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The Financial Independence, Retire Early (FIRE) movement is dedicated to helping people retire before the traditional retirement age of 65-70. The premise of FIRE is that people who live frugally and invest enough throughout their working years can become financially independent and spend the rest of their lives living off the passive income generated by their assets.

There are at least four offshoots of the traditional FIRE movement. They include:

• Lean FIRE: Involves saving enough to live a comfortable, but not lavish, lifestyle during retirement.
• Fat FIRE: Designed for those who wish to live a lavish lifestyle during retirement.
• Barista FIRE: Barista FIRE allows you to retire early with investments that cover the majority of your living expenses. However, it involves taking on a part-time job to cover expenses like health insurance and miscellaneous expenses.

And then there’s Coast FIRE.

Coast FIRE

With Coast FIRE, you invest enough money you think it will take to sustain you in retirement. For example, if you plan on spending $100,000 a year in retirement, you might aim to build a nest egg of $2.5 million. (A common guideline in the FIRE community is to save 25-times your annual expenses.)

Once you believe you’ve invested enough, you can quit your job and switch to one you enjoy more. As long as it pays enough to cover living expenses, you no longer have to contribute to your nest egg and can “coast” until retirement.

An example of Coast FIRE

Let’s say you’re 25 and want to retire at 50. At age 45, you check your favorite trading platform, look at your portfolio, and decide that if your investments continue to grow at the same rate, you’ll easily have enough to retire at 50. You quit your job and work part-time or try a new full-time position.

However, if you’re nowhere near your goal, you’ll need to stick with your current job and continue contributing to your nest egg. It’s not until you reach your goal that you get to coast.

Coast FIRE is an offshoot of the FIRE movement, and while it may be the ideal plan for some, it can be a disaster for others. Coast FIRE offers you the chance to reinvent your life in middle age. However, there are at least four things that can go wrong.

If you’re looking for a way to build a nest egg over time, you may want to consider how these top-rated IRAs can help you achieve your goal.

1. Your numbers could be way off

You may overestimate the average annual return on your investments and not save enough. Or, you could underestimate the amount of money you’ll need for retirement. Either way, you could find yourself short of the mark.

If you’re currently in your 20s or 30s, it may be hard to imagine how much you’ll change over the next 30 to 40 years. You’re not going to stop growing and maturing. As you’re introduced to new ideas, meet new people, and experience entirely new things, it’s natural that your thoughts and opinions will change.

I’m not saying you’ll be unrecognizable, but you will change. It’s a natural part of adult development. What you “think” you’ll want during your retirement years may not be what you actually want.

2. You could decide to coast too early

This point piggybacks on the previous point. None of us knows what we don’t know. You could take a look at your portfolio and be thrilled to see you’ve amassed what appears to be a small fortune.

However, since none of us can see the future, you may switch over to coasting too early, stop investing, and, thanks to inflation, end up with a less impressive nest egg than expected.

3. You could underestimate the cost of health insurance

Fidelity Investments estimates that the average 65-year-old American couple can expect to spend around $315,000 on healthcare expenses throughout retirement. You can cut that amount in half to $157,500 if you’re single. While this amount includes Medicare premiums, medical expenses can still come as a surprise.

Unless you’ve remembered to build in enough to cover the cost of medical care in retirement, you may not have as much as expected for other living expenses.

Plus, there’s the issue of losing your employer-sponsored medical coverage if you leave your job to take on something part-time or start your own business.

4. You could sacrifice your current happiness

Coast FIRE success often requires making dramatic cuts to your budget and lifestyle — especially if you don’t earn much money. There’s an interesting Reddit post, written by a 32-year-old who says they quit the movement so they could spend more time enjoying their life.

According to a poster named fireflyer, they’ve never earned more than $50,000 annually (and sometimes much less), live in a high-cost-of-living city, and have spent the past five years saving every penny. Here’s some of what fireflyer has experienced over the past five years:

• Stopped socializing due to the cost.
• Hasn’t had the money to fulfill the dream of traveling.
• Feels the goalpost constantly moves, and they’ll never have as much as they need to retire early and coast.
• Feels as though they’re waiting for their life to start.

Of course, not every experience will be like fireflyer. Still, they provide an honest look at what it’s like for some.

For those who make Coast FIRE work for them, it’s undoubtedly gratifying, but that doesn’t mean it’s right for everyone’s finances or lifestyle. Go in with your eyes open and know what you can expect. That way, you have the best possible chance of success.

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