Coast FIRE is growing in popularity! Woohoo!
More and more people are realizing that financial independence is not a binary achievement (FI, or not FI), it’s more of a lifestyle and a journey.
If you have an early start on saving and investing, many of the freedoms of financial independence can be realized long before “retirement” actually happens.
Slowing down your FIRE timeline gives you more work/life flexibility and allows you to enjoy the journey, vs. focus solely on the finish line.
As someone who’s currently pursuing Coast FI, I think it’s pretty awesome. :)
That being said, there are definitely downsides to Coast FIRE. Living with a less formal structure can lead to uncertainty, uncomfortable feelings, and can sometimes add more stress to your life.
Today I’m gonna talk about some of these downsides — some technical, some emotional — and most of which I’ve experienced personally.
How I’m Doing Coast FIRE
First, a quick recap on my FIRE situation: My wife and I left our full-time jobs in early 2018 to travel and slow down a bit. We have no debt, a sizable investment portfolio (~$1M) and a decent cash emergency fund.
Our basic financial plan moving forward is:
- Work enough to cover our annual spending
- Leave our current investments untouched (maybe do some minor shuffling)
- Our nest egg should magically grow over time
- We will achieve FI sometime in the next 5 – 100 years 😅
As loosy-goosy as this plan sounds, we are caring less and less about our exact financial forecast or FI date. Most of the hard saving/investing work has already been done, so our biggest focus now is how we want to spend our time in life.
We’re still young, so our strategy can and will probably change. But for now, this is where we’re at. We are still loving and enjoying life, but here are some Coast FIRE downsides we’ve experienced…
Coast FIRE Can Be Perceived as “Lazy”
I got the following comment on this blog last year, and I’ve heard similar remarks about people who quit their job to try Coast FIRE…
“This sounds more like a “backFIRE” strategy – one that young folks will regret.
For several years, I was a manager hiring and firing people in an up-and-down business, seeing thousands of resumes and I would have just thrown away any resume of someone that didn’t look like they were trying as hard as they could while they were working. It was OK with me if they had taken time off or slowed down specifically to raise their children, but any resume that looked like they were putting in minimal hours to get by would get thrown away without a second look.”
It’s kind of sad… I bust my balls at my part-time job, my volunteer job, my hobbies, home duties, side hustles, you get the point. I’m an extremely hard worker and good teammate. But no matter how hard I work or how efficient I am, many people will confuse my “part-time” employment status as “not trying very hard” in life.
I guess if I ever need to go back to full-time work, my resume will end up in the trash? 🤷♂️
I hear it in personal situations, too… I was out surfing on a Tuesday morning recently, and a guy in the lineup asked me if I had “called in sick” that day for work. I was a little offended — I’ve never faked being sick in my whole life! Maybe he was just joking — but the fact that I’m a young dude surfing during a time most people my age are working, I was immediately labelled a slacker.
The reality is if you’re living a lifestyle different from the norm, you’re gonna be perceived as different from the norm. This means you’ll be called lazy, selfish, confused, childish, or unprofessional. People jump to conclusions about your work ethic if they think you’re enjoying life “too much.”
If you are someone who cares what everyone else thinks (I am sometimes!) then you might have a hard time adjusting to Coast FIRE and working less.
More Options Mean More Decisions
Some of the beauties of Coast FIRE are deciding when you want to work, how much travel or play time you want to pursue, and custom-designing your life.
This sounds like a dream to most people!
But in reality, having unlimited options in life can be quite overwhelming (and scary). As humans, we crave structure. We like to follow the leader and subconsciously like it when other people make decisions for us. (That way, if it doesn’t work out, we can complain and pass blame to others.)
I’m not gonna lie… Several times over the past 3 years I’ve been tempted to return to a full-time corporate job. Not because I particularly want to join a specific company, but because going back to a 9-5 is the “easy button.” They will assign me work, give me health care, a 401k, and look after me. It’s familiar, and familiar = comfort and security.
Thankfully, every time I’ve thought this way, I’ve been able to slap myself silly and remind myself why I started this Coast FIRE journey in the first place. I’m committed to figuring out my purpose in life, and working on anything else is just delaying that mission.
Yet having more options is confusing and takes more time to figure out. If I asked you to choose a flavor on the left side of this chart below, it’s quite easy. If I asked you to choose a flavor on the right, it’s not so easy.
It’s Hard Watching Your Friends/Peers Progress Professionally, Without You
Over the past 3 years, my friends have been promoted, gotten raises, and progressed in their careers. They have interesting new challenges, are leading larger teams, and coaching younger co-workers. This will happen more and more over time.
I know I’m not supposed to be comparing myself to others, but it’s soooo hard not to! Sometimes I feel like everyone else my age is progressing as a grown-up, with fancy work titles and such, and I’m staying in the same spot.
It’s getting harder to shoot the shit with my friends because I can’t relate to their work situations anymore. There’s nothing I hate more than FOMO, but I’d be lying if I didn’t say I am experiencing a tiny bit of it. Maybe I just need more self-confidence? Or to meet some more real life financial independence friends?
