ready is by investing in your education and skills. That way, you increase your odds of meeting qualifications and getting hired. You can learn on your own time through free online programs and courses, and you can stay connected in your field through networking, social media and LinkedIn.

Or, you can do what Sabrina, my podcast listener, did. She invested time and money in pursuing a master's degree in mental health during her marriage, which took her seven years to complete while attending to responsibilities at home. Now, she's able to exit her relationship with some professional momentum, and with the hopes of building a practice and getting a return on the investment.

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It's Hard to Recommend Stay-at-Home Parenting. Here's Why - CNET

The pandemic threw many entrepreneurs off track as they suddenly grappled with unexpected challenges. One of them was Delhi-based Harsh Bala, whose manufacturing business of small electrical products suffered huge losses. But she didnt lose hope. Harsh Bala reinvented her career as a tutor with the help of digital tools on the internet. Heres her inspiring story.

Harsh, an engineering graduate, ran her own manufacturing business of small electrical products because she wanted to be her own boss but when the pandemic hit in 2020, the business saw sales dropping and costs increasing. The losses started piling up as the country went into lockdown eventually forcing her to put the business on hold.

Tiding over difficult times

From drawing a five-figure salary from her business to sitting idle during the pandemic, Harshas life became miserable. From being someone who always kept active and tried out different things, she became clueless about her future. Her savings were nearly exhausted, leaving her devastated.

I was unable to come to terms with the fact that I was losing everything, which took me a lot of time and effort to build. I was traumatised and lost my self-confidence, she says.

How she harnessed the power of digital

But giving up was not an option for her. She wanted to pull herself out of the loop of self-pity she had fallen into as soon as possible. She started looking for ways to keep herself occupied. She spent more and more time on the internet. After trying out different things, she decided to become a tutor to regain her financial independence and lost confidence. At the same time, she enrolled herself in the WomenWill program. She learnt from the entrepreneurship training that the course provided through short, simple, vernacular videos. Specifically, she learnt how to grow her tuition business and earn money.

She has started earning again and her confidence continues to grow. The best part about her tutoring business is that she is still her own boss. Now that she has a steady income, she also plans to revive her manufacturing business soon.

This article is published in partnership with Google.

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How Entrepreneur Harsh Bala Reinvented Her Career As A Tutor Using Internet - SheThePeople

SAN DIEGO--(BUSINESS WIRE)--Retirement solutions leader Finance of America Reverse (FAR) today announced the release of Disconnected: Perceptions vs. Reality in Retirement Planning, a new study from the Stanford Center on Longevity (SCL) that examines the challenges and concerns facing retirees and pre-retirees as they plan for retirement. The report also suggests messages and interventions that practitioners and researchers can use to help anticipate and address these challenges. The study was made possible with support from FAR and builds on FARs mission to help address the U.S. retirement crisis through greater awareness of home equity solutions and indicates a need for more financial guidance and retirement planning earlier in life.

The study findings show that the majority of retirees and pre-retirees are not financially prepared for retirement and lack sufficient savings to fully retire at age 65. Of those surveyed, the median retirement savings were valued at $128,000 and more than half (55%) of respondents reported their financial situation as fragile or being just able to get by financially. Since most financial advisors suggest spending no more than 4% per year of invested savings, that equates to just $5,120 per year that the majority of retirees could safely withdraw from their investments to supplement other retirement income sources.

Among pre-retirees, almost half (46%) said they are deciding when to retire based on their age and not their target savings amount, while nearly one-third (30%) reported having no plan for deciding when to retire, which might result in retirees not having enough income in their later years, especially at a time when their medical and long-term care expenses tend to increase.

The findings also indicate there is room to improve the resources retirees and pre-retirees use to help make retirement planning decisions. According to the study, nearly three in four respondents (72%) rely on their own instincts when making retirement decisions, with that being the only resource used by more than half of all respondents. Conversely, only 41% of respondents say they currently rely on a financial advisor to assist them with retirement planning, and 60% of respondents indicated they should have done more planning than they did. The combination of these factors and the lack of planning earlier in life contributes to low confidence in retirees and pre-retirees future financial outlook, with only 10% of respondents feeling comfortable with their finances.

So many Americans manage their finances on their own for years without any advance planning, only to then find themselves ill-equipped for the surprises, frustrations, and sheer expense of sustaining a 30-year retirement, said Steve Vernon, a consultant with SCL and co-author of the report. The invaluable insights from this survey illustrate where a strategic, multifaceted approach centered around financial literacy and engagement, step-by-step expert guidance from wealth planners and advisors, and empowering messaging for retirees can truly make all the difference in building a financially secure future.

The survey also reinforces the need for Americans to think about retirement planning more proactively and seek the advice of financial experts to help support them in reaching their future financial goals.

