Coast FIRE, a unique iteration of the Financial Independence, Retire Early FIRE movement, shares the overarching goal of early retirement through strategic saving. However, unlike traditional FIRE, Coast FIRE involves a distinct approach. In Coast FIRE, individuals front-load their retirement savings early in their careers and then allow those investments to grow over time until they can fully support retirement around the conventional retirement age of 65. In traditional retirement, you save a minimum amount of savings each and every year until your nest egg gets to the point where you have enough in your bank account to reitre, this is usually closer to your conventional age where you would get either pension, and/or social security, as well as 401k funds. The concept of Coast Fire, as well as Barista Fire (yet another unique iteration), is to front load those savings, even though you are not retiring until 65. 

The concept is built on the idea of reaching a point where your initial retirement savings can grow on its own without further contributions, eventually reaching a sufficient level to support your desired lifestyle in retirement. Once the Coast FIRE target is achieved, individuals have the flexibility to reduce or even stop additional contributions to their retirement accounts, allowing them to “coast” towards retirement.

This approach acknowledges that achieving full financial independence or early retirement may be challenging for everyone, but by front-loading savings, individuals can benefit from the power of compound growth over an extended period. It allows for a more gradual and less intensive approach to retirement planning while still aiming for financial freedom. 

Principles of Coast Fire

The Coast FIRE approach hinges on two key principles:

1) First, establishing a savings and investment target that, fueled by compound interest over time, will eventually cover retirement expenses.

• This target is determined by considering factors such as desired retirement lifestyle, expected expenses, and the conventional retirement age of around 65.

• Individuals utilizing the Coast FIRE approach strategically calculate their net worth, factoring in assets and liabilities. They may incorporate real estate into their portfolio to diversify investments and potentially accelerate net worth growth.

• A key element in this principle is leveraging a fire calculator or a coast fire calculator to estimate the required savings amount and the anticipated growth rate. These tools assist in creating a realistic financial plan for achieving the Coast FIRE goal.

2) Secondly, committing to aggressive early contributions to reach this goal, followed by working only to sustain current living expenses. This allows individuals to enjoy a reduced work commitment, directing more time and resources towards personal passions, travel, education funds, and other pursuits until retirement.

• The second principle emphasizes committing to aggressive early contributions to reach the established savings and investment target. This entails dedicating a significant portion of income to savings during the early career years, taking advantage of the power of compound interest.

• Individuals following the Coast FIRE approach work diligently to become financially independent early on. They focus on growing their savings at an optimal annual growth rate, balancing risk and return in their investment portfolio.

• As individuals progress towards their Coast FIRE target, they transition to working only to sustain their current living expenses. This reduced work commitment provides them with the freedom to allocate more time and resources towards personal passions, travel, education funds, and other pursuits until retirement.

• While managing personal finance, individuals may prioritize debt reduction, including credit card debt, to enhance their financial flexibility and accelerate the path to financial independence.

By capitalizing on the principles of Coast FIRE, individuals aim to gracefully “coast” into retirement. They anticipate ceasing additional savings in their 30s, 40s, or 50s, with the ultimate goal of retiring in their 60s. This strategy offers greater flexibility in managing both money and time during the final working years, aligning with the broader ethos of the Financial Independence Retire Early movement.

Examples scenarios of Coast FIRE and how it could play out

Here are a few hypothetical examples illustrating Coast FIRE scenarios:

1. Early Aggressive Contributions:

   • Mary, aged 30, decides to pursue Coast FIRE. She establishes a savings and investment target using a coast fire calculator, factoring in her desired retirement age of 65. Mary contributes aggressively to her retirement accounts in her 20s and early 30s, taking advantage of the power of compound interest.

   • By her mid-30s, Mary’s investments have grown substantially, and she decides to reduce her work commitment. She continues working to sustain her current living expenses while redirecting more time and resources towards personal passions and travel.

   • Mary anticipates reaching her Coast FIRE goal in her 50s, at which point she may cease additional savings, transitioning to a more relaxed work schedule until conventional retirement age.

2. Real Estate Diversification:

   • John and Sarah, a couple in their late 20s, incorporate real estate into their Coast FIRE strategy. They invest in rental properties alongside traditional retirement accounts.

   • The couple aggressively contributes to both real estate and retirement investments in their early years. As their real estate portfolio grows, they experience additional income from rental properties, contributing to their overall financial independence.

   • By their mid-40s, John and Sarah decide to reduce their work commitment, knowing that their real estate investments and retirement accounts are on track to cover their future expenses.

3. High Annual Growth Rate Focus:

   • Alex, a single individual in their early 30s, is keen on achieving Coast FIRE with a focus on a high annual growth rate. Alex strategically invests in a diversified portfolio with higher-risk, higher-return assets.

   • With an aggressive approach to early contributions, Alex experiences a significant annual growth rate on investments. By the age of 40, the investment portfolio has grown substantially, allowing for a reduction in work commitments.

   • Alex continues to work at a reduced capacity, enjoying a more flexible lifestyle, and aims to fully retire by the age of 60.

These examples highlight the diversity in Coast FIRE approaches, demonstrating how individuals can tailor their strategies based on factors like age, investment preferences, and lifestyle goals. Keep in mind that these scenarios are hypothetical, and actual results may vary based on market conditions and individual circumstances.

In essence, Coast FIRE offers a nuanced and flexible pathway to financial freedom, allowing individuals to navigate the currents of life with more autonomy and control over their resources and time.