Coast FI is an alternative to traditional FIRE that allows for more freedom and flexibility now, not ten years from now.
With Coast FI, you need to save enough money to cover your future retirement needs and then “coast” toward retirement.
The key benefits of Coast FI include the ability to reach financial independence much faster, letting your money do the heavy lifting, and continuing to work in a way that brings you joy.
Like most things in life, FIRE is not a one-size-fits-all.
Instead, there are many ways to approach financial independence and early retirement, from lean FIRE to fat FIRE and everything in between. And one of those unique ways is called Coast FI—reaching a point where saving is optional, so you can downshift your work and lean into freedom and flexibility now, not ten years from now.
It’s an exciting approach focusing more on enjoying the present moment by building a life you love right now.
And my goal with this post is to create an elevator pitch for coast FI as I attempt to answer this single question:
Why would someone pursuing FIRE decide to coast to financial independence instead?
First, Let’s Examine The Traditional Path To FIRE.
The traditional path to FIRE centers on a single goal: save 25 times your annual expenses and never have to work again.
Then, you can wake up every morning and do what you want, as money is no longer a consideration. If you spend $60,000 per year, your FIRE number is $1,500,000. ($60,000 x 25 = $1,500,000)
FIRE number = 25 x Annual Expenses
And to reach your FIRE number, there are two primary levers you can rely on to increase your savings rate and achieve financial independence:
Increase your income.
Cut your expenses.
For most, the path to FIRE will involve some combination of both levers—ramping up their income through a side hustle or career change while trimming the excess fat from their monthly budget.
Here are some ways people typically increase their income:
Hustle for a promotion.
Work overtime at their current job.
Start a side hustle they can do after hours.
Take a new job based on earning the most amount of money.
And here are some ways people typically slash their expenses:
Downsize their home or move into a shared living space.
Get rid of their car and rely on public transportation or biking.
Cut back on discretionary spending like eating out, shopping, and travel.
Then, by increasing their income and cutting their expenses, many are able to save and invest 50 to 70% of their income to reach FIRE as quickly as possible. And for many, that’s the goal: reach FIRE as fast as possible so they can begin living their best lives.
And while this can be great for some, it’s not right for everyone.
Here’s Why Traditional FIRE Is A Bad Fit For Some.
1. It can be a miserable journey.
After reaching his FIRE number, Carl Jensen, from the prominent FIRE blog 1500 Days to Freedom, reflected on his path to FIRE in a post titled: “My Death March to Financial Independence.”
In the post, Carl describes the sacrifices he and his wife were making to achieve FIRE as fast as possible and, ultimately, how he regrets not slowing down and spending more time with his kids. He writes:
“We should have slowed it down. For much of this time, I was exhausted. Working 80 hours per week for years on end is insane.” He continues: “We should have thought twice before taking on major projects with kids. I missed out on parts of my kids’ childhoods because I was so busy working. This makes me sad.”
He sums it all up with this:
“We forgot to enjoy life.”
And unfortunately, I think this is all too common in the FIRE community as people become borderline obsessed with reaching their FIRE number at all costs—no matter the sacrifice. As a result, FIRE takes delayed gratification to extreme and potentially unhealthy levels, causing many to miss out on experiences or cherished moments that they can never get back. Fortunately, it doesn’t have to be this way, as we will explore in a bit.
2. It can be unattainable for many.
Another reason FIRE may be a bad fit for some is that it is simply unattainable for many.
Back to the example of spending $60,000 per year—you would need $1.5 million to reach FIRE. But what if you’ve maxed out your earning potential, you can’t cut your expenses any further, and you’re still barely able to save? So many smart, talented, and capable people may never be able to achieve FIRE because of their life circumstances. Does this mean they shouldn’t get to embrace freedom and flexibility in their lives?
3. It limits the most powerful force in finance.
Compound interest is the most powerful force in all of finance, but FIRE fails to take full advantage of it.
That’s because one of the primary goals of the FIRE movement is to retire early and begin living off your assets, which limits the time your investments have to grow and compound. So, instead of saving a small amount of money and letting the power of compounding turn it into a massive sum over 4 to 5 decades, you have to save a massive sum of money to retire early in 1 to 2 decades. That means more effort, more work, and more savings on your part, which again makes it an unattainable goal for many.
It’s like being a football coach and benching your star quarterback—winning any games with that approach will be tough. As a result, the rest of your team must pick up a lot of extra slack.
So does this mean you should forget about financial independence altogether?
