You've Reached Coast FI—Now What?
Here Are 3 Options To Consider After Hitting Your Coast FI Number.
Key Takeaways:
Once you reach Coast FI, you've got options.
The first option is to continue doing what you're doing, which can be a popular choice, but may not be the best fit for those who don't enjoy their work or are experiencing burnout.
The second option is to downshift your work or pursue more fulfilling work and interests, which can improve one's quality of life and allow you to enjoy many of the benefits of FI today. But this option requires a lot of effort, planning, and possibly a leap of faith.
The third option is to repurpose your savings and live a more lavish lifestyle now, support causes that are important to you, or set up the next generation for financial success.
Reaching Coast FI is an exciting milestone for anyone on the path to FIRE.
It means you have achieved a level of financial security and freedom that many people only dream of. But what do you do once you reach Coast FI? What are your options? What should you consider?
That's what I want to cover today. In the hopes of answering one single question:
What can you do once you achieve Coast FI?
Here Are 3 Options To Consider After Hitting Your Coast FI Number.
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Option #1: Keep doing what you're doing.
The first option when you reach Coast FI is the path of least resistance—just keep doing what you're doing.
Continue working the same way, saving the same way, and spending the same way.
I think this is a popular option for two reasons: first, it allows you to accumulate even more wealth and reach financial independence sooner. And second, it's frictionless—it’s the default path that you're already on, so it's the easiest choice to continue.
And I think this is a really great option for anyone that loves the work they are doing in the amount they're doing it. If that's the case, why change it up? Why not continue saving and investing to achieve financial independence even quicker or amass more wealth? As the old saying goes: If it ain’t broke, don’t fix it.
But what if it is broken?
I think there are definitely some situations where continuing down the same path is a poor fit. Here are some that come to mind:
If you don't enjoy the work you are doing or the amount you're doing it.
If you're experiencing burnout and questioning if you can continue at this pace.
If there's something unique about the present moment that you will miss out on (think, young kids at home or aging parents with only a few years left.)
Really I think it comes down to this: reaching Coast FI doesn't mean you have to make changes to your lifestyle, but it does mean you have the option to.
And just because continuing on the same trajectory will be the easiest path to continue does not mean that's the option you should go with. After all, the entire reason you've reached this milestone is because you are choosing to be intentional about how you live your life, so why not continue that same level of intentionality by evaluating all the different options you have available?
Which brings us to the second option.
Option #2: Downshift your work.
The second option when you reach Coast FI is to downshift your work and enjoy more flexibility sooner.
This means you can reduce your hours or change your job to one that is more fulfilling or enjoyable, even if it pays less. This option allows you to have more control over your time and enjoy the benefits of financial independence sooner, even if you haven't reached full FI yet.
Or, if you are a dual income household, maybe you go down to a single income household and one of you pursues other interests.
This is the option I went with when reaching Coast FI in August of 2020, and it's one of the best decisions I've ever made.
The advantage of this option is that it allows you to enjoy the benefits of financial independence sooner, even if you haven't reached full FI yet. It also allows you to pursue more fulfilling work and interests, which can greatly improve your quality of life.
For us, we realized that we only needed about 20% of our FIRE number to start coasting, meaning we were able to tap into tons of the benefits of a FIRE lifestyle decades before achieving it.
Let's run the math on that one:
With our annual spending of $60,000 per year, we would need $1,500,000 to be fully financially independent ($60k x 25 = $1.5 mil). But, at 29 years old, assuming we wanted to hit financial independence by age 62, we only needed $300,000 to coast to financial independence. And $300,000 / $1,500,000 is just 20%.
For me, downshifting my work meant trading in my 60-hour-a-week job for a career as a self-employed freelance writer and remote financial planner (initially, I was doing seasonal tax prep but have since shifted to financial planning.) That allows me to create an incredibly flexible and unique schedule so I can spend more time doing things I love with the people I love, all while covering my living expenses.
And I think this is a great option for anyone that:
Is experiencing burnout on their path to FIRE and wonders how much longer they can continue at this same pace.
Doesn't love the work they are doing and dreams of something else—even if it means doing the same work they’re doing but on a schedule they can control.
Has something uniquely valuable about the present moment in their lives: young kids at home, aging parents they want to spend time with, or unique travel opportunities that are only available or a good fit right now.
Alternatively, this may be a bad fit if:
You love the lifestyle and path you are on now and have no desire to change it.
The tricky thing with this option is that it's going to require a lot of effort, planning, and maybe a bit of a leap of faith.
As I reflect back on my situation when I found out about Coast FI—it was almost bittersweet.
Bitter in the sense that, now that I knew there was an alternative option to the path I was on, I almost felt like FIRE lost some of its appeal. Like now that I had seen Coast FI, I couldn't unsee it. There was no going back. But sweet in the fact that it offered me an opportunity to completely redesign the life I was living and lean into a lot of the benefits of FIRE now, not decades from now.
This led my wife and I to a series of conversations—what would we do with this new Coast FI knowledge? Should we just continue with our plan as-is, focusing on a high income, high savings rate, and reaching FIRE as quickly as possible? Or should we switch it up and lean into freedom and flexibility now?
