Coast FIRE Offers Relaxed Path to Financial Independence
The Coast FIRE movement provides an alternative route to financial independence, distinguishing itself from the aggressive savings approach often associated with traditional FIRE (Financial Independence, Retire Early). This strategy allows individuals to cease retirement contributions once their existing investments are projected to grow sufficiently for retirement through compounding. It offers increased work flexibility, enabling people to cover current expenses while their portfolio matures without further active contributions.
The "Financial Independence, Retire Early" (FIRE) movement has gained recognition for its goal of achieving financial freedom, often through aggressive savings and diligent investing to retire years before the traditional age. This approach, sometimes traced back to the 1992 book "Your Money or Your Life," has been amplified by various online communities and can involve saving a significant portion of income, pursuing multiple income streams, or delaying major life events.
However, some investors are pursuing Coast FIRE, an offshoot that offers a less extreme path. Coast FIRE allows individuals to ease up on retirement contributions once their existing investment portfolio is deemed on track to reach their desired retirement sum through compound growth. This method does not require stopping work but rather earning enough to cover current living expenses while their savings accumulate in the background.
This strategy can provide individuals with increased work flexibility, such as taking a pay cut, changing careers, working for themselves, reducing hours to part-time, or choosing less stressful employment. Andy and Nicole Hill, for instance, pivoted to Coast FIRE after finding traditional FIRE created tension at home. Andy Hill, who quit a demanding corporate job after reaching a $550,000 Coast FIRE number, now works approximately 20 hours a week on his own business.
Another example is Amberly Grant, who did not earn six figures for most of her career. After years of traveling and undertaking various odd jobs, she reached her Coast FIRE number in her mid-30s, despite an average annual income of about $15,000.
To determine a Coast FIRE number, investors typically consider their current age, ideal retirement age, expected annual spending in retirement, current investments, anticipated returns, and inflation. Online calculators can assist in estimating the required investment needed today to grow into a sufficient retirement balance. However, financial coach Andy Hill cautions that these figures are estimates, advising investors to regularly review their calculations and account for inflation and fund expenses.
According to Business Insider, Coast FIRE is one of several offshoots of the broader FIRE movement, alongside Lean FIRE, Fat FIRE, and Barista FIRE.
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