What is Coast FIRE or Coast FI?

Coast FIRE or Coast FI stands for coasting to financial independence.

Coast FIRE or Coast FI stands for coasting to financial independence. 

It’s a branch of the traditional FIRE movement where you front-load retirement savings to reach a certain amount, then take your foot off the gas. This allows compounding to do the heavy lifting while you coast, working part-time or flexibly to cover living expenses. 

With Coast FIRE, you no longer need to worry about saving for retirement since your nest egg will grow to what you need to become fully financially independent at a future date.

To use an analogy, imagine that you are riding a bike up a steep hill. The majority of the work is upfront, pedaling hard to reach the top. Once you reach the top, you can begin your descent, coasting your way down the hill, pedaling lightly as needed, and steering to stay on course.

Coast FIRE is the same: you work hard initially, stuffing your retirement and investment accounts until you reach your coast number. Once you hit your number, you can begin coasting, working just enough to cover living expenses while living flexibly now. Along the way, you may find it’s time for a course correction, which means you pedal a little harder for a bit, or less hard, or maybe just turn the handlebars to head in a slightly different direction. The beauty is that you can adjust continuously along the way, scaling work up and down as needed.

The true beauty of CoastFI is that it allows you to reach a modified form of financial independence much sooner than you would achieve full financial independence. 

That said, CoastFI is not without its skeptics and naysayers. For example, it’s been called the “lazy man’s FI” and bashed by traditional FIRE purists because “you still have to work, so you’re not really financially independent.” 

So with that, let’s explore some of the pros and cons of coasting to financial independence.

Advantages of coasting to financial independence.

You can enjoy many of the benefits of FI right now.

One of the best things about coasting over traditional FIRE is that you may have already reached your coasting number—or are very close—while full traditional FIRE is still years or even decades away. 

For example, assume you’re 30 years old, with a traditional FIRE number of $1 million. You would need roughly $130k to start coasting now, assuming you wanted to hit full FIRE by age 65 and estimate inflation-adjusted returns of approximately 6% per year.

So, at the age of 30, you can begin coasting to financial independence, still working to cover living expenses, but no longer grinding hard to reach your full FIRE number of $1 million. This allows you to experience many of the freedoms and benefits of financial independence while you’re young, rather than delaying those benefits to a future date.

You can work on your terms.

I think Joe from Retire at 40 put it best: 

“For me, Coast FIRE is saving up early and then switching gear. This could mean working less, working in a less stressful job, or being your own boss. After you hit your target, you just need to work enough to support your lifestyle.”

Knowing that your nest egg is secure and putting in work behind the scenes, you can only imagine the type of work scenario you might come up with. Maybe you decide to start your own gig as an independent contractor, working for 3-6 months out of the year to cover your living expenses and doing anything you want with the extra time.

Maybe you find that you can cover your living expenses working three days a week from 10 am to 4 pm, leaving you loads of time to do the things you’re passionate about.

Maybe your job becomes too much, and you choose to walk away, knowing that you just need to find enough work to cover your living expenses. This gives you incredible amounts of flexibility in your decision-making and gives you the power to walk away from work that’s not a good fit.

However you decide to earn your lifestyle costs each year is entirely up to you and can vary from year to year or by each phase of your unique life.

You leverage the power of compounding.

When I think about Coast FIRE, I think, “Working smarter, not harder.”

Why bust your back trying to hit your traditional FIRE number right now when you can just let the most powerful force in finance do the heavy lifting for you? 

By front-loading your retirement accounts early, you open the door for compounding to take effect over decades and decades, getting you to where you want to go with significantly less effort.

I think we often overlook the power of compounding because, as Morgan Housel, author of The Psychology of Money, puts it: “Our minds are not built to handle such absurdities.”

Consider this example from Housel’s book: Warren Buffet has been investing since he was ten years old, giving his money over eight decades to grow and compound. As a result, roughly $81.5 billion of his $84.5 billion net worth came after his 65th birthday.

That’s the absurd power of compounding over long periods, and that’s the force you are tapping to help you coast to financial independence.

You can customize Coast FIRE to match your unique life.

Want to hit full FIRE at age 55 with an annual spending rate of $60k/year? Cool, there’s a coasting number for that. Or maybe you’re more of a frugal, traditional retirement type and want to achieve full FIRE by age 65 with an annual spending rate of $35k/year, excellent, whatever floats your boat.