The way we think about and plan for retirement is going to require a fundamental shift. The accepted path of education, career, and a retirement at 65 ignore the true demographic and social changes happening in our country, said FAR President Kristen Sieffert. We need to invest in non-biased education and in building a set of retirement tools as broad and diverse as the various paths people take in the second half of life.

Sieffert added: We are living in a time of transition, marked by longer lifespans, increasing housing and healthcare costs, more volatile markets, but also encore careers, lifelong education, and a redefinition of life after 60. The insights from this study help inform our work with financial advisors and consumers alike, underscoring the importance of planning ahead and of home equity as a central financial tool for the new realities and possibilities in retirement.

Martha Deevy, Associate Director and Senior Research Scholar at SCL, said: We look forward to continuing our vital work with support from organizations like FAR so that more Americans are equipped with the tools and support they need to create healthy, vibrant lives throughout their retirement.

Key Findings

In addition to highlighting aging Americans financial perceptions and aspirations for the future, results from the study also pinpointed several noteworthy trends. Key takeaways include:

Lack of Savings Contributes to Fragile Financial Outlook

Professional Advice Key to Improving Retirement Planning Decisions

Expectations for Retirement Dont Match Retirement Plans

Download the full report here: disconnectedretirement.stanford.edu

Methodology

The Stanford Center on Longevity conducted this study with support from Finance of America Reverse. Findings from the study incorporate research from multiple sources, including: a custom survey of 2,000 U.S. retirees and pre-retirees from the ages of 50 to 74, conducted by Greenwald & Associates; in-depth interviews with 21 academics, industry experts and recent retirees; and a detailed review of relevant literature across the financial planning and retirement spaces.

About Finance of America Reverse

As a retirement solutions company and part of the Finance of America Companies (NYSE: FOA) family of companies, Finance of America Reverse is committed to empowering people with the tools they need to achieve financial independence and get to work on retirement. Through its team of Licensed Loan Officers and network of lender and wholesale partners, Finance of America Reverse offers home equity products and services designed to help older Americans include home equity in their retirement plans. The company is licensed nationally (NMLS #2285) and is a proud member of the National Reverse Mortgage Lenders Association (NRMLA).

For more information, please visit http://www.far.com or find us on Facebook, LinkedIn or Twitter.

2022 Finance of America Reverse LLC is licensed nationwide | Equal Housing Opportunity | NMLS ID # 2285 (www.nmls.consumeraccess.org) | 8023 East 63rd Place, Suite 700 | Tulsa, OK 74133

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Majority of Retirees and Pre-Retirees Lack Sufficient Savings to Retire by Age 65, According to New Research from The Stanford Center on Longevity and...

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Dubai, UAE, Sept. 29, 2022 (GLOBE NEWSWIRE) -- Announcing AlfCoin, a new hedge fund that will revolutionize the world of crypto finance. AlfCoin will be a one-of-a-kind hedge fund serving everyone. Through this venture, we will bring cryptoverse and trading assets together.

ALFCOINs main purpose is to fill the gap between cryptocurrency and asset trading. Up until now the crypto world and classic financial markets were separated but through AlfCoin we have a chance to be the bridge and use the tools provided by the crypto market to remove the negative impact of classic investment markets, full of constraints and limited to a select few.

We have realized that the high return investments are reserved for the elite and it created a barrier between the world of finance and the public. With AlfCoin we will overcome this and be the hedge fund for everyone.

AlfCoins main focus is creating financial independence for individuals, we are not here to recreate the wheel of finance, but to ensure that the public can reach all financial tools available.

The AlfCoin team is giving investors a chance to get the returns that they deserve. In todays world, it is time-consuming to follow the financial markets and even then you might miss a piece of crucial information or make a bad trade. Through AlfCoin you will have no issues such as these, just invest & forget.

The concept of AlfCoin is fairly simple, you do not need complicated charts or unending financial reports, all you need is AlfCoin and combine it with a StableCoin and follow one of our 5 plans. For more information about our plans please visit here.

Through our simple yet elegant user interface, you will have a chance to invest with a couple of button clicks without any hassle. AlfCoin makes investment more accessible by building a simple interface that everyone can use. Complicated interfaces destroy the appetite for investing. For us, your experience should be as simple as possible.

One of the biggest concerns for an investor is security, and AlfCoin is proud to state that Alfcoin is fully backed by Armoni, and our Hedge Fund is registered and regulated by the Grand Duchy of Luxembourg. Through today's blockchain technology, we have created a highly secure system for everyone. We work with top-class professionals for security.

To ensure the security and the sustainability of the system we have run a test version of AlfCoin on BSC and had incredible results. Reaching over 168% ROI on BSC was certainly a success for our future and now we are ready to make the next move with the Ethereum blockchain.