On the flip side, while I might be missing out on all the benefits and joys of corporate progression, I’m also missing all the negatives and downsides of corporate life. I guess there’s 2 ways to look at it. :)
The Worst of Both Worlds: Same Work Headaches With Less Money
Coast FI is usually proposed as semi-retirement. It appeals to people as the best of both worlds — having low-stress, meaningful work plus a healthy amount of free time.
But some people actually end up experiencing the worst of both worlds. They can’t find work that’s meaningful or enjoyable, and they don’t have the extra spending money to splash around during their downtime. The frustrations of this flexible lifestyle might outweigh the benefits of it.
What if your low-stress dream job ends up having the same crappy work politics as your last job? Maybe your dream job only pays half of what you need to survive, and you have to hustle your ass off and trade all your free time for extra cash to continue Coast FIRE? Maybe the work you want to do is available only in full-time capacity — not allowing you any time off at all?
If you’re in Coast FIRE range and are considering quitting your job to pursue passion work, keep these things in mind…
- “Work” doesn’t go away. You are not retired yet, even though it feels like it. You still have YEARS or maybe even decades of work and hustling to do.
- If you want to spend more money, you need to earn more. It’s probably a good idea to build extra spending money into your Coast FI expectations so you can try new hobbies and travel.
Unpredictable Market Returns and Retirement Date
If you are no longer contributing to your retirement savings (and not making any withdrawals), then you’re banking on the fact that your investments will grow organically over time. You’re relying solely on market growth to reach your FI number.
Exactly how quickly will your investments grow? 🤷♂️ Nobody knows. You could reach FI quickly with stellar market growth, or you could suffer bad returns and hit financial independence 20 years later than you expect.
If you’re about to try Coast FIRE, be prepared to live with a ton of uncertainty. When you drop your savings rate to 0%, you are also dropping all control of your early retirement timeline.
Lifestyle Inflation and Increasing Living Expenses
I’ve written about this before — why my FIRE number keeps changing … My wife and I still have some pretty big life decisions to make, and each one affects our annual spending: Kids or no kids, deciding which city we want to retire in, etc.
Each time we increase our annual spending, our FI number gets a little higher, and our retirement date is pushed out a little further. This affects all financial independence followers; it’s not limited to just Coast FIRE. But with Coast FIRE, the fact that you’re not saving any more compounds the issue … Since we’re not personally saving more, any new FI number gap needs to be filled solely by investment growth.
Depending on your age and how much you have life figured out, Coast FI might be a really risky path. If you start coasting with a very lean savings pile, you could be screwing yourself if you later realize you need a fat savings pile.
Despite the Downsides, I Still Love Coast FIRE
All things considered, my wife and I are still really enjoying our slow and uncertain path to financial independence. The reason I want to share my crappy feelings and experiences along the way is to give people a wider perspective. Coast FIRE might seem alluring from the outside, but there’s a messy middle that exists, too.
All you Coast FI, Slow FI, Barista FIRE (or whatever the cool kids are calling it these days)… Are you experiencing this stuff, too? Or am I the only nerd complaining about these privileged problems?
Have a good one,
Joel
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What if your low-stress dream job ends up having the same crappy work politics as your last job?
Yes! This really gets me. Tonnnns of ‘fun/dream’ jobs involve long or weird hours and low pay and any job has politics involved. I think because I started out in one of those and now get paid much more and am actually less stressed about the actual work, I might be biased… but I do feel people over romanticise.
Agreed. I’m realizing more and more that dream jobs aren’t “found”, they are *created*. It’s about your attitude within the position/company and what you make of it, vs. what external events are happening.
I’m still kind of confused by the Coast FIRE thing. Doesn’t that just mean something like having a normal amount invested for ones age who still works a job, albeit a lower stress one?
If so, sounds good to me.
The difference in motivation might lie in having kids or not. I found many of my friends, including myself, got more motivated to earn money and provide ones are a little one arrived.
If you are looking for some challenges, here are two:
1) Shoot for a $3 million net worth due to inflation and low interest rates.
2) Build your own site to this one’s size.
I don’t have much motivation to grind anymore myself. With everything opening up it’s time to really enjoy life to the maximum.
Sam
Good point about having kids and how they might change our earning motivation. Happy Friday Sam!
Happy Friday Joel!
Honestly, I think it’s cool to be different from the norm… but it’s definitely hard to stop comparing yourself, especially if the majority of your friends are still working the corporate grind. Something tells me though that I bet those people working in the corporate grind are probably wishing they were working in a job like you :)
It’s up to us to be uncommon in an uncommon crowd.
Have an awesome day and keep it up!!
Fiona
Yep, there’s 2 ways to looking at the corporate situation. A lot of things I miss, but definitely a lot that I don’t. Hope all is well Fiona – have a great weekend :)
Hi Joel, just wondering: Why did you decide to stop contributing to your retirement savings? Is there no room in your budget to do so? I like the thought of not “having” to keep contributing, which I guess is the point of reaching COAST FI. But that doesn’t mean I *cant* contribute, right? I think even if I reach COAST FI and decide to reduce work, I’d still continue contributing if I’m able, even if it’s maybe less / more sporadic… That would still allow me to shorten the timeline and not rely exclusively on portfolio growth. I think it doesn’t have to be totally black and white, right?
