Coast FIRE: Cruise To Retirement

As a high-income earner, you have the luxury of taking a few different routes toward achieving financial freedom and an early retirement.

On the one hand, there is a fast and difficult route. If you’re able to sustain the demands of the most highly paid jobs, earning and investing along the climb, you can shoot straight for your ideal early retirement lifestyle in the shortest amount of time.

The biggest obstacle of this route is sustaining your pace and avoiding the chances of burnout that come with earning maximum money.

However, instead of feeling trapped and thinking you have to grind it out for the rest of your life, there’s Coast FIRE.

The idea of Coast FIRE is simple: front-load enough savings and investments that will grow to fund your retirement while you have the luxury to switch jobs or try something completely new knowing that your financial future has already been secured.

When you’ve hit your Coast FIRE net worth, even if you never save another dime again, your initial investment will grow and compound over time to afford you the lifestyle you want in retirement.

If you’re feeling burnt out at your job, thinking of doing something new, or prefer to take it slower and cruise to financial freedom, Coast FIRE might be the perfect path for you.

Even if you’re content with your job and want to keep earning the big bucks, Coast FIRE is still a valuable tool that will let you set more boundaries and dictate work on your own terms which will make you even richer!

Coast Your Way To A Fat Retirement

Coast FIRE is very effective for high earners because they make enough income to aggressively save and secure their retirements early on, letting their investments do all the heavy lifting to build wealth as time passes.

For example, you might be Coast FIRE if you have $200,000 in your 401(k) at age 32 and plan to retire in your 60s. Even if you don’t save another penny, your retirement savings invested in the stock market at a ~7% average real return would give you over ~$1.5 million to retire on by age 62.

If you follow the 4% rule and are happy living off ~$60,000 from your portfolio (on top of some Social Security if it still exists), then you’re set for retirement in your 30s!

Now let’s raise the bar. What if you can save up $1 million, with the same assumptions as before, and decide you want to go part-time to spend more time with your family or pursue something you’re passionate about instead of grinding it out in your current path?

Without ever saving another penny you would have over ~$8 million to retire on.

Is ~$320,000 a year enough to live your ideal retirement lifestyle? If so, then all you need to do is front-load enough money and coast your way to Fat FIRE!

Using the rule of 72, if you wanted to stop working even sooner and retire 10 years earlier, you’d still have ~$4 million at age 50.

The beauty of Coast FIRE is saving and investing becomes completely optional once you’ve saved enough up front to give you a lifestyle that you’ll be happy with by the time you want to retire.

If you have always dreamed of being a pastry chef, getting a Ph.D. in art history, or being a teacher in a foreign country but couldn’t because of the money, you now have a chance to do it!

Or if you decide to have a family and take care of your aging parents, you might want more flexibility and free time. If you are Coast FIRE, then you have much more freedom and choices to arrange your life to fit your needs.

Let’s take it up another notch. Since the first million is the hardest, number two should be easier.

For those shooting to become millionares by 30, let’s run the same scenario again if you doubled your goal by 32.

When you don’t have to save another penny to have a ~$16 million net worth or ~$640,000 a year to spend in retirement, the world becomes your oyster.

Ultimately, Coast FIRE is a checkpoint in your financial journey where you have the flexibility to take more risks, go after your dreams, and live your best life today, knowing that you are set financially for the rest of your life.

Knowing that you are Coast FIRE gives you the feeling of F You money. You will naturally feel less stressed at work and happier when you aren’t afraid of getting laid off and have options.

Even if you’re content at your job and want to continue aggressively growing your income and career, knowing that you have achieved Coast FIRE can be a valuable tool to empower you to set more boundaries and dictate work on your own terms.

The ball is in your court when you can walk away from your job. When the time comes to move on, make sure to negotiate a severance and get paid as you head out the door.

High Earners Can Have Their Cake And Eat It Too

While the traditional idea of Coast FIRE is taking a low-paid job that’s just enough to cover living expenses, high earners are fortunate because they have plenty of room to scale back their incomes if they want to downshift their professional lives.

If you’re used to functioning at a high level and working long hours under stressful environments, taking it down a notch at any other job will feel like a piece of cake!

Who cares if you’re making less money when you’re happier and your quality of life is much better?

You also do not have to give up the time and effort you’ve invested in your career entirely if you don’t want to. Often times there are ways to use the experience, skills, and network that you’ve built over the years to find a job that meets your lifestyle requirements.

As a doctor, you can do locum work.

As a lawyer, you can go in-house.

As a banker, you can work for a corporate client.

There are countless ways you can get paid very well while taking an “easy” job relative to what you’re used to, allowing you to cover your expenses and still save money if you want to retire earlier or spend more.

If you make a high income and you’ve kept your fixed expenses in check, taking a voluntary pay cut can allow you to buy back valuable time to focus on other areas of your life such as your health, and family, or even try your hand at entrepreneurship that might one day let you escape the rat race!

Once you hit your Coast Fire net worth, you can allow yourself to stop chasing maximum money and find balance in your life. Figure out your own sweet spot for work that not only pays well, but is also sustainable for you, allowing you to live a better life today and look forward to a brighter tomorrow.

In my opinion, ~$200,000 a year (~$400,000 for a couple) is a sweet spot for a high reward-to-effort ratio. Not only are you able to live a very comfortable Coast FIRE lifestyle even in the most expensive cities across the country, but you also enjoy better work-life balance and pay reasonable tax rates.

At ~$200,000 per person, you are able to stay at the top of the 24% income tax bracket after maxing out your 401(K), triple-tax-free HSA, and other pre-tax employer deductions, and avoid the 8%+ jump in taxes along with any marriage tax penalty.

At the end of the day, once you’ve built up a financial base, you can decide on the best route to financial freedom based on your life circumstances and money goals. Just make sure to protect your wealth against unaffordable risks.

If you’re itching to do something new or feeling unfulfilled and burned out, Coast FIRE might be a great option that can empower you to live a better life today.

Even if it takes longer to reach your ideal retirement lifestyle, sometimes the best solution might be to take a slower route and enjoy the ride there.