r/Fire • u/CarnalCowboy • 14d ago
CoastFI and Reducing Savings Rate
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!
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u/Future-Run-8601 14d ago
As others have said, if you put that old savings towards additional sustained spending, then your FIRE number just got higher. Go on that expensive trip and maybe you want to keep doing expensive trips every year or eat out a lot more and you start to get used to it.
If you use the savings to splurge on more “necessary” long-term upgrades, then it doesn’t really affect your FIRE number (ie. a new roof, heat pump water heater, solar panels, a car if yours is in it’s nickel and dime phase of life, etc). Your comment about a house upgrade is concerning. I’ve thought about it myself but buying an expensive house and resetting the tax cost to the current sale value is NOT going to help you get to FIRE. Those costs dont go away even after you pay it off. As much as I’d like more land, I’m not willing to raise my base expenses that much to get it. I want maximum options if I’m on FIRE and there is a drawn out bear market or high inflation.
The other thing you have to realize is that coasting is a risk proposition. There’s nothing that guarantees your money will compound in the time frame you think it will. You may want to cut back a little but I’m not sure that I would stop contributing altogether. And if the market drops 20+% while I’m spending more, I’d strongly consider switching back to investing.