Slow down … FIRE is not a race

by Joel - Published June 19, 2020

Post image for Slow down … FIRE is not a race

(FYI … “Sank Farten” means “slow down” in Swedish. I’ve been yelling it at speeding cars on my street lately, but I just get strange looks in return :))

When I first stumbled across the FIRE movement, I’ll admit I was a little narrow-minded. I thought the goal of FIRE was to accumulate an insane amount of savings to reach financial independence as fast as possible and hit retirement at the earliest age you can.

This naive thinking was both a blessing and a curse.

It was a blessing because it made me focus and take my financial education seriously. But it was also a curse because always prioritizing money is not a sustainable lifetime quest. Putting money first is OK sometimes, but if you prioritize it for too long, you could miss out on other important experiences.

A breakthrough moment for me came a couple of years ago at my favorite place (where I do all my important thinking) — the bar!

You can simmer down your FIRE

My friend and I were out drinking and talking about finances. This was right around the time I’d quit my job and was re-thinking my career choices and how I could pursue early retirement. We were a few beers deep when he asked me, “So, when you go back to work, how long will it be until you can fully retire?”

Since I didn’t have my spreadsheet with me, I just spat out some round-figure numbers to answer the question. I said something like:

“Well, if I can get a miserable soul-sucking job that pays me $200k per year, and I really manage my expenses, I can probably hit financial independence in 5 years. Or, if I find a slightly less miserable soul-sucking job that doesn’t pay as much money — say, $100k per year — I can reach FI in 10 years. Or, maybe I could find a fun and cool job that I actually like for $50k per year, and achieve FI in 20 years.”

That’s when it hit me: I’ve passed the point of inevitability. No matter if it takes me 5, 10, or 20 years to achieve financial independence, I will eventually cross the finish line. The biggest difference in which path I take is determined by how much I enjoy the journey in the meantime.

I realized that there’s no rush for me. I wanted to slow down and enjoy the ride.

This is when I discovered “Coast FI” … and happiness became my focus, not money.

Coast FI: What is it?

This is a variation on FIRE (financial independence, retire early). Basically, at some point in your financial journey, you will have built up enough wealth that you no longer need to contribute to your retirement accounts. You can just let compound interest do its thing, and your net worth will naturally grow higher and higher until you achieve your FI number.

Consider this scenario:

Let’s say my current net worth is $500k, all invested in a broad stock market index fund. And let’s assume my FI goal is to have $1 million in my retirement account. Since I’m only at the halfway mark, this is nowhere near enough to think about a traditional retirement just yet.

But if the $500k is left sitting untouched, the money will slowly grow over time thanks to compound interest. Given a 7% average interest rate, the assets in that account will double in about 10 years, to $1 million. This will happen naturally, without me adding any more contributions from paychecks.

Over the next 10 years, I could drop my savings rate to 0%, and I would need to earn only enough money to cover my ongoing living expenses. I could potentially slow down work, take a gap year or sabbatical, or explore lower-paying and more gratifying employment opportunities.

Coast FI can feel a bit like semi-retirement. Most of the freedoms that come from financial independence can be recognized before actually achieving FIRE — and in this scenario, at the halfway mark!

Yes, money is still important in coast FIRE

Don’t get me wrong, Coast FI doesn’t mean you can take your eye off the ball. In the scenario above, there are a few things that could go wrong.

First off, we could experience a bad 10-year stretch of investment returns in the stock market. This happened recently from January 2000 through December 2009 … they call this The Lost Decade, when the S&P 500 returned an average of -0.95% annually. Ouch!  Not only would this completely blow a 10-year timeline to FI, but you’d also miss a big opportunity if you’re not saving/investing anything during a down market.

Another potential disaster would be if you become lazy and ease up on all the frugal and thrifty habits you used to build up your savings in the first place. Money still needs to be an important part of decision-making. You can’t start running up your annual expenses — you have to work to keep them in check.

Finally, time is the biggest factor here. You need time for compound interest to really work its magic. So Coast FI is typically better suited for younger investors who have a longer time period to work with.

Benefits of slowing down your FIRE

For me, there’s a sense of relief that came from deliberately slowing down my path to FIRE. I used to put a lot of pressure on myself to retire early, build a massive net worth, and do it all as fast as possible.

But now that stress is gone. I’ve learned that FIRE is not a race or competition. There is no wrong or right way to do it. Taking a slower route means I can relax more and enjoy life.

