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Six months ago Scott Dichter wrote a forum post (Coast FIRE! Who would have thought that FIRE could have so many flavors? – HumbleDollar) about Michael Kitces’s blog post about Coast FIRE. For those unfamiliar with the term, please check out the articles.
In a nutshell, Coast FIRE is when one accumulates enough money whereby the money currently saved for retirement is sufficient to meet one’s future goal to retire early without the need to continue adding to retirement savings.
As last year progressed I began to suspect that I may have (inadvertently) achieved Coast FIRE. I just inputted our figures into Kitces’s calculator in the article, and my suspicions were confirmed. We did it! But how, and, will we actually be able to stop saving?
As I’ve noted in previous posts, my wife and I are in our 40s and we’ve long planned to retire in our 50s, so about 10 years from now (at the latest). We’re prodigious savers–saving about a third of our gross income in all available retirement accounts and any amounts over those in brokerage accounts. We always wanted to reach FIRE, but we did not plan on nor think that we would reach Coast FIRE (which I probably hadn’t even heard of until maybe 5 years ago).
Having reached Coast FIRE, it appears that we may have the following options: (1) stop investing or reduce investing because we’ve already met our goal (or will reach it); or (2) continue to invest at the same or similar rates in order to have an even fatter retirement.
I wonder if any of you had this happen or have any thoughts. My initial thinking is that, given our natures as savers, it’s probably unlikely that we’ll stop saving at the levels we’re currently doing. Further, given that future market returns are inherently unknowable we’ll probably “err on the side of caution” by continuing to invest.
Ben after reading your post I realized that we are in Coast “retire”. As I have written before we have been living off our assets for the past six years while waiting to claim Social Security, and our portfolio has not dropped more than $100K from time to time. It has been a pleasant surprise, but has been one buoyed by a hot market for the majority of that time. We have been blessed for sure!
To begin, congratulations on reaching your goal, it’s truly extraordinary to get there in your 40s. I agree with Horn and Mark below; keep saving but relax a little bit.
I was an ICE guy by necessity, but have been totally retired for 4 years now. My challenge remains shifting gears from saver to spender. Currently age 73, I’m just now getting used to spending 1%, when in reality I could probably be spending 5%.
I know I can’t take it with me, but the frugal voice inside my head keeps whispering save, save, save.
It would seem you also have a few more options. 3) you could move your retirement timeframe forward. 4) you could keep saving but adjust your asset allocation to a more conservative position to mitigate any sequence of return risk when you do ultimately retire 5) If you so wish, you could take the risk and switch careers and/or move to a possibly more fulfilling but less remunerative job.
One issue on your option 1, Be careful if you stop saving/investing, you run the risk of increase spending – which may become permanent – can your current savings support that increased spending in your early retirement?
Anyway, congratulations you’ve placed yourselves in a good position – you have options – which is what money really buys.
I think these points are also good things to think about. Congratulations to you and your wife, Ben, that is a great accomplishment. And like Mark said above,”you have options”. Chris
Being a saver, while enviable, is a hard habit to break. Nobody reverses course overnight, it just feels wrong to start spending when you’ve been saving your whole life. Maybe loosen the reins a bit and try to spend a little more. For even more fortitude training, try spending some of your brokerage by trimming overweight positions while continuing to put money away in tax-advantaged accounts.
My instinct is that fat FIRE beats coast FIRE every time. Build the biggest balance you can—it gives your future self more flexibility and cushion against uncertainty. That said, you clearly have some financial breathing room now to enjoy life. The future’s never guaranteed, so don’t forget to live today too.