The piece de resistance of AlfCoin is our dApp. AlfCoin dApp is fully compatible with mobile and web browsers. Via AlfCoin dApp the investors will have access to their very own dashboard and if you are a trader you can access to Serenity Traders Platform.

Another fantastic offering of AlfCoin is the Serenity Traders Platform. Through Serenity, you will have a chance to become a trader. Serenity is what we call a prop firm, a company that allows you to trade its capital and earn a percentage of the profits you made. But Serinity is taking prop firm to the next level as it will give you the possibility to access the world's first decentralized trading room.

AlfCoins CEO Nikolas Krokos statedWere on a mission to change the landscape of traditional investment and crypto world. Combined with our vision and the top minds in this field together to help elevate innovations and optimize both investor and trader experiences. For us, the most important thing is the financial independence of the individuals and we are here to make that dream a reality.

Welcome to AlfCoin - The Hedge Fund for Everyone.

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AlfCoin Establishes Itself as a Exclusive Hedge Fund Cryptocurrency in The Industry. - StreetInsider.com

After making her mark as an entrepreneur, Navya Naveli Nanda has now turned into a podcaster with What The Hell Navya. In a recent interaction with indianexpress.com, the 24-year-old shared that she was very excited to venture into this new medium. Her mother Shweta Bachchan and grandmother Jaya Bachchan have also joined Navya on the podcast.

I think the three of us were really excited. This is something we literally do at home every single evening. So, it was also something that came across very naturally. The concept of it and the idea. So I think that excitement was the overall emotion for all of us, she shared.

While not revealing much about the podcast, Navya Naveli shared how three generations of women will be talking about financial independence, love, relationship, womens health, and how its important to have female friends. She added that theres a lot that they have packed into the show and are waiting for listeners feedback on everything they have to say.

When asked if it was tough to convince her mom and nani, Navya smiled to say, It actually wasnt. They were very excited. My mom is actually someone who loves podcasts. She listens to podcasts every day. So she was excited about that and my nani is a sport. Shes always ready to try something new. So it wasnt difficult to convince them at all.

Navyas younger brother Agastya Nanda is all set to make his acting debut with The Archies opposite Suhana Khan and Khushi Kapoor. Many had hoped to see Navya too treading the same path. However, she started her business. As we discussed how many wanted to see her on the big screen, Navya said, I mean I keep reminding them that I am an entrepreneur and its never going to happen. So I think that dream is, unfortunately, going to be unfulfilled for many people.

What The Hell Navya streams every Saturday on IVM Podcasts.

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Amitabh Bachchan's granddaughter Navya Naveli Nanda on acting plans: 'It's never going to happen' - The Indian Express

Finances FYI Presented by JPMorgan Chase

By Aaron Allen, The Seattle Medium

The meaning of financial freedom or financial independence is different for every family or individual. This could mean building generational wealth or a healthy savings account thats flush with cash but regardless how one defines financial freedom or independence literally depends on ones long-term financial vision.

According to Eli Taylor, who works for J.P. Morgan Private Banking, achieving financial independence is doable and requires the setting of goals; creating and managing your budget; paying down debt and saving; and evaluating your progress regularly.Achievable goals are going to be unique to each client, says Taylor. The first step to achieving financial independence is to define what that means to you and your family? What does that ideal lifestyle look like? Does a specific idea or goal come to mind? If so, I tell my clients that it is something you can look forward to, perhaps its early retirement or eventually downsizing to a less expensive living situation, it could mean paying down student loans, which leaves more flexibility. Having a better sense of future desires will help set up more achievable goals.

No matter what financial independence and freedom means to you, there is no better time to start developing good financial habits than right now. To help you start, J.P. Morgan provides four simple steps that you can begin to apply today to better administer your money and financially give you a better peace of mind.

Step 1: Set achievable goals.The first step to achieving financial independence is to define what that looks like to you. What does your ideal lifestyle look like? Does a specific idea or goal come to mind? If so, think about it as something you can work toward. Perhaps its early retirement or eventually downsizing to a less expensive living situation, which leaves more flexibility in the near-term.

[Determining] short-term, mid-term and long-term goals are crucial first steps in achieving financial independence so that you know what you are working towards, says Taylor. Have a plan around your goals, around a budget, debt management and investments and thinking about these is how I would advise my clients in regard to achieving their financial goals.

Step 2: Create and manage your budget.Once youve set goals, it is time to create a budget. The type of lifestyle you want to establish will help indicate how much money will be necessary to earmark towards assets like savings, retirement and investments as families plan and work towards reaching their goals on time.According to Taylor, a budget as a living document that fluctuates over time as spending evolves from month-to-month, quarter to quarter or yearly.