Absolutely not. Financial independence is one of the best ways to use your money to increase your satisfaction and well-being. I agree with best-selling personal finance author Morgan Housel on this one:
“The ability to do what you want, when you want, with who you want, for as long as you want to, pays the highest dividend that exists in finance.”
I can’t think of anything else you can buy with your money that will bring you as much happiness as being able to purchase back your time—not cars, not homes, not vacations—nothing will bring you as much satisfaction as being able to direct your life energy as you see fit.
But if FIRE isn’t a good fit for you, what’s the alternative?
Coast FI Could Be The Perfect FIRE Alternative To Live Your Best Life Today.
To set the stage, I like to use an analogy I heard from FIRE blogger Tina “Mrs. Flamingo” from the Money Flamingo blog.
Imagine that the journey to financial independence is like driving down the freeway. So there you are, cruising along toward financial freedom. You'll pass a series of exits on the way to your FIRE number. Each exit is a milestone: Coast FI, Lean FI, Barista FI, and so on.
These represent an opportunity to hop off the freeway—to modify your approach to FIRE.
Of course, you don’t have to exit, but you have the opportunity to.
That’s the decision I was faced with back in August 2020. I had been pursuing FIRE pretty aggressively for 6 to 7 years when I heard about Coast FI. But I was at a point in my journey where I felt burned out and overworked.
Coast FI was the perfect transition.
It would allow me the freedom to downshift my work and spend more time doing things I love with the people I love.
I had reached the point where I didn’t need to save another dime, and I could still have a comfortable and secure traditional retirement. All I needed to do now was cover my living expenses while working flexibly and letting my assets work in the background.
I had reached my Coast FI milestone and decided to hit the exit.
What Is Coast FI or Coast FIRE?
Coast FI, also known as Coast Financial Independence, is a concept within the FIRE (Financial Independence/Retire Early) movement that involves reaching a certain level of financial independence and then “coasting” towards retirement.
The basic idea of Coast FI is that once you have saved up a sufficient amount of money to cover your future retirement needs, you can scale back on your savings rate and focus more on enjoying your life in the present. The term “coasting” refers to the idea that you can relax and take your foot off the gas pedal while still making steady progress toward your financial goals.
It’s a modified approach to FIRE that gives you 80% of the benefits of financial independence with as little as 20% of the effort.
Here’s How Coast FI Works:
First, you reach a point where saving is optional. Instead of saving your full FIRE number, you just need to save enough that it will grow into the amount you need for future retirement. That allows you to use compound interest over long periods to easily achieve financial freedom at a future date.
Second, you use that freedom to design a life you love. When you no longer need to save, you can focus on building a life you love right now, not decades from now. For me, that meant shifting from the corporate world to a more flexible lifestyle through freelance and contract work.
Work just enough to cover living expenses. With Coast FI, you are as free as your living expenses allow you to be. If you only spend $50 to 60k per year, you just need to work enough to support that, and then you’re free to do as you please with the rest of your time.
Do work you love, and don’t be afraid to downshift your career. Too many people stay in a job they hate but pays well because they want to reach FI as soon as possible. With Coast FI, you can switch it up now and pursue work that is important to you, even if it doesn’t pay the highest salary. That decision alone is enough to give you a meaningful satisfaction boost in your life.
But, What’s So Great About Coast FI?
There are really three things that I think make Coast FI the number one FI strategy you should consider:
1. You can achieve Coast FI much faster than traditional FIRE.
The best part about coasting is you can reach it so much faster than traditional FIRE.
Consider this—if you’re 30 years old and spend $60k per year, you need to save $1,500,000 to be fully financially independent. But if you want to coast at age 30 and be fully FI in your early 60s, you only need to save $315k to start building a life you love. That’s just 21% of your total FI number!
That meant I could start coasting at just 28 years old. But if I wanted to achieve full FIRE, I would have been grinding for at least another decade, if not more, to achieve $1.5 million.
2. Coast FI lets your money do the heavy lifting.
The reason that coasting requires so much less effort on your part is that it relies so heavily on the strength of compounding—the most powerful force in finance.
That’s because instead of condensing your investment timeline into a decade or two as you do with traditional FIRE, coasting lets your money grow and compound for 3, 4, or 5 decades, depending on your age. So, instead of needing to save a large amount of money and retire early, you only need to save a modest amount of money that will grow and compound into the amount you need to be work optional in the future.
One way I’ve heard it described is that coasting means you get to coast, not your money—your money is putting in hard work behind the scenes while you enjoy yourself—a win-win.
3. You continue working.
No, that’s not a typo. I think continuing to work is one of the benefits of coast FI.
