How to define a “nest egg” and take more risk
Often, people postpone taking chances on new ventures due to a lack of a financial cushion, whether it's starting a business, traveling, becoming a parent, taking a riskier job, or taking an extended break from work. They say, "I can't take a chance on x until I have a nest egg."
But what exactly is a nest egg? Here's my suggestion: consider coastFIRE.
For the past seven years, I've been a proponent of FIRE (financial independence, retire early). The fundamental premise is to minimize your expenses, maximize your savings, and take control of your financial life, with the hope of retiring earlier than the traditional age of 65 in the United States. While I believe this is a fantastic and empowering concept that more people should be aware of and pursue, it can also cause you to become fixated on reaching your retirement savings number and miss out on more fulfilling pursuits.
CoastFIRE, on the other hand, refers to having enough money in your retirement accounts that your net worth will continue to grow without additional contributions, allowing you to support yourself during retirement at a traditional retirement age. While you won't be able to retire immediately, it frees up the money you would otherwise be contributing to your savings and assumes that you'll be able to cover your living expenses until you reach your target retirement age. This is a powerful idea. It's like a massive weight being lifted from your shoulders, and you've accomplished a significant financial milestone. I wouldn't recommend reducing your savings rate to zero, but it should give you more freedom to take risks. Imagine the mental relief of knowing that you're not jeopardizing your retirement when you take a break from your stable (perhaps high-paying) job to pursue your passion project or go on an adventure.
If you encounter setbacks or failures in your pursuits, having the peace of mind that you've accumulated enough savings to attain your retirement objectives will alleviate stress. It's essential to note that this approach may not be suitable for everyone, and some may perceive it as excessively cautious, while others may view the goal as unattainable. Nonetheless, I'm presenting a framework that's aiding me in navigating risk as I move forward.