To use an analogy, it was like we took all of the puzzle pieces of our current plan apart, put them back in the box, dumped them on the table, and explored what it would be like to rearrange them into a new puzzle—a new plan that incorporates Coast FI.
Ultimately, we landed on the plan to downshift my work, even though that meant taking close to a 50% pay cut in the beginning. But, since we had been saving close to 50% of our income, and were now savings optional with Coast FI, we had the opportunity to make that work.
And it was definitely a leap of faith. Imagine me, at 29 years old, making more money than I’ve ever made, with a wife who is a stay-at-home mom, a brand new baby, and a mortgage. Imagine me deciding to walk away from that in exchange for freelance work and seasonal tax prep work. Talk about a gut check!
But the thing is, we had been diligently saving and investing all these years, we had cash in the bank, and we had backup plans for our backup plans.
I knew full well that if everything went to hell, the absolute worst-case scenario is I end up right back where I was—working my tail off and earning a high income. What did we have to lose? And that’s the power of knowing your numbers and being realistic about things, not letting fear and emotions steer the ship.
If I let fear and emotions steer the ship, I would have been too terrified to make this leap: terrified of what others would think, terrified of messing up our finances, terrified of not being able to earn enough money as a freelancer.
Instead, I realized that we had nothing to lose and everything to gain.
Worst-case is we went right back to the plan we had been pursuing—diligently saving and investing to achieve FIRE. Best case? We ended up with a lifestyle that is uniquely ours—tailor-made for the type of life that we want, complete with slow walks to the park, reading books as a family in the middle of the day, and traveling around to see people we love during the summers.
And ultimately, with young kids, we decided that we wanted to do whatever it would take to have the lifestyle we want now, not decades from now when the kids are grown and gone.
At the end of the day, this is a personal decision, and you should weigh all the options before making it. If you're getting to Coast FI, you're already doing an incredible job at being intentional with how you want to live your life—just make sure that intentionality continues as you consider all of these different options.
Which brings us to our next option.
Option #3: Repurpose your savings.
The third and final option when you reach Coast FI is to repurpose your savings. In other words, keep working and earning the same amount, but instead of saving all of it to reach FIRE faster, you repurpose it for other things.
And when I think about this option, there are really three things that come to my mind that you could repurpose your savings for:
You could use it to live a more lavish lifestyle today.
You could use it to support causes that are important to you.
You could use it to set the next generation up for financial success.
Now let's double-click on each of these options together and explore some of the pros and cons of each.
1. You could use it to live a more lavish lifestyle today.
So, you've reached a point where savings is optional, but you still love the work you're doing in the amount you're doing it.
Exploring this option: What would it look like to just spend ALL or PART of the money that you were saving before?
Of course, I don't mean blow it on dumb stuff that you don't care about. But instead, use it to provide joy and satisfaction in your life. A couple of things that come to mind for me are:
Use it to hire a house cleaner, landscaper, or nanny—or all 3!
Ramp up your travel spending and consider traveling in style or with family and friends (think fancy hotels, bougie AirBnBs, adventure experiences, etc.)
Order meal kits that make your dinners less stressful and more delicious.
Spend it on fun summer camps or expensive sports teams for your kids.
These are just a few of the ways I think you could use your money to live a more rich and enjoyable life. And again, I think this can be a really great option for anyone who has reached Coast FI and knows they don't need to save but has no interest in downshifting their work.
But here's the big catch with this approach: If you built your Coast FI number around an annual spending rate of $80k per year, but then you start spending $120k per year after reaching Coast FI, it's going to be very challenging to go from this new lavish lifestyle back to your original lifestyle at some point in the future.
That doesn't mean it can't be done, but I would think that once you get used to a certain spending amount and lifestyle, it's hard to put that 'toothpaste back into the tube' if you will.
So, one thing to consider if you want to go down this path would be trying to find expenses that you know will naturally disappear at a future date.
For example, if you’ve got kids, maybe you use more of that money on experiences or stuff for them, knowing that someday they will be on their own and that spending category will naturally disappear. Or maybe you find some one-time purchases that would add value to your life—like upgrading your car or something along those lines.
I think this can be a fun option if you’re looking for ways to repurpose your savings, and obviously, I think you could feel a direct and immediate impact on the richness of your life with this option, but I would again just caution anyone considering this route that you may want to adjust your FI number target if you plan to increase your spending temporarily, because it may be hard to avoid wanting that same lifestyle in the future, once you’re used to it.
It’s like the saying that goes: “If you were raised on steak, it’s hard to shift back to ground beef.” or something like that. Once you get used to a certain lifestyle, it’s hard to dial that back.