This could be a good time to work with afinancial advisor, says Taylor. The beautiful thing about my journey in banking is I started out as a teller, personal banker, financial advisor and now private banking, but I have had the privilege of working with clients from all ends of the spectrum. And what I have noticed is that it doesnt matter really where you fall, creating a budget whether youre just starting or even if your someone who is affluent, a budget is still going to be important. So, once youve set those goals and those intentions for your finances, it is going to be very important to create a budget.

For a more holistic approach to your finances your strategy will be unique to you, so your advisor should evaluate your full financial picture and offer research-based recommendations on investing, banking and lending needs, continued Taylor. Your advisor will also explain how certain life events and market cycles might affect your path forward, and help you adjust your strategy to stay on track.

Step 3: Pay down debt and start saving.One of the more difficult aspects of manifesting your financial future is becoming free of financial hardship especially when youre burdened by debt, and rising inflation.

According to J.P. Morgan, interest rates have fueled a 13% cumulativeyear-over-year increase in credit card balances. Paying down debt is a crucial component to your financial independence, and more than eight in 10 (83%) Americans prioritize paying down debt rather than saving for the future.

Its important to know that often we see debt as this huge, big number and often when we look at the amount of debt that some families have, it is overwhelming, says Taylor. It is important to know that you can break it down into bite sizes and start paying down some of those smaller balances as you work your way to paying down some of those bigger balances.

Taylor also advises that it is important to save, even it you are only putting aside small amounts. He says that many of his clients are surprised how much can be saved over time even regardless of the amount of money that they choose to put aside on a regular basis.

While paying off debt is important, establishing savings is also an essential component of financial freedom, says Taylor. It can be the cushion you need for unexpected expenses or emergencies that arise. Just look at how COVID exposed the unexpected. Building savings doesnt just happen though, you have to be intentional about putting money aside.

Big goals start with small progress: If saving seems overwhelming, start small by committing to putting aside one dollar every day, adds Taylor. At the end of the month, deposit that $30 into your savings account and start the next month with the same strategy, youll be shocked at how much youre able to save over time if you stick with it. And with automatic tools like ChasesAutosavefeature, you can schedule transfers from your checking account to your savings account, at an amount and frequency thats most comfortable for you.

Step 4: Evaluate your progress.Taylor suggests that revisiting your plan with a financial advisor on a monthly, quarterly or even yearly basis can help you manage your savings, monitor your financial progress and your spending habits. Revisiting and evaluating your plan also gives you valuable insight into opportunities that may be available.

Again, we mentioned that your plan is a living, breathing document that can evolve, says Taylor. So, assessing your spending with what you planned to spend on a regular basis will help you better manage your spending habits, adjust your savings and monitor progress toward your long-term financial goals. It will also provide valuable insights into the areas where youre spending the most money and if there is opportunity to revise. Review your budget regularly and monitor and evaluate your spending habits at least once a month.

Remember, achieving financial independence takes time and its important to regularly look for areas of improvement and determine whats working and whats not. Over time, youll find that managing your finances will become easier and more effective, creating a better financial future, concluded Taylor.

Finances FYI is presented by JPMorgan Chase. JPMorgan Chase is making a $30 billion commitment over the next five years to address some of the largest drivers of the racial wealth divide.

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Four Steps To Achieving Financial Independence - Seattle Medium

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Financial peace of mind might be closer than you think.

The Financial Independence, Retire Early (FIRE) movement has inspired millions of people to rethink their goals and both make and save more money along the way. But for many, the amount of money youll need to actually retire often north of $1 million can feel intimidating at first. Thats why you need to know about Coast FIRE.

Coast FIRE varies from traditional retirement strategy in that you strive to contribute heavily to your retirement and investment accounts early on in your career. Then, thanks to compounding interest and dividend reinvestment, these annual gains will take you the rest of the way to becoming financially independent without ever having to save another dollar. Once you reach your Coast FIRE number, you can shift to a different job that pays less, or use your newly excess income to pursue other passions in life, and know that youll have enough money when you reach traditional retirement age.

I do not have to work, and I enjoy that flexibility, says Carol Christie, certified financial planner and founder of Free to be Finance, a financial coaching services company. Christie was a technical sales manager who aspired to reach Coast FIRE. By maximizing her savings and investing in assets that generated revenue, she now coasts toward financial independence, and supports others on how they can achieve the same. Carol took an additional step to reach her Coast FIRE lifestyle goal by relocating to a more affordable area of the country, where she needs less money to live on.

You might be able to take a similar approach with your savings strategy. Heres what to know about Coast FIRE and how to calculate your Coast FIRE number.

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Coast FIRE is a variation of traditional FIRE that focuses on front-loading your retirement savings. The approach leverages compounding interest and dividend reinvestment to reach your retirement number. Since actual retirement is still years away when you first reach your Coast FIRE number, the retire early part of the acronym, its sometimes referred to as Coast FI.

