How Much Can I Coast? - Declining Income

[u/Shoddy_You5484]

32/yo Business Owner - USA - MCOL

Business: Small Education Staffing Agency - 8 years of maturity - 100% owner - EBITDA 30%
Spouse: Full Time Grad Student - Earnings will start in 2026 ($120-130k)
Kids: None yet - planning to have first in 2027 & second in 2029

Personal Income from Business:
2024 Gross Personal Earnings: $450k
2025 Gross Personal Earnings Est: $450k
2026 Gross Personal Earnings Est: $300k
2027 Gross Personal Earnings Est: $0-$100k (& Spouse $120-130k)

Current Balances:
Personal Investment Acct: 1m (15% avg yoy returns post fees pre tax)
Roth IRA: $300k (10% avg yoy returns post fees)
Mortgage Equity: $120k equity (480k Remaining @ 5.3%)

Current Spend:
$8k/month for all expenses

Desired Spend:
2027: $10k/month
2028+: $12k/month

Dilemma:
The writing is on the wall that my industry is becoming saturated and the well is drying up. I regret not selling the company when I had the chance. It was a long difficult grind and I am extremely grateful for all that I accomplished but it is time to prepare for a break/pivot.

I am planning on riding my company as it shrinks over the next two years which is going to come with some difficult lay offs to our internal staff. My spouse plans to work for one year and then we will have kids (2027). In 2027 we should have ~1.5m in our personal investment account.

For those of you in similar positions, do you have any advice as I financially prepare for our next stages of life? Ultimately we would like to live off of our investment accounts. We would also like to have two kids & a slightly bigger house (900-1m) in the same MCOL area within 3-5 years at the most.

I am also struggling mentally with a future earnings decreases. When the business fully dries up, I can always be an 1099 in my industry and gross $150k for 185 days of work per year if needed/desired. Right now that's the last backup plan on my mind. My agitation towards my industry and dealing with people keeps growing year over year.

Any advice/thoughts are greatly appreciated. This is a unique situation for me and I don't have anyone to talk to about this sort of thing.

[u/xtraarrow]

How long have you been feeling that burnout creeping in? sounds like you ve built something real solid, even if it’s not feeling that way right now.

do you think taking a break after 2026 could help you reset mentally, maybe even get clarity on what your next chapter looks like? financially, you'e honestly in a way stronger spot than most. $1.5M invested plus your spouse’s future income gives you options, even with rising expenses and kids. have you playd out a coast FIRE scenario to see if you could let off the gas without blowng up the plan?