Are you working a job you don’t like because you’re worried about saving enough for retirement?
Well, what if you already have more than enough saved for retirement?
Would that give you confidence to think about switching jobs? Maybe to a job that pays less but better fits your life goals?
Think about it.
If you didn’t have to save another dollar between now and retirement age, would that give you more career freedom?
Would you start looking for that job you really want instead of the job that pays the most?
To explore these questions, let’s look at the money mindset concept known as “Coast FIRE.”
What is Coast FIRE?
Coast FIRE is a subset of FIRE for people who are not necessarily trying to retire early.
Instead, the idea is to aggressively fund your retirement accounts early on so you have more options as your career progresses.
The reason you’ll have options is because once you hit your projected magic retirement number, you no longer need to fund your retirement accounts.
You can sit back and let compound interest do its thing. Your retirement years are covered.
With retirement covered, you don’t need to earn as much money. You can focus more attention on your present-day self. That might mean working less hours or working the same amount but in a different job.
This is the essence of Coast FIRE: knock out retirement planning early on to create more career flexibility later.
Coast FIRE does not mean complete financial independence.
When you reach Coast FIRE, you are not financially independent because you still need money coming in to fund your current lifestyle.
But, you need less money because you no longer need to save for the important goal of retirement. That means you have earned some financial freedom, but not complete freedom.
That’s OK.
Remember, the part that separates Coast FIRE from traditional FIRE is that early retirement is not the goal.
Instead, Coast FIRE means continuing to work until normal retirement age (like age 65) but having more freedom in what you do for work.
To put a bow on it: the main money mindset benefit of Coast FIRE is that you have options once you’ve already put away enough money for retirement.
With retirement taken care of, you can:
- Switch to a lower paying job or lower stress job.
- Become a stay-at-home parent and live off of one spouse’s income.
- Start a business.
- Grow your side hustle.
- Take some time off to think about what you want to do next.
With Coast FIRE, each of these options feels safer because you’ve already fully funded your retirement.
That’s a powerful feeling.
You can take a pay cut for a better job with Coast FIRE.
Let’s say you earn $200,000 and save 20% of your salary ($40,000) for retirement.
Once you reach your retirement goal, you no longer have that $40,000 obligation. You have achieved Coast FIRE.
With that extra $40,000, you have options. You could:
- Live it up and spend the money on stuff you don’t care about.
- Repurpose the money towards another financial goal.
- Switch to a more attractive job that may only pay $160,000.
Whatever you choose, the point is that you have options.
If your job is slowly killing you inside, Coast FIRE provides the money mindset to explore other jobs.
It’s no secret that lawyers typically work long, stressful hours. That’s why burnout amongst lawyers is unfortunately a common occurrence.
For example, you may have begrudgingly taken a high-paying job out of law school to pay down your loans faster. By the way, there’s nothing at all wrong with that.
Now, with your loans gone and your retirement savings in good shape, maybe you’d like to explore a less stressful job.
Maybe you’re ready to pursue that less lucrative career that was the reason you went to law school in the first place.
Maybe you’re ready to stay at home with your kids and live off of one spouse’s income.
Of course, burnout is not limited to lawyers. Many professionals today are experiencing burnout.
Have you been putting off that career change? Does this sound too familiar?
Coast FIRE allows you to find a job that fits your life better knowing you don’t need to make as much money.
Financial Independence Pivot Early (FIPE)
If you’ve been a follower of Think and Talk Money, you know I don’t like the term “FIRE.”
The problem for me is that the FIRE end game is suggested right there in the name: become financially independent so you can retire.
If you’re anything like me, you didn’t pay all that money to go to law school just to retire in your peak-earning years. There’s plenty of meaningful work still to do.
It’s not uncommon for people to hear about financial independence and immediately think that’s only for people who want to quit their jobs and retire on a beach somewhere.
I don’t think that’s what financial independence is about at all.
Financial independence is all about creating options.
When you’re financially independent, you can make decisions based on your core values instead of making decisions based on money.
You can pivot.
That’s why I believe in FIPE not FIRE.
I prefer to think about pivoting, not retiring.