The sooner you achieve Coast FI, the earlier you can remove retirement contributions from your monthly budget, which will lower your expenses without having to adjust your lifestyle. You might want to bring in supplemental revenue streams like a side hustle or rental income to fast-track your Coast FI goals.

Coast FIRE is a way to adopt the FIRE movement lifestyle without living on an uncomfortably low budget for decades to achieve financial independence. However, it does require aggressive savings and expenses management at the start.

I was living off of ramen noodles and bananas, says Zack Swad, founder of Swad Wealth Management, a financial consulting company. Swad saved as much in his retirement accounts as he could while working as a Charles Schwab financial advisor to frontload his retirement portfolio and reduce financial pressure. I was able to save a significant amount of money very quickly, which has given me the opportunity to really explore what I want to do with my life over the next five years, ten years, thirty years, he says. I wanted more autonomy and control.

After Swad hit Coast FIRE, he switched to opening his own advisory business. He says he wanted more time to be with his family, play music, and do other things that he enjoyed. Coast FIRE creates flexibility to achieve your retirement goal over time because compound interest is on your side.

As an estimate, you determine your FIRE number by taking your annual expenses and multiplying them by 25.

FIRE number = Annual Expenses x 25

From here, a Coast FIRE formula is to divide your FIRE number by (1 + annual rate of Return)^(Time). Annual rate of return is the average percentage you expect your investments to grow each year, and time is the number of years you want this interest to compound before you retire. This simple compound interest formula can function as your Coast FIRE calculator.

Coast FIRE number = FIRE number / (1 + Annual Rate of Return)(time in years)

Heres an example: Say youre currently 35, want to retire by 60, and expect $4,000 in monthly expenses in retirement ($48,000/year). Your invested assets return 6% each year, and dividends are reinvested. Your FIRE number the invested assets you need to be able to live off of a 4% withdrawal each year would be $1.2 million.

FIRE number = $48,000 x 25 = $1.2 Million

Your Coast FIRE number, however, would be much lower: $279,590.

Coast FIRE number = $1,200,000 / (1 + 0.06)25

Heres the year-by-year breakdown of how $279,590 at a 6% annual return would grow into $1.2 million over a period of 25 years and give you a path to financial independence without any further contributions.

This Coast FIRE formula gives you a ballpark amount you need to save to reach Coast FI and get on track to becoming financially independent. You dont need to save any more money once youve hit this number, but additional contributions will get you to early retirement sooner if you want to speed up your timetable. Keep in mind that the FIRE example given above is based on a 4% annual withdrawal rate. You can also use the free compound interest calculator at investor.gov to generate your own numbers, using different periods of times or average annual returns.

Certified financial planners caution against relying on the simplicity of this formula in future projections. Depending on your time to retirement, higher or lower expenditure fluctuations, and inflation, any of these factors can change your real rate of return. If you are relying on compound interest alone to get you to early retirement, be sure to watch your retirement investments carefully.

What if we have a bear market? What if we have higher than expected inflation? What if we have a recession? You can build in those scenarios, what income [is] going to look like in these time periods, [and] how this will affect your portfolio and ability to withdraw, advises Katharine Earhart, partner at Fairlight Advisors, a financial planning and investment management firm working with non-profit organizations and their employees. Being mindful of how much you can spend and save, tied to changing conditions, ensures that you reach what youll need for financial independence.

Many people use their current expenses to determine their FIRE number. It makes more sense to decide what kind of lifestyle you will live during retirement do you see yourself spending more money to travel, or less money with a planned move to a cheaper area of the country or world? The goal is to save for the lifestyle you plan to live when you retire, which may be different from your current lifestyle.

Your Coast FIRE number will be the first number you reach in your FIRE journey. From there, you have options on how to proceed with your savings efforts. Here are some variations of the FIRE movement that you can apply for the rest of the way to achieve financial independence.

Traditional FIRE aims to save over 50 percent of income with minimal spending. It is an aggressive path of mega-savings and a stark lifestyle to reach an early retirement goal. With Coast FIRE, you have the flexibility to invest in larger but less extreme contributions early (not as much as FIRE) and allow the compounding interest and reinvested dividends to help you reach your retirement goal by the time you are 60 years old or the age that you set for retirement.

Barista FIRE is when you plan to keep a part-time job in retirement to have residual income and health insurance. Since youll still be making some money every month, you dont need to draw as much from your retirement accounts, which means you need less money in invested assets. As a result, your Barista FIRE number will be lower than your FIRE number. The name Barista FIRE was coined in response to Starbucks offering health insurance to employees who average a 20-hour work week.