Hold on—hear me out on this one.
Part of the reason I fell in love with the FIRE movement in the first place was because I hated the work I was doing. I was working as an electrician at the time, which is a fine trade that paid me a fair wage, but I never enjoyed the work. I wasn’t passionate about electrical—I didn’t wake up excited about my work every morning. And ultimately, that created a huge happiness drag on my life.
So, as you can imagine, I was all in when I heard about a movement designed to help you exit the rat race by reaching a point where work is optional. I wanted out of my work, so I wanted in on the FIRE movement.
But, after a career change and a shift to self-employment, I’ve realized that work is not the enemy of freedom.
Work you hate is the enemy of freedom.
Work that doesn’t light you up is the enemy of freedom.
Work that consumes too much of your energy is the enemy of freedom.
But work doesn’t have to be that way.
I believe you can find work you love at a pace that fits your lifestyle, and I think coast FI is one of the best ways to do it. Because once you reach your coast number, you only need to cover your living expenses with your work. So, if your living expenses are manageable, you’ve got a lot of options with the work you do.
On top of that, the reality is that most people will continue working after reaching FIRE.
Show me someone that’s reached FIRE, and I will show you someone that still does paid work. For example, Pete Adney from Mr. Money Mustache, Paula Pant from Afford Anything, and Brad and Jonathan from Choose FI — they’ve all reached their FIRE goals, and they all continue to do paid work, albeit self-employed paid work.
Once I realized that even if I reached full FIRE, there was no way I would want to stop working for the rest of my life, full FIRE started to lose its appeal. Why would I grind to reach my full FIRE number if I wasn’t interested in never having to work again?
I realized that all I wanted was the opportunity to create a flexible work schedule that fits my lifestyle. I didn’t want to work 40-60 hours a week, but I didn't want to stop working altogether. So for me, the sweet spot has been right in the middle — still working, but on my terms, doing the things I enjoy, at a slow and steady pace.
Coasting embraces the truth that you don’t want to stop working altogether—you just want options. Once you realize that, full FIRE looks less appealing, and coasting takes center stage.
Now, let me share my “Why” of Coast FI.
My “Why” Of Coast FI.
I used to be on the typical path to FIRE.
I had a high income and a high savings rate and was doing a ton of work. I was also very frugal, sometimes to a fault. I was firing on all cylinders while working towards FIRE.
Then a couple of really important things happened.
First, I was promoted to a management position. My new position paid well, but it came with loads of stress—I started waking up in the middle of the night with my mind racing about work.
Second, my daughter was born. Becoming a dad has been a life-changing experience. It’s helped me realize that more than anything, I want to be present and available to spend time with my kids now, not ten years from now. I am acutely aware that I only get 18 summers with my kids before they are grown and out of the house, and I intend to take full advantage of each summer.
Third, a couple people I knew passed away unexpectedly. One of my coworkers who was about my same age passed away unexpectedly in 2020. A few weeks later, the spouse of another coworker passed away. These two unexpected losses hit me hard and made me realize that while I plan to live a long and healthy life, nothing is guaranteed.
These three events helped me realize that I couldn’t sustain this pace much longer, and frankly, now that my daughter was born, I didn’t want to. Lastly, I realized that tomorrow is never guaranteed.
I needed to start living a life I love right now.
Fortunately, coast FI made that dream a reality for me.
It allowed me to trade my high-paying but stressful job for one that was more flexible and less stressful while still covering my living expenses.
It allowed me to spend more time in the house with my wife and daughter, the people I love the most.
And it allowed me to take advantage of my only guarantee: the present moment. In our first year of coasting, we took 6 weeks and road-tripped up the coast of California as a family. The next summer, we spent a few weeks in France on our first international trip with our daughter. We plan to continue traveling and experiencing life together each step of the way.
I’ve realized that coast FI is taking another step towards intentional living. It challenges you to evaluate whether you are living a life you love or just working towards a target FIRE number that you hope will make you happy.
And I think one of the false assumptions people have about FIRE is that when they reach their FIRE number, they’ll be happy. This is because they assume their work is making them unhappy. But happiness is driven by many factors, and the absence of work does not guarantee you’ll be happy.
With CoastFI, you’re not focusing on some end goal or hope of future happiness.
You’re focusing on right now, making the most of the present moment by leaning into freedom and flexibility today. And that’s why I love coasting to financial independence.
Interested in learning more about CoastFI?
Get the free e-book: The 3 Key Elements of CoastFI, and start designing a life you love today.