Hey Lady! Any excess money we make this year (and every year) will absolutely be invested! And if our income keeps growing while we do the things we enjoy doing, that’s awesome. Contributing to our retirement accounts is something we’d love to do more of, it’s just not the top priority anymore.
One thing to note if/when you decide to Coast FI… It’s easier to reduce work than it is to build work back up again. You don’t have to go down to earning the bare minimum, just for coasting sake. Take things at your own speed, and if you earn more than you spend, that is all goodness to keep investing.
For me, I think the biggest issue is the worry that I am going to regret not working during my 40s if I suddenly need the money later and can’t get employed because of ageism and the grand canyon sized hole on my resume. Rationaly I know we are ok with 2 million nw and my husband still making 6 figures, but I’m not sure if you can ever have enough money to truly feel secure. The more you have, the more you realize how not in control you really are. I am grateful for where we are, though, it’s just human to feel insecure sometimes.
Hey Liz, I understand, and used to feel the same. But then I read this article which kickstarted a change in my thinking: https://www.mrmoneymustache.com/2018/03/09/money-and-confidence-are-interchangeable/
Not gonna lie, I still have income insecurities! I’m human. But, these scary feelings are WAY less than they used to be… It takes YEARS to re-program your brain and feel secure about the money you have/don’t have, that’s why I wanted to start this Coast FI journey earlier in life vs. later. I needed to change my feeling of attachment to a 9-5 income. If the “not in control” feeling only gets worse with more money, why would I want more money than what I need?
Congrats on your wicked savings pile. That’s a huge accomplishment for you and your hubs! No matter what your resume says, you’ve achieved something 99% of people may never achieve. :). Happy Friday and have a great weekend!
Hi Joel,
I’m a late starter & only discovered FIRE at 47. So I was totally surprised when I reached the milestone of Coast FI, thanks to my younger self contributing extra to my retirement account for some years. It is liberating, in that I have the option of working less & only need to earn an income to support my living expenses till I can access my retirement funds at 60. But I am choosing to continue working full time for the next 5 years so that I can fully retire at 55. I confess, though, that the allure of working even a day less is getting very strong :)
The advantage of a late starter is that we don’t have to wait many years to access our retirement fund but the flip side is that we don’t have many years to build it up either. It’s pretty scary to just trust the math. You have youth on your side & therefore the time to adjust to what life may throw at you.
Thanks for a thought provoking article as usual :)
Latestarterfire
Definitely scary to just trust the math! I think there’s a benefit to Coast FI when you’re younger – because you have many years to fix things if you go off course. On the flip side, you’ve got many years to screw things up if your math is off or you try coasting too early.
I love reading your LateStarter stories and refer many “older” folks to your site for encouragement. Thanks for what you do! Keep it up!
Joel, hey dude! Just getting around to reading this on the flight back from SF. Trip was great. Cali is awesome. Hope to see you next time I’m here :)
It’s definitely common to hear the “how do others perceive FIRE?” question. And many people definitely think that “stopping work” at 45 is somehow lazy.
I like this quote: I’m lazy. But it’s the lazy people who invented the wheel and the bicycle because they didn’t like walking or carrying things.
Besides, knowing you….odds are you’ll keep yourself pretty busy in retirement, including some things that other people might normally recognize as “work” e.g. this blog.
Idk. Just food for thought.
Cheers dude,
Jesse
Glad you had a good visit to Cali! Fincon is in Long Beach in 2022 – put it on your calendar :)
I will give the commenter credit–backFIRE is pretty creative. I’m sure the FOMO you experience with career-related talk is reciprocated by your friends when it comes to the amount of freedom you enjoy. We tend to only talk work because of how much it dominates our lives. I am probably a good 10 years away from beginning to think about FIRE, but if I were to get FIRED I would consider going the coast route.
I still really enjoy hearing people’s work stories and internal politic challenges (as long as they’re not complaining too much), and sometimes I can even give a valuable outsiders perspective because I’m completely removed. You’re right, the fomo goes both ways. :)
This is gonna be such a nosy question lol… but i’m confused on how your investment portfolio is $1M, but net worth is ~600k? It’s making me feel like I’m misunderstanding your net worth numbers, and by default, how I calculate my net worth!
I think $1M investment portfolio at your age is definitely sizeable enough for CoastFI – people FIRE on that! You have plenty of time for it to grow and if the market is at a snail’s pace, doubling your investments every 15 years, you’d have $4M by retirement age.
Hey Sandy! Not nosy at all – sorry for the confusion. I left out some private partnerships and joint RE stuff when I started the public tracking reports. That’s why a lower number. Since some of the rentals will be sold soon-ish, I’ll be moving that cash over to our brokerage account and track more completely online going forward.
Numbers aside, the process is simply: Assets – Liabilities = Net Worth. Don’t worry, you’re doing it right!
Yes, I think a mil is enough to coast. People are coasting with much less, or even trying to FIRE with less. We’ve certainly got enough time on our side, as long as we keep covering our annual cost of living and enjoying what we do :)