Related: Is Your Starbucks Barista Secretly a Millionaire? Why Early Retirees Are Embracing Barista FIRE To Still Have Health Insurance

Lean FIRE is when your retirement goal is set on funding only the bare necessities in life. Basically, you plan to live a frugal lifestyle when you retire and therefore, require a smaller retirement number. You will have to work to pay for any additional expenditure or splurge. Coast FIRE focuses on creating a nest egg that fulfills the lifestyle you want to live during retirement and coasting through a lower-paying or part-time job once you reach your investment goal.

Related: Lean FIRE Can Help Middle-Class Americans Become Financially Free. Calculate This One Number to Get Started

Fat FIRE is when you want to retire early without having to skimp or live on a lean budget. It is considered the more luxury path to achieving financial independence. Typically, you anticipate $100,000 or more in annual living expenses and at a 4% withdrawal rate, necessitating at least a $2.5 million investment portfolio.

Related: If You Want to Retire Early but Dont Want to Scrimp, Fat FIRE Might Be for You

If youre seeking peace of mind, consider calculating your Coast FIRE number today so you can set goals that move you toward a higher quality of life and eventual financial freedom.

Weekly commentary from our senior editor on the FIRE movement, side hustles, passive income, and pursuing financial independence.

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'Coast FIRE' Can Give You Peace of Mind About Retirement. This Formula Shows How Much Money You'll Need - NextAdvisor

Grant Sabatier, creator of finance website Millennial Money and author of "Financial Freedom," technically isn't retired. But he could be. He has enough money in his portfolio to live on without ever needing to work again. And that's sort of the point.

Sabatier is one of the leading voices in the so-called FIRE movement short for financial independence, retire early. Adherents to this philosophy aim to save and invest large portions of their income in their early earning years in order to have enough money to retire decades before they reach their mid-60s.

By 2015, at age 30, Sabatier had saved $1.25 million, enough to ensure that he'd never have to work again. But instead of kicking back on a beach, he has embarked on a new career teaching others how to achieve financial independence.

Over the last seven years, Sabatier has seen his share of FIRE success stories, as well as common pitfalls early retirees run into. If you're considering embarking on a FIRE journey, here are two potential problem areas to understand now so you don't run into them down the line, Sabatier says.

Planning for an early retirement requires you to have an idea of what life after work will look like, which can be difficult in a society where people are often defined by their work.

"So much of our identity is tied up to our work and the things that we do in our professional life," says Sabatier. "A lot of people spend all this time working and saving and investing in order to retire early, then they don't have an idea of what they want to do after."

That can make knowing how much money to save tricky given that retiring to a beach in Thailand, writing your novel at a caf or traveling the country in a van require different financial pictures to pull off.

One way to narrow things down is to focus on your core values. Interrogating which parts of your life bring you the most happiness can help you form a clearer idea of what you want, Jim Crider, a certified financial planner who specializes in clients seeking financial independence, recently told CNBC Make It.

"If you can be articulate about what's important to you, your vision is clear," he said. "You can spend money in the most efficient manner. You can make the things that are most important to you happen in a bigger, grander way."

Still, no matter how clear your retirement vision is, it may require some field testing, Sabatier says. If you've accumulated enough cash savings to cover a year or more of expenses, try a "mini retirement" to get a sense of how life away from the office actually feels, he suggests.

Or begin pursuing your passions on the side while you're still working. "This is one of the biggest reasons I recommend trying a side hustle, so you can start making money doing something that you enjoy. And actually then use that as a bridge to when you want to retire early."

None of your early retirement dreams are likely to come to fruition if you don't stash away enough money.

"I see a lot of people retiring with enough money to cover their annual expenses today, but they're not estimating what adding two kids or moving to a higher cost of living area could add to their expenses," Sabatier says.

The number that would-be early retirees are aiming for is known as their "FIRE number" the amount of money they need in their portfolio to live off of in perpetuity.

The calculation used to find it is based on the "4% rule," an investing concept borne of an influential 1998 financial study which posited that investors holding a mix of stocks and bonds could withdraw 4% of their portfolio's value per year.

To find your FIRE number, if you assume a 4% withdrawal rate, you'd multiply the annual income you expect to need in retirement by 25. Someone hoping to live on $50,000 annual withdrawals from their portfolio would need $1.25 million to retire.

People get themselves into trouble, Sabatier says, when they fail to account for how that equation can change for them over time.

You may have thought $50,000 was plenty to live on when you embarked on your FIRE journey in your 20s, but by the time you're 45, your needs may have changed drastically. You may need to adjust your number upward before you can have the retirement you were envisioning.

You may have to adjust your assumptions for how soon you could hit your number too, Sabatier adds. That's because safely drawing down your investments relies on the assumption that markets will consistently move upward. And while that has been the trend over long periods, the direction of your investments is far less predictable between now and when you're hoping to call it quits.

