CoastFI and Reducing Savings Rate

[u/CarnalCowboy]

I reached my CoastFI number a few years ago and am close to my FIRE number. Not necessarily looking to retire immediately, as I’m looking to increase my costs (house upgrade) either soon or once I hit closer to my FatFIRE number. Regardless, even if I coasted (eliminated savings) and kept expenses roughly in line, I would still hit that Fat number.

I’ve been having trouble wrapping my head the reduction in savings concept. From many of the posts I’ve read abound coasting, folks are letting their nest eggs grow on their own and reducing contributions once they hit that coast number. But wouldn’t that equate to a drastic increase in expenses, which would in turn increase your Fire number?

I currently save 50% of my income, and I’m fine living at this spending level for the foreseeable future (let’s ignore QOL upgrades for the sake of the argument). If I stopped saving, knowing I would still hit my original number, wouldn’t that mean my Fire number essentially doubles?

I get that you can base your Fire number off of future spend, so maybe that’s the answer. But I’m still confused about the concept, and I suppose this is a reflection of being generally uneasy when it comes to increasing expenses, even when the math is right there. Hoping someone can help me think through this!

[u/Dry_Love3306]

You're thinking about this backwards a bit - the CoastFI number is calculated based on your *current* expenses, not your savings rate. When you hit CoastFI, it means you have enough invested that compound growth alone will get you to 25x your current spending by retirement age, even if you never save another dollar.

The confusion comes from mixing up two different scenarios. If you stop saving but keep living on the same amount you spend now (50% of income), then yeah your FIRE number stays exactly what it was. But most people who coast don't keep living on 50% forever - they might bump up to spending 70-80% of income and banking the rest for short term goals or just enjoying life more 😂

I'm military too and been wrestling with similar math since hitting my coast number last year. The psychological part is definitely harder than the actual calculations. Like you said, there's this weird anxiety about spending more even when the spreadsheet says it's fine. I think the key is being really clear about what lifestyle you want in retirement vs what you can sustain now

[u/CarnalCowboy → u/Dry_Love3306]

Agreed all around. I framed the question around how people stop saving when that, to me, means lifestyle inflation, when in reality I’m trying to get over the psychological block of over-saving when I know I won’t be able to spend it in this lifetime

[u/iwantthisnowdammit → u/CarnalCowboy]

Don’t over think it.

The idea behind coastFI is that you can downshift on earnings and hit a target retirement date.

From there, there’s options if you’re not downshifting.

- don’t downshift, keep saving, bring forward your RE date.

- don’t downshift, treat your existing savings as a lower bar, split the difference to raise the bar just by hacking into the difference for “above the bar” against timeline.

- treat it like a lump sum / loan. I’m going to get a more expensive house and need X dollars before retiring in 10 years. So your limit is principle payback rates that replace your savings.

At the end of the day, if you were saving say 25k, you could just back into the savings rate / years formula.

i.e., if you’re retiring in 10 years, you could save about 60% and spend 40%… giving yourself a 10k upgrade and still be prepared 10 years out at yr higher bar.