Just like traditional FIRE, your numbers are your own, and as long as the math checks out and you’re happy with the lifestyle, you do you.

And of course, if your plans change along the way and you decide that $60k/year spending just won’t cut it, you can simply go back to the drawing board, calculate your new coasting number, and re-arrange things to make that work. For some, that may mean scaling up work for a bit to hit a new savings and nest egg goal or possibly delaying their full FIRE age, whichever you decide.

You can gradually transition to FIRE with no hard stop.

I once heard traditional retirement described as a grueling climb up a steep cliff face, followed by a leap off the other side. 

Unfortunately, I think that traditional FIRE can feel very similar as you attempt to immediately downshift from going all out trying to hit your FIRE number to being entirely financially independent, never needing to work again.

Brandon Ganch, creator and blogger at The Mad Fientist, recently described his approach to traditional FIRE in retrospect:

“For me, back then, it (FI) was a finish line.  Everything was going to be great after that finish line, and everything wasn’t working prior to that finish line.  And I think that was definitely the wrong way to do it.

I think the more you can view it as just a spectrum where every dollar you’re saving is adding to that power that you have to take more time off, or follow that passion project to another level, I think the better off you’ll be and then the less crazy FI or post-FI life would be after because it’s not going to be just like flipping a switch.

It’s just going to be this gradual progression into ‘oh, actually now I have the power to have unlimited free time and now I know how to deal with that and use it properly because I’ve practiced along the way as I’ve incrementally gotten more free time.

So that’s how I would view it, just as a spectrum and not as a goal line."

For some, the thought of dragging out their FIRE path seems like pure torture—they’d rather stay in an all-out blitz and achieve FIRE as quickly as possibly—and that’s fair to each their own. But I believe most people would feel much more at ease and satisfied with a gradual transition into FIRE, which coasting is ideal for. 

Disadvantages of coasting to financial independence.

You still have to work.

There is no way around this one: if you’re coasting, you’re still working. For some, this is a non-starter. I can hear them now: “How is this even FIRE at all—you still have to work for the next 30 years?!”

Or, as Kristy from the Millennial Revolution so eloquently put it when describing the cons of Coast FIRE:

“You’re still someone’s bitch for 30+ years.”

Ouch.

But I have a couple of thoughts here:

1. Most people who achieve FIRE continue earning money in some capacity. Ironically, Kristy from the Millennial Revolution is one of those people with her blog and book—granted, she works for herself, but there is no reason you can’t work for yourself and cover your lifestyle costs while coasting.

2. With the power to work flexibly and just cover your lifestyle, you do not have to be someone’s bitch for the next 30+ years. If you’re in a job that’s not a good fit, you don’t have to stay—coasting gives you the power to move on to something else.

Using myself as an example, I’m 30 years old and coasting. Honestly, I can’t imagine never earning money again for the rest of my life, so why would I want to pursue traditional FIRE right now? Sure, traditional FIRE would give me the option to never work again, but if I don’t need that option, why would I opt for full FIRE and delay living a flexible FI lifestyle? 

I just want the freedom to work on my terms, allowing me to spend time with my family and frankly however else I want. Coasting gives me that option: I work seasonally as a tax preparer from January to April each year and am self-employed as a freelance writer during the offseason. I set my schedule, I work from home, and I feel like the luckiest person I know. 

The future is uncertain.

One issue that comes up when discussing Coast FIRE is the idea that the future might be uncertain or different from the present.

For example, I’ve heard people say, “Well yeah, you’re okay with working now, but what if that changes in 10 years, but you still have to work to cover lifestyle costs?”

Or people say, “Well, what if your projections are off and your nest egg doesn’t grow to what it needs to be for full FIRE?”

And to that, I say, of course the future is uncertain. Of course your preferences are going to shift and evolve over time. Of course the math could be wrong! But the beauty of coasting is that it’s not some set-it-and-forget-it approach. Instead, it’s an ever-evolving, gradual journey across the FI spectrum. 

If you decide never to work again, shift gears and start pursuing traditional FIRE aggressively. Nobody is going to fault you for that. If the math is off, then make adjustments along the way, just like you would do if you were pursuing traditional FIRE.

The future will always be uncertain, which makes it even more important to capitalize on the present. Don’t delay your beautiful FI lifestyle for some later date. Instead, figure out your unique needs and start coasting today. As someone that’s coasting and enjoying every moment of it, I think you’ll be glad you did.