"We know we're living in increasingly uncertain times. I see a lot of people under-saving and overestimating the potential future performance of the stock market."

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37-year-old self-made millionaire: Don't retire early before you consider these 2 things - CNBC

Talking to Diania Merriam, you'd never guess that the semi-retired host of a financial advice podcast ever had problems with money.

But the 35-year-old says that just a few years ago, she was "completely financially illiterate."

Merriam spent her 20s in Brooklyn, New York, where she earned $135,000 a year working in the consumer goods industry. She focused on working hard and making money, rather than on spending what she did have responsibly.

"At my worst, I was probably spending about $2,000 to $3,000 a month just going out and partying," she tells CNBC Make It. "I was going out for drinks after work. I was going out to dinner every night. I was partying pretty hard and I just simply was not paying attention to where my money was going."

Before she knew it, Merriam had racked up $15,000 in credit card debt to go along with the $15,000 she still had left over from her student loans.

For years, the debt didn't bother her. But in 2016, when she decided she wanted to take on Spain's famous Camino de Santiago, a 500-mile trek that takes a couple of weeks to hike, the challenge inspired her to finally tackle her debt as well.

"I don't think I had the ambition of retiring early," Merriam says. "I just knew that I wanted to get out of debt. I wanted to walk the Camino and I wanted to find some financial stability."

She realized her food spending had gotten out of control and set about trying to trim it down.

"I started bringing lunch to work every day, cooking breakfast, lunch and dinner and really focusing on those food costs," she says. She also traded expensive nights out for hosting dinner parties at her apartment.

I don't think I had the ambition of retiring early. I just knew that I wanted to get out of debt.

With her increased savings, Merriam was able to pay off her debt in just 11 months. From there, she decided to put all the money she was saving toward her investments and began pursuing FIRE, which stands for "Financial Independence, Retire Early."

She moved to Ohio in 2017, leaving Brooklyn behind in favor of a slower pace of life in Cincinnati.

"I went from paying $1,800 a month for a cockroach-infested apartment in Brooklyn to paying a $600 mortgage in the nicest place I've ever lived," she says.

By January of 2021, Merriam left what she calls "W-2 work" in favor of hosting a financial advice podcast. She currently has a net worth of around $470,000, including about $350,000 in savings and investments, and earns about $3,000 per month from the podcast. She works around 7 hours per week.

Merriam describes her current financial situation as "Coast-Fi," a breakoff of the FIRE movement. Being Coast-Fi means she only needs to earn enough money to cover her expenses because she already has adequate savings and investments to support herself once she reaches a traditional retirement age.

For now, Merriam is happy to remain Coast-Fi and isn't actively trying to fully retire. Her $2,000 monthly spend which includes her mortgage, car and other expenses is lower than what she was spending going out with friends in New York and gives her flexibility on how she spends her time.

The process of eliminating her debt and then pursuing FIRE, she says, gave her a new perspective on her relationship with money.

"It definitely helped me see how wasteful I was being," she says. "That experience showed me I didn't really have an income problem, I had a spending and money management problem."

Watch the video above to learn more about Diania Merriam's story.

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This 35-year-old has a net worth of $470,000 and is semi-retiredand she only works 7.5 hours a week - CNBC

This story is part of So Money, an online community dedicated to financial empowerment and advice, led by CNET Editor at Large and So Money podcast host Farnoosh Torabi.

Welcome to So Money Hot Mic, a weekly column on my latest financial musings.

I'm new to TikTok and the algorithm doesn't quite know me yet. It keeps feeding me stay-at-home mom content. The hashtag #stayathomemomlife is trending with over 778 million views of content from full-time caregivers. Some parents share struggles like loneliness. Others show how they structure their days to include a workout.

Then there's one from the husband of a stay-at-home mom, with close to a million "likes." Waxing poetic about why wives should stay home to "handle business," he says, "I don't want her working." And while acknowledging the huge responsibilities of being a "housewife," he ends with a derogatory note that most women who stay at home are smart enough to "keep it quiet and let the man out there making all the dough think he's running sh--."

Stay-at-home parenting, whether you choose to pursue it because of personal values, cultural pressure or due to the high cost of child care (or all of the above), is a real pull that I understand and respect. Without expansive programs for free preschool and paid parental leave, the current system does little to support working parents.

My husband and I have two young kids, and we occasionally talk about how life could be easier if one of us left our jobs and became the primary caregiver. It's usually after a long week of no childcare, a sick child and a pile of dirty laundry.

Joyful parenting. Me with my two kids.

But if you've followed my podcast, you know my viewpoint on this, which is not always popular: Stay-at-home parenting is a risky move and not one I like to recommend.