Another benefit is having more work opportunities. Growing up, I always thought your income would keep rising and rising with each new job or promotion. Accepting anything less than what you previously earned would be a step backward.

But I started realizing that as my income rose and I became more specialized, there were actually fewer work opportunities for me. For example: There might be only 10 companies in Los Angeles that would hire me at a salary of $100k/year …. But there are probably 5,000 companies that might hire me at $50k.

Having a bigger pool of available jobs to choose from lets me explore new and exciting things. I can make my career decisions based on fun and flexibility, not salary.

More coast FI resources

Here are some cool articles and resources by fellow bloggers that you might like:

When can I Coast FI? by Brewing FIRE

Adam has created a few tables to help decide if Coast FIRE is right for you. Based on your current situation and numbers, you can work out how many years it would take you to get to your coast FIRE number:

a table showing many years it would take you to reach FIRE and what your coast point would be

Slow FI Interview Series by the Fioneers

Jess and Corey are not only on the Coast FI train themselves, but they have also interviewed a bunch of others who are intentionally pushing out their retirement dates. I love their phrase and goal of “achieving incremental financial freedom.”

What is Coast FIRE? by Four Pillar Freedom

Zach has some wicked visual examples of how investments grow by themselves to achieve a specific coast FI number. He also has a formula you can use to calculate how much you need to be able to start coasting to FIRE yourself!

No matter what flavor of financial independence you’re pursuing, I strongly encourage you to build a life you will be proud of and enjoy as much of it as you can along the way.

Sank farten! And have a great weekend!

Anybody else working toward coast FI? (Did anyone start later in life?) How about switching jobs to trade more money for a more joyful journey?

*Sign pic up top by jasejc!

{ 22 comments… read them below or add one }

1 Susie June 19, 2020 at 7:12 am

I like this :) i never really understood why people who strove for FIRE to get away from “soul sucking” jobs didn’t just look for more fun jobs? and as you put it, sure it will take longer but the journey will be so much better. My strategy was to find the highest paying job and tough it out for the first 5 years of my career (and yes that job crushed my soul). But I established a fantastic base and for the next 15 years Ive worked for basically no money at a start up ( it was such a great experience) and then found jobs with wonderful work life balance but only an average amount of money. Ill hit my “number” in the next year or so and even though it took 6-7 years longer this way, at least I had some good work experiences, made a lot of friends, made some cool stuff at my jobs, and didn’t hate every day of it :)

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2 Joel June 19, 2020 at 9:33 am

Yeah I think many people get blinded by the dollar signs, and will sacrifice happiness to go get more money. (I can’t blame them, I did the same thing when I was younger). I still believe hard work, grit, and shooting for big goals is necessary… But, this can be done *while* enjoying life, not in lieu of it!
Congrats on being FI soon. Great example of how coasting works out!

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3 Adam June 19, 2020 at 9:07 am

Our goal is to hit the FI number when our house is paid off in September 2030… and we are completely on board with coasting. Part of our plan involves removing the $1140 mortgage P&I from our expenses; unless we completely blow our targets out of the water, we can’t pull the trigger until then anyway. And if we get there early, we have the option to cut our hours. My wife has coworkers who’ve done that and her company is very flexible with regard to maintaining health insurance coverage — year-round four-day weekends would be a delight!

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4 Joel June 19, 2020 at 9:23 am

Nice! Health insurance is a huge win for working part time. 2030 seems so far away… But that’s what I thought about 2020, and here we are. Enjoy the journey! :)

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5 Physician On FIRE June 19, 2020 at 10:36 am

Sank Farten!

I spent 6 weeks in Stockholm as a med student, but I did not pick up that lovely phrase.

Tak and Skål are about all I recall at this point.

Cheers to Coast FIRE and enjoying the ride!
-PoF

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6 Joel June 19, 2020 at 11:21 am

Apparently “infart” means on-ramp, and “outfart” means off-ramp too.
Have a great weekend PoF! :)

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7 steveark June 19, 2020 at 11:42 am

My wife and I are distance runners still in our sixties. She has a marathon coming up later this year. I remember incorporating fartleks, “speed play” in Swedish into our training and always thought the name was hilarious!

