Pros and Cons of Coast FIRE

Coast FIRE is a newer strategy within the Finanacial Independence Retire Early movement.

With Coast FIRE, a large sum of money is saved aggressively early on, and then allowed to accrue interest until the individual is ready to retire without additional contributions. This allows the person to live very frugally for a limited amount of time, rather than until retirement,  and use their full employment income for the majority of their working life..in short, to coast into retirement on their early savings.

I think this is an interesting option, and I see some clear pros and cons.

Pros:
You can work hard early on while you are young, and then blend right in with your peers.
You can quit a high paying, stressful job and take a lower paying, more enjoyable job just to pay for immediate expenses and not worry about your retirement.
You have an "Ace in the Hole" if there is ever a significant, immediate financial need in your life.
You won't get stuck being too frugal to enjoy your life, because you won't spend the majority of your life living that frugally

Cons:
You may have to delay major life goals like starting a family
You will earn less early in your career, so it may be harder to save the initial sum while covering you living expenses at a lower income level
You need to pursue this in your 20s and 30s, you can't start late. Some people are already too old for this strategy.
Financial setbacks in life could require that you tap into those savings (i.e. divorce or significant family/personal illness), and require that you start over.
If you begin with significant debt, such as high student loans, then you may not be able to pursue this strategy because you can't save fast enough with the debt load.  
Discretion is required for this to work.
You need the discipline to know it is there and leave it alone while young.

This seems like the ideal candidate would be someone who has family that pays for them to get a college degree that allows them to enter a field with high paying (but stressful) jobs early on. I suppose it would also work for someone who was able to pay for school with the G.I. bill or scholarships. It would also be ideal for a skilled tradesperson such as a welder. I'd assume it would be easier if you were single and capable of delaying starting a family through traditional means either because you are male and you won't lose fertility under normal circumstances, you have already made safeguards to preserve your fertility, you don't intend to have children, you don't intend to have biologically related children, or you don't intend to have biological children in the traditional manner. It would also work for someone who inherited or otherwise received a large sum of money early in life, like the friend that received a life insurance payout from the death of a parent at 19.

I know that it won't personally work for me both because I'm too old and because I've never had a high income job, inheritance, or even family support. But maybe it would work for you? Do you think it would? Why or why not?

What am I missing? other thoughts?

I have followed the FIRE movement for a few years now, incorporating some of the financial advice into my own savings to reach a point where I might have what the movement falls "FU" money.

I think a niche that can coast fire if they can be disciplined is traveling tradesmen. I know of one guy after high school apprenticed to be a millwright and traveled all over the country for big jobs. Between the amount they made, union perks, per-diem, and side jobs he was flush with cash. A young single guy with low bills, he can pack a lot away very quickly. The problem is when all of their buddies are buying the newest 2024 Lifted RAM I'm-A-Big-Masculine-Man Diesel 4500 and want to join in on the fun. If they can be smart, they can pocket a lot to transition to a more localized job to still earn income but perhaps pursue other goals in life.

College debt to higher degree income is now not as attractive as it once was. You might be able to get one of the hot jobs such as coding for a big company but they tend to be the ones who get laid off in waves when the economy sours. Some people go into the legal profession to get in with the big firms and trudge through 80-Hour weeks trying to make the big bucks. There isn't as much silly money in the world that is easily achievable.

Coast FIRE is possible, it just requires the right time/right place/right mentality to be successful. It however sounds lovely LOL.

We are sort of coast FIRE-ing - wife has a low-stress online job that she's comfortable with working indefinitely, while I am grinding it out on the corporate side a bit longer so I can retire fairly soon and get land.  I think the key to coast is to find a job that you enjoy and are ok working for a long time.

Josh Garbo wrote:We are sort of coast FIRE-ing - wife has a low-stress online job that she's comfortable with working indefinitely, while I am grinding it out on the corporate side a bit longer so I can retire fairly soon and get land.  I think the key to coast is to find a job that you enjoy and are ok working for a long time.

Were you able to save a large sum while young that will accrue into what you need for early retirement at the target date?

Coast FIRE isn't about being able to take a lower paying (but less stressful) job early, it is about using the magic of compound interest to guarantee yourself a nice nest egg that will last you through retirement earlier than your peers while mostly living a normal lifestyle while they are all starting to scramble to save after their kids move out. ;)

To me, it seems like all the various FIRE strategies are more reactions than something that is planned from the start. All the various FIRE plans generally start out with 10ish years of saving roughly half your income. After that time, there are options:

1) If you still like your job, great! You'll probably keep working and be regular FIRE.
2) If you really like your job, great! You'll probably keep working for a long time and Fat FIRE.
3) If you hate your job and want to quit all work,  great! You're Lean FIRE.
4) If you hate your job, and want to do something else on the side, great! You're Batista FIRE.
5) If you want to up your spending, great! You're Coast FIRE.

How much you'll like your job a decade from now is really hard to predict.

Carla, I think you lay out the pros and cons pretty well. I would add another con though, which is the risk that future economic conditions cancel out the anticipated benefit of your early sacrifices.

Compound interest does not work much magic when interest rates are low or deflationary, and markets do not always cooperate with an individual’s personal retirement timeline.  

Early in my working life, the 2001 post-911 recession reduced my older coworkers IRAs enough that some kept working longer than they had expected.  My own retirement funds lost value in 2008 recession and 2020.

I guess it’s not a “con” so much as a caveat that even if you plan to coast, you may need to pedal again to get over some humps.

Hello Cat - yes, we did get that initial savings in place that will cover our needs by retirement age.  The question now is do we try to maximize current earnings to allow for early retirement or work more enjoyable, lower-paying jobs that will just cover expenses (and we won't retire until the normal time).  Chances are, I will just suck it up for a while to enable more freedom in the long-term.