What Is Coast FIRE And Is It The Right Retirement Path For You?

As someone who helped ignite the modern day FIRE movement back in 2009, I’m amazed at how popular the movement has come! There are so many different types of FIRE to fit different people’s lifestyles. Today, we’ll discuss what is Coast FIRE and whether it’s the right type of FIRE for you.

I’ve been “retired” since 2012 and my wife, who is three years younger, joined me in early retirement in 2015. We both retired right before our 35th birthdays. Not a day goes by where we are not thankful for saving and investing aggressively to get out of the rat race.

Since retiring from corporate America, we’ve traveled to 20 new countries, wrote a severance negotiation book, wrote a traditionally published book out on June 28, 2022, and had two children! One could say that post-retirement, we’ve been busier than ever.

In fact, I haven’t told anybody I’ve been retired since 2014. These posts and books don’t write themselves!

The Different Types Of FIRE

Back in my day, there was only one version of the FIRE movement. That version is having your retirement portfolio(s) generate enough passive income to fund your desire early retirement lifestyle. If your passive investment income can cover your living expenses, you are financially independent.

Over time, FIRE evolved into three main types of FIRE:

1) Fat FIRE

2) Lean FIRE

3) Barista FIRE.

These three main types of FIRE serve as the foundation for the different FIRE lifestyles. But what about this new type of fire called Coast FIRE? Coast FIRE can be considered a subset of Lean FIRE or Barista FIRE.

Let’s look at some various definitions of Coast FIRE according to some FIRE enthusiasts on the Reddit FIRE sub-board, as well as my official definition of Coast FIRE.

The Definition of Coast FIRE

My official definition of Coast FIRE is this: A person who is on the slow path to financial independence and still needs a job to eventually live the FIRE lifestyle. The job tends to be a low-stress job that doesn’t pay a lot.

Someone who is Coast FIRE can “coast” through his or her job and eventually obtain financial independence through the potential growth of their investment portfolio. To be Coast FIRE, an individual also needs to have enough saved up and invested so it can grow into a large enough nest egg to live off by age 60+ (traditional retirement age).

In other words, let’s say you need $100,000 to live off of at a 2% withdrawal rate. Therefore, you would eventually need $5 million before you can completely retire. Someone who is Coast FIRE would have enough invested at this moment to grow their portfolio to $5 million by the time he or she wants to retire.

A 30-year-old can be considered Coast FIRE if he has $500,000 invested and experiences a 8% compound annual growth rate for 30 years. He wouldn’t have to contribute another dollar to his investment portfolio to achieve a $5 million portfolio by the time he is 60+. The risk, obviously, is that he does not grow his portfolio at a 8% compound annual growth rate for 30 years.

Since investment returns are not guaranteed, Coast FIRE is the weakest type of FIRE of them all. Many argue it is not even close to real FIRE.

Coast FIRE was created to help working individuals on the FIRE journey feel better about their progress. Given every personal finance enthusiast is saving and investing, literally everybody who cares about their finances can be considered Coast FIRE.

More Definitions of Coast FIRE

Here are more definitions of Coast FIRE from other FIRE enthusiasts on Reddit.

Coast FIRE means you have enough in your retirement accounts that without any further contributions, it will grow into enough to cover your “traditional” retirement. With Coast FIRE, you only need to earn enough to cover your current expenses. i.e. if you were making $80k and saving 50% for retirement, now you only need to earn $40k to cover your expenses pre-traditional retirement.

Coast FIRE sounds like Barista FIRE, which is a type of FIRE where someone works a fun job to help pay the bills and provide some social activity. However, the Barista FIRE person essentially has enough in his or her retirement accounts to retire if need be.

The Differences Between Barista FIRE And Coast FIRE

Barista FIRE = You are Barista FIRE if you follow the 4% rule on your investments and it kicks off enough income to pay for your basic necessities. You can work a part time “barista” job to cover the remainding expenses. .