Why? At bottom, it's because I care about financial independence. In many cases, the partner who doesn't earn a paycheck (usually a woman) has little to no financial autonomy in the relationship. And, while I understand that not everybody can or wants to prioritize their financial freedom, I get nervous about any household model that leaves one adult financially defenseless and reliant.

I occasionally receive emails from my audience with questions like these:

Recently, I got a message from Sabrina, a 50-year-old mom of three from California. She was splitting from her husband, but hadn't made her own money during the marriage. "I've primarily been a stay-at-home mom, which for such cliche reasons crippled me financially. I'm in the process of divorce. My ex's career is soaring, while I feel like a 1950's housewife ... in the dark and starting from scratch," she wrote.

About 11 million people, or one in five US parents, are stay-at-home parents, according to a 2016 Pew Research study. In the last few years, especially given the work-life constraints of the pandemic, stay-at-home parenting is on the rise. If you're in this camp -- or leaning toward taking on this role -- here are some important considerations for your financial health.

Stay-at-home parenting is a tireless job that involves myriad responsibilities and, according to at least one 2019 study, amounts to a six-figure salary. The Mom Salary Survey estimated the average annual value of a stay-at-home parent as $178,201.

Attaching a financial value to your household contributions as a primary caregiver is important. Prescribing to the adage that "money is power" can oftentimes leave a spouse, who is not earning a paycheck, feel they can't (or shouldn't) have an equal vote in household financial matters.

As I wrote in my most recent book When She Makes More, the partner making less (or no money) deserves a central and active seat at the table. They should have a say in how household money gets spent, saved and invested. Any resistance to this from the primary wage-earner is a red flag in my book.

You can stay financially active through other means, too. Have routine budgeting meetings with your spouse. Review monthly bank statements and credit reports. Consult with financial planners and accountants and review all tax documents.

Is stay-at-home parenting a move you're willing to afford? As a financial advocate, I always tell people to run the numbers. When you're not earning a paycheck, you're not just losing income -- you're losing out on the compounding growth of that income, as well as future retirement savings. For example, a 32-year-old woman earning $60,000 a year who stops working for five years to be a stay-at-home mom will lose $300,000 in wages, as well as another $400,000 in lost wage growth and retirement benefits, for a total of over $700,000. This calculator from the Center for American Progress helps parents understand the long-term costs of full-time caregiving.

For some, the math will make them stop and reconsider. For others, it will make no difference. My insistence on weighing these long-term financial implications has rubbed some people the wrong way. This summer, I received an angry email from a stay-at-home mom who had listened to my podcast on the subject. "I choose to sacrifice for my kids, not sacrifice at the altar of financial success," she wrote.

To be clear, my argument is not that money is more important than kids. My main point is that our choices have trade-offs. Like with any financial decision, it's important to be clear on the costs and proceed with eyes wide open.

Banking your own money -- either through a part-time job or by taking an allocation from your spouse's income and depositing it in your own account -- can ensure some financial independence as stay-at-home parents, experts say.

According to Tracy Coenen, a forensic accountant who has worked on many divorce cases, it's crucial to have your own money during a marriage and in the event of a divorce. "You need to be able to make some autonomous spending decisions," she said recently on my podcast. "It's also important because, if the marriage ever goes south, you need to have a source of money to pay an attorney to get the divorce filed, to potentially go get an apartment of your own, and feed yourself."

One of the most heartbreaking things Coenen sees during a divorce is when the wage-earning spouse cuts off the stay-at-home parent. No one should feel trapped in a marriage because they don't have the resources to survive on their own, she said.

Along those lines, having a personal credit card ensures that if the couple breaks up, the nonworking partner has access to their own line of credit for emergencies. And it's better to apply right away, said Coenen, "while you have the earnings of your spouse that help you qualify for that credit card."

If you're a stay-at-home parent, it's a good idea to prepare for re-entry in the job market somewhere down the road. In her book Off Ramps and On Ramps, author Sylvia Ann Hewlett found in her research that a vast majority of women who leave the workforce eventually want to get back to their jobs and careers.

Regardless of why you want to get back into the workforce -- whether it's because you change your mind or your kids are all grown -- one of the best ways to get ready is by investing in your education and skills. That way, you increase your odds of meeting qualifications and getting hired. You can learn on your own time through free online programs and courses, and you can stay connected in your field through networking, social media and LinkedIn.

Or, you can do what Sabrina, my podcast listener, did. She invested time and money in pursuing a master's degree in mental health during her marriage, which took her seven years to complete while attending to responsibilities at home. Now, she's able to exit her relationship with some professional momentum, and with the hopes of building a practice and getting a return on the investment.

Read more:

Stay-at-Home Parenting: Why Aren't We Talking About the Financial Costs? - CNET