When FIRE first came to fruition, many other forms of this pursuit began to develop. One in particular, I find myself coming back to often in my work as a planner is Coast FIRE. This approach I find best articulates the why behind retiring early, and the idea of making the most of your time in my opinion. Below is everything you need to know about CoastFIRE from a planner’s perspective, and follower of the principles of FIRE.
What is Coast FIRE?
Coast FIRE is the idea of saving up enough early on to essentially ‘make saving optional’, and eventually earning income in itself. It is the most flexible approach, and realizes that time is the most valuable currency vs your FIRE number. In a sense, you approach retirement as not retirement and think about it more in terms of financially being independent on various levels. In fact, there may not even be a set retirement date per say, but more of a gradual transition into different periods of less and less work and more freetime to pursue passions or interests.
Once an individual has saved enough to be able to take on less hours/lower pay or perhaps a lower stress job, they aim to let their investments ‘coast’ until they may utilize them for retirement. This may mean working longer in some cases, but also fits well with those who do enjoy their work or want to monetize a certain hobby. It also means that it is important to have a diligent and intentional view of one’s finances.
The first and most important step is determining how much money you need to be financially independent, where you define how much you need to reduce your hours or temporarily stop working to explore your passions. This is completely unique to the individual and is determined by their spending, savings, and life goals, but is less than what they need to fully retire.
Example of Traditional Retirement Timeline VS Coast FIRE
In a traditional Retirement situation, you would work full time or part time for a set amount of time and then fully retire, usually in early to mid 60s. From my experience I have seen couples look forward to their retirement for some time and usually enjoy that extra free time, but I also see this not always be the case.
The big life change from many years of work and building that identity can come as a shock and end up sending people back to work. I also see people occasionally have regret that they didn’t retire sooner as they enjoy the extra time with family, and in the event of one spouse’s early demise this regret can be significant.
With coast FIRE, an example of how this would look is as follows:
20-35 - Work full time
35-37 - No work/sabbatical and time with kids
38-44 - Possible career change / part time work
45-47 - No work
48-58 - part time and full time work
58-68 - monetize a hobby
68+ - no work/full retirement
The main takeaway here is that it prioritizes time over earnings, which is inarguably more precious and valuable.
Challenges to Coast FIRE
Approaching this type of retirement comes with a number of unique planning circumstances.
Restarting work after taking a break
Ensuring your spouse is onboard
Other disruptions to your plan
Family and friendship changes
Depending on your industry of occupation and the overall job market, going back to work can be tough. Even the motivation factor can have an impact here too.
Arguably the most important factor here is if you are married. You need to make sure that your spouse is onboard with your goals of working. They may also be following the CoastFIRE path and maybe you choose to take breaks at the same time or alternate work, or perhaps you have different goals altogether. Either way, it is important to openly over communicate on these factors.
Market returns, industry disruptions, social security changes, life events can also disrupt your FIRE plan. Proactive planning with a financial planner in an ongoing capacity can help plan for these in advance and help keep you on track and get the most of your time.
Lastly, it’s important that you surround yourself with like minded groups in this case. Understand that some may resent your decision to follow coastFIRE or possibly think that they cannot follow this themselves, and this is completely normal.
In conclusion
While CoastFIRE isn’t for everyone, it is a solid option for those looking for an alternative to the 9-5 work week. It is especially important to be on top of one’s finances to successfully follow this strategy. Put time, relationships, and community at the forefront, and push forward if you opt to use this strategy.
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