Coast FIRE = means you have enough saved (with the power of compounding) to cover traditional retirement. This is a fairly low number to hit when you are in your 20s or 30s since time is on your side.

Barista FIRE = means you have enough saved to only need to make the amount of money each year that would be doable from a part time, lower paid job. Then you could supplement that income by drawing down from your investments.

Barista FIRE = means you are withdrawing money from your portfolio, but supplementing it with income.

Coast FIRE = means you don’t touch your portfolio but you dial your employment back to cover your expenses only. Once the portfolio grows to cover your full expenses, you are FI.

This seems like the most rational definition of Coast FIRE.

Coast FIRE = For us, it means working low-stress jobs just to pay the bills while leaving our savings untouched. Currently, that means we each earn $15,000 per year to cover our household expenses of approx. $30,000 per year. So my quota is $41 per day, 365 days per year.

So I guess my definition of Coast-FI would have two parts. 1) You get a job that’s either low stress, part time, or both. 2) You have enough saved that you can eventually legit FIRE with your current portfolio.

Sounds like Barista FIRE to me!

More Definitions of Coast FIRE And Barista FIRE

Barista FIRE = It represents the ability to pick your job based on how much you enjoy it rather than how much it pays. It may be coupled with a limitation on hours. When we are describing Barista FIRE, it’s a life choice that people pick rather than something forced on you by circumstances. If you aren’t interested, then you know, don’t do it?

A person that needs to work *just any* job for 20 hours a week is in a significantly more flexible position than a person that has to work a job that pays at least $X per hour full time. It’s a kind of freedom and I’m really over any kind of gatekeeping – if that’s your goal and you want to call it Barista FI then we all understand what you mean.

Sounds like Coast FIRE to me!

Barista FIRE = where you get a more relaxing (in theory), low-paying job to get out of the house and cover most or all of your day-to-day expenses, once you no longer need to save anymore for retirement.

Coast FIRE = where you don’t necessarily change jobs, but you no longer need to save for retirement so you “coast”, either working less or increasing your spending instead of saving more.

Coast FIRE and Barista FIRE Are Very Similar

If someone can find an enjoyable job and coast through life and enjoy it, then great. I personally find it hard to find any job that is more enjoyable than having absolute freedom. I don’t care how much someone pays me. If there is a schedule I have to adhere to, it’s not as nice as being free.

Using Coast FIRE is a way to keep motivation alive for FIRE enthusiasts who aren’t quite there yet. To get to true FIRE, you need to first get to Coast FIRE. Most people probably don’t even realize they’ve gotten there until they start crunching the numbers.

More FIRE acronyms will pop up as more people aspire to FIRE. We tend to adjust terms to fit our stage in life rather than take the harder route. Bottom line: FIRE is having enough passive investment income to cover one’s desired lifestyle.

It’s human nature to describe and justify our financial state, even if we’re so far away from true financial independence. It makes us feel better and happier to keep on going!

The Minimum Investment Portfolio Amount To Be Coast FIRE

Finally, it’s worth putting a dollar value on when you can declare yourself Coast FIRE. At the end of the day, hard numbers matter for financial independence.

After doing a deep-dive review of my 14 investment portfolios, I’ve determined a $300,000 portfolio is the minimum investment portfolio amount necessary to consider yourself Coast FIRE. Once your investment portfolio gets to $300,000, you can feel more at ease about working so hard and contributing so much. You can easily take a lower-paying and more fun job after reaching $300,000.

Let’s say you have $300,000 at age 40 and traditional retirement is considered age 65. At a 8% compound annual return, in 25 years, your portfolio will have grown to $2,000,000 without any contributions. Despite inflation, $2,305,000 along with inflation-adjusted social security should be enough to provide for a reasonable lifestyle.

Good luck everyone on your journey to financial freedom. I’ve been writing about FIRE since I first started Financial Samurai in 2009. It’s been a great journey and well worth it. Once you reach FIRE, you can always strive for Fat FIRE if you wish!