One interesting caveat to consider:
At some point, you'll be eligible for Social Security benefits. I know, I know, a lot of people in the FIRE movement like to assume there will be no Social Security benefits, but that's just highly unlikely. What's way more likely is that either: a) you won't be eligible for benefits until an older age or b) Social Security taxes will go up to help fund benefits. Likely, we will see a combo of the two. All that said, if you bump up spending, then ride that wave until you get Social Security, then fully retire, you could (potentially) use your Social Security benefit to make up that gap, assuming you are set to receive an amount similar to your increased spending. Then you never have to "unring" that bell of a more lavish lifestyle.
2. You could use it to support causes that are important to you.
Next up, what if you decided to repurpose your savings and start funneling that money into a cause or cause(s) that are important to you?
For some, this could be a great option to gain a lot more satisfaction with their money, rather than just accelerating your path to FIRE or living a more lavish lifestyle. And the cool thing is, giving can look different for everyone.
You could go the traditional route, donating to your church or a charity that you support. OR you could go the less conventional route—like using extra funds to support local businesses in your area, to help friends or family, or to give to others in your community.
Again, this could look different for different people based on your unique interests and causes that you care about, but this can be a great way to get more satisfaction out of your money.
3. You could use it to set the next generation up for financial success.
Lastly, you could use your savings to set up the next generation for success.
This means you can invest in your children's education, help them start a business, help them fund the downpayment on their first home, or give them a head start on their own FIRE or Coast FI journey.
This option allows you to use your wealth to make a positive impact on your family, even if you haven't reached full FI yet.
I personally love the idea of setting up a legacy of generational wealth, financial health, and stewardship within your family. And what better way to do it than by saving and investing money for the next generation? It’s like planting a tree for them before they’re even able to plant it themselves, and when we’re talking about investing, the power of compounding for them can be staggering.
For example, I was curious once what it would take to hit Coast FI for my kids, assuming that they would need an inflation-adjusted $1.5 million by the time they are 65 (using my same Coast FI numbers that assume an inflation-adjusted $60k per year spending from the portfolio in retirement.)
Essentially, I found out that if I wanted to hit Coast FI for my kids by age 10, I would need right around $40,000 invested for them, and without them or I saving another dime, they would be at a point where their future retirement was secure.
Imagine growing up with that level of financial security—imagine how free you would feel to pursue things based on your interests and desires, not based on what will pay you the most money.
Of course, I strongly believe that this kind of setup HAS to come with so much more than just a financial gift. There should be conversations between you and your children about what you are doing, the value of money, the value you get in life from doing meaningful work (paid or not), and the realization that having that kind of leg up is extremely rare and lucky.
And I know this concept is probably making some people’s skin crawl as they are just imagining these spoiled and entitled kids growing up without a financial worry in the world. And you may be right—but also, you may be wrong. I’ve spent a lot of time reflecting on why we are so convinced that money ruins kids, and I have some unique thoughts on this one.
I’ve talked to a lot of people that have zero interest in saving money for their kids because they’re convinced it would spoil or ruin them. But what if the only reason we think that would happen is because we only ever hear the most outrageous or egregious examples of silver-spoon trust-fund-babies who use their parent’s money to wreck their lives?
What if nobody is talking about the kids who have been set up for financial success and are simply living happy, healthy, and productive lives—just without the same levels of financial stress and anxiety as their peers?
What if either nobody knows their stories or they are simply too boring to tell?
I think the idea that setting the next generation up for financial success will ruin or spoil them is just too simplistic. The reality is so much more nuanced than that, and I believe that there are ways to do it intentionally and do it right, so that the next generation is financially secure, but not entitled. And for anyone that is interested in that topic, I highly highly recommend you check out the book Intentional Wealth: How Families Build Legacies of Stewardship and Financial Health, by Courtney Pullen.
It’s one that I have read a handful of times, and I plan to continue reading as I flesh out my own plans for the next generation.
And for anyone that’s interested in hearing what we are doing for our kids, I do plan to put out a post in the future about using FI to set the next generation up for success with details about what types of accounts we are using for our kids and the discussions we plan to have with them as they get older.
And in the end, zooming back out, I think one of the coolest things about hitting Coast FI and evaluating these options is that you can go with one at first and then shift to a different one in the future.
For example, when I heard about Coast FI, we opted to use our newfound freedom to downshift my work, choosing to earn enough to cover our living expenses while embracing a very free and flexible lifestyle.
But, over time, I’ve gotten better at my work, and my income has gone up, all while working the amount that fits our desired lifestyle. So, now we’ve got some excess funds coming in that we could use to accelerate our path to FIRE, or repurpose for other things, or both.
And ultimately, we’ve landed on a combination of all three options, where we are working the amount that fits our life, using some of the excess funds to accelerate our path to FIRE with our Roth IRAs, and then using some to set up the next generation for success with college savings plans and custodial brokerage accounts.
And that’s the beauty of knowing your options and trusting your gut—you may end up being able to do everything you want and then some while coasting to financial independence.
As always, I hope this information has been useful and inspiring as you work towards achieving financial independence! Thanks for reading!
Thanks Anders! Any guidance for my colleagues who are feeling the fear of pivoting to Coast FI or just taking a break, even if they have 20+ months of living expenses saved up? They're worried about giving up a high-paying tech job, even though they feel burned out.