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8 Joel June 19, 2020 at 1:04 pm

Glad you enjoy potty humor, because I plan to write more of it :)

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9 Lisa O June 19, 2020 at 12:56 pm

Love the thought of slowing down! I am a late bloomer of savings money and living a frugal life. I will be working until 62-64 years of age. I just never understood the thought of not working and being retired until now. I sit at my desk from 8:30 – 5 p.m. Monday-Friday at 55 years of age and think….I love my job most day but freedom is what it is all about. I now talk to my kids (31 & 27) about saving more so freedom comes earlier for them. Material possessions just weigh a person down….trying to pay for them takes your freedom away.

You are right with compounding interest…it will do part of the job on its own!

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10 Joel June 19, 2020 at 1:06 pm

Loving your job makes a huge difference. Awesome you’re encouraging your kids to save early and own less stuff. It’ll give them many more options later on. Thanks for sharing! Happy Friday!

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11 JoshDoesFatFIRE June 20, 2020 at 4:19 am

Great post Joel.
Funnily enough my goal is currently FatFIRE – hence my blog name. However, i imagine at sometime along the journey I will begin to experience some form of burnout naturally, and if that does happen and I decide to choose lifestyle over massive wealth, the CoastFI will be something I will strongly consider.

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12 Joel June 20, 2020 at 10:21 am

I think if you start early enough in life, you can Coast all the way to FatFIRE. It all depends on whether you want to keep working and earning income. Lifestyle and massive wealth aren’t adversaries. You can have both!

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13 Backpack Finance June 20, 2020 at 5:41 am

I love the concept of coast FIRE. I believe it’s worth it to chase the dollar big time in your 20s. Even at the expense of having less fun. By doing that you can easily switch to a low pay high fun gig in your 30s.

The only thing here is the mental side. How do you deal with a lower pay after getting accustomed to getting a higher and higher salary for a decade or more.

That’s a big one. For me at least.

Cheers!

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14 Joel June 20, 2020 at 10:11 am

A sabbatical helps with the mental side… When I quit my job, money stopped coming in. My friends were getting paid every 2 weeks for just showing up to work, and I was getting paid $0. I missed about 50 x paychecks over 2 years. So now, any salary is a good salary. I don’t care that it’s lower than what I once made. It’s HIGHER than $0 which I experienced.

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15 Sport of Money June 22, 2020 at 12:40 am

Instead of switching to a lower paying job, have you thought about curing what makes your higher paying job not fun? Especially if you have a nice financial nut saved already which would give you more security on making changes.

Don’t like a particular person at the higher paying job? Just don’t deal with that person. Don’t like the hours? Start coming in later or leaving earlier bit by bit to see if manager will care. Don’t like commuting? Ask for a work from home arrangement. Don’t like a particular assignment? Just discuss with manager why someone else is a better fit for it. You are willing to give up on the job anyway, so what do you have to lose making requests.

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16 Joel June 22, 2020 at 9:34 am

I wish I could go back and give my younger self this advice! At the time, I thought i was trying hard to do all these things to improve my situation… But in hindsight I was not thinking outside the box and felt I had no room to negotiate. Silly me.
Cheers for the input – more to come on this topic because I think many people feel stuck at work and think the only way out is quitting.

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17 Matt June 24, 2020 at 2:00 pm

I was never able to really hunker down and commit to crazy frugality required to hit a crazy saving rate. For me the journey is important, it doesn’t have to happen at breakneck speed. Would I like it to happen faster… yes, but I’m done killing myself for it. Great post Joel!

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18 Joel June 24, 2020 at 4:57 pm

Yeah there’ll be nothing left to enjoy if you deteriorate yourself along the way. Cheers, Matt!

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19 Forrest McCall June 24, 2020 at 11:06 pm

FIRE is a long game. While I don’t plan to retire early, I do want to be able to work at my own leisure. I also like to focus more on increasing my income than lowering my expenses (but I should probably do both if I wanted to speed it up!). Great post Joel!

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20 Joel June 25, 2020 at 10:15 am

Nice! Are you focussing on raises and more pay at your day job, or more side hustles and other forms of income? Just curious.
Cheers!

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21 Accessible Investor June 27, 2020 at 11:43 pm

I really do like this concept of Coast FI. The journey is important to me. I don’t want to be miserable while achieving FI and then arrive at FI without hobbies, stories, friends, etc. Enjoying the FI journey is important too!

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22 Joel June 29, 2020 at 9:53 am

Yep! Hobbies, stories, and friends… the good stuff in life money can’t buy. :)

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