Freed by 50

What is CoastFIRE?

CoastFIRE is the idea of front loading your retirement savings heavily at a young age to the point that you can reasonably assume you don’t need to invest anything more in order to reach retirement at your target age.

For instance, assuming a safe withdrawal rate of 4%, a 7% rate of return, and that you’ll want to live on $40,000 per year, you’ll need 25x$40,000, or $1,000,000 in your retirement accounts by the time you reach retirement age at 65.

In that case, in order to say you’ve reached CoastFIRE to retire at 65, you would need to have $100,000 in your retirement accounts at 30. From this point on, anything else you saved would either move your retirement date forward, or be icing on the cake.

Is this really FIRE?

Nope. CoastFIRE itself feels like two opposing terms combined into one. Coast, meaning you save just enough to coast your way to retirement, and FIRE, which stands for Financial Independence Retire Early. The Retire Early part being in opposition to Coast.

When I first heard of CoastFIRE I immediately thought “This sounds like a young man’s game.” Not that I’m old, or sexist (because women can play too), but the whole idea of CoastFIRE is to save a lot of money early in life and then rely on compound interest to do the rest of the work for you.

Then what is CoastFIRE?

CoastFIRE to me seems like a great milestone. Being able to say you’ve reached CoastFIRE at any age is to say “I’ve saved enough for retirement that I know I’ll be able to retire at 65.”

If retiring at 65 is your goal, then perhaps CoastFIRE is your endgame. But that’s not retiring early. Really all you’ll have achieved is freedom from retirement savings. And what then will you do with your money? Live “your best life” on Instagram for 30 years?

Again, reaching a level where you can reasonably assume that between now and a normal retirement age you will have generated enough wealth on autopilot to retire is great! But it’s not Financial Independence, nor is it Retiring Early.

What if I want to retire early?

This is where people have told me that I don’t understand CoastFIRE. Although it relies on compound interest to reach the full value you’ll want in retirement, some people have pointed out that you can CoastFIRE with a retirement age of 40 in mind.

Returning to our example from above, this would mean that by 30, rather than shooting to have $100,000 in your retirement fund, you’d be pushing to have $500,000 in your fund. In that case you would hope that in the 10 years between 30 and 40 your money doubled thanks to the rule of 72 and compound interest.

Hitting CoastFIRE at 30, would then mean that you do plan to retire early and are on track to do so. I will concede that in this case it does check all the boxes of being Financially Independent and Retiring Early at 40. But…

Why I consider this a milestone and not a goal

Saying you’ve reached CoastFIRE is a great way to keep yourself motivated on your journey to retirement. Being able to keep in the back of your head the notion that whatever happens from here on out, you won’t be a 75 year old Walmart greeter trying to desperately make ends meet is a good feeling. Knowing that even if you quit saving for retirement and decide to buy a boat (possibly the worst financial move anyone could ever make), sinking every last dollar into it between now and retirement wont affect your ability to retire is a pretty good feeling. I just don’t feel it should ever be your goal.

For one, in order to truly be FIRE, CoastFIRE relies on some optimistic market conditions and a relatively small time horizon. In the example of having $500,000 double between 30 and 40, yes, math says this should happen, but real life says a lot of other things could happen. Bear markets and other economic crisis tend to happen which could set you back a few years.

Second, life events tend to crop up. Between 30 and 40 I bought a house, a dog, and three different cars, had two kids, had two major home repair expenses, and I’ve tripled my income. All of this has changed my retirement goals and numbers.

Last, and this has to do with all levels of FIRE, assuming you can live only with enough to cover your expenses (even after you pad for luxurious travel) is a poor idea. While I wholeheartedly agree that you should be cutting expenses in order to attain your goals, you need to remember that life still happens after FIRE.

I recently completed a $52,000 renovation of my home and paid for it in cash. It hurt a lot to not put that cash into my retirement fund (in fact I put that much and more into retirement this year to feel better about it). It made me realize that if I retired early, I wouldn’t be able to do something like that without serious budgeting, saving, or earning.

Finally, I see a great many people that do consider CoastFIRE to be just a milestone. “I’ve already reached CoastFIRE” is a statement I come across often from people who continue to ruthlessly sock away money until the day they reach real FI. At that point they can finally consider RE.

Whatever your path to financial independence, I applaud you and wish you the best. If CoastFIRE is your method of choice, so be it. I just cant agree that it’s true financial independence.