Pivot means to adapt or improve through modifications and adjustments.
That sounds appealing to me.
Retire means to withdraw, to retreat, to recede.
None of those things sound appealing to me at all.
Retiring sounds like moving backwards. I’m not working so hard to achieve financial freedom so I can move backwards in life.
With FIPE, financial independence is still the primary goal. But, the endgame is not to withdraw or retreat.
The endgame is to adapt and improve how you spend your working hours.
Financial independence is for people who want to be empowered to take more control of what they do with their working hours.
It’s not about quitting work entirely.
It’s about the freedom to pivot to other work, if you want. I’m convinced that humans are meant to be productive. We are social creatures who at our core want to be contributing.
That doesn’t mean we have to be or want to be employees. But, it does mean that we want to do something meaningful with our working hours every week.
That’s why I believe in the power of pivoting, not retiring.
That’s what FIPE is all about.
And, that’s what Coast FIRE allows you to do.
Financial independence is about much more than retiring early.
FIRE emphasizes saving more and spending less until you reach the point where your passive investments generate enough income to allow you to quit your job.
I love this part of FIRE: the idea of creating enough income streams so that you have the freedom to do what you want with your time.
I share the primary goal of saving more money and spending less to achieve more life freedom.
By the way, I call this Parachute Money. I like to view each income stream as a separate parachute string. The more parachute strings you have, the safer it is to make a big change in life.
The problem becomes when people are so focused on achieving FIRE that they sacrifice too much of their current lives.
Yes, you’ll achieve FIRE faster if you save 90% of your salary.
But, what kind of life are you left with in the meantime?
Coast FIRE is less about the grind and more about enjoying the process.
The goal is still to be financially independent, even with the recognition that it will take longer to get there.
FIPE and Coast FIRE work well together.
FIPE and Coast FIRE are similar because they are for people who are looking for change but are not looking to retire.
By having enough saved up for retirement before you make that change, you’re giving yourself a layer of protection.
You’re giving yourself the freedom to explore better work situations for your personal situation.
That’s why Coast FIRE and FIPE work well together.
Both money mindsets actually encapsulate the entire purpose of financial independence in the first place:
To create options.
Read Die with Zero by Bill Perkins
If you don’t like the idea of Coast FIRE and foregoing future retirement contributions, you need to read Die with Zero.
No money mindset book has led to more passionate conversations with my friends and family members than Die with Zero.
First, Perkins encourages us to think about whether we are working too many hours.
In Perkins’ view, the problem is that we are sacrificing the best years of our lives. Instead, we could be creating lifelong memories.
In that same vein, Perkins makes a strong case that many of us are saving too much for retirement.
Also, Perkins questions the conventional wisdom of waiting until we die to pass money onto our kids. Instead, he suggests helping our kids earlier in life when the money will be more meaningful.
Read Die With Zero. This money mindset book will motivate you to book that vacation you’ve been putting off.
Also, read A Richer Retirement by Bill Bengen.
Bill Bengen, creator of the 4% Rule, just released a new book with some fun news for all of us saving for retirement.
Bengen’s updated research shows that it’s safe to increase your withdrawal rate in retirement from 4% to 4.7%.
If you are retiring today, it gets even better. Bengen’s research shows that you can safely withdraw around 5.25%.
Bengen’s new book is called A Richer Retirement: Supercharging the 4% Rule to Spend More and Enjoy More.
If you’re not sure about how much you need to save for retirement, Bengen has the answers. He’s done the research and done the math.
His conclusions will give you the confidence to select a magic retirement number that works for you. Once you reach that number, you don’t have to worry about saving more for retirement.
Coast FIRE will open your eyes.
Coast FIRE is a powerful money mindset hack.
When you reach Coast FIRE, you no longer need to save for retirement.
That gives you a lot of options, including switching to a job that better suits your lifestyle.
If you feel like you’re far away from retiring, Coast FIRE is the money mindset hack to start making you feel better about your progress.
In our next post, we’ll do some math together to figure out what your Coast FIRE number is so you can measure your progress.
Are you interested in creating options to pivot instead of retire?
Have you thought about Coast FIRE in the past?
What about FIPE?
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