Coast FIRE gives you the ability to free up more of your money to enjoy life now instead of retirement.  I'm a fan of the concept and it has impacted the trajectory of my family's financial life.

But just because I think Coast FIRE is great, doesn’t mean everyone does. 

To help us get another perspective on this Coast FIRE concept and what could go wrong with it, I’ve invited Sam Dogen, the Financial Samurai, back on the show today.

Sam is the founder of Financial Samurai, a personal finance website focused on slicing through money's mysteries. He's also the author of the Wall Street Journal bestselling book Buy This, Not That: How to Spend Your Way to Wealth and Financial Freedom.

Overview: Why Coast FIRE is Delusional According to Sam Dogen (Financial Samurai)

Sam Dogen reviews the following:

• Why Coast FIRE cannot be a “set it and forget” figure
• How changes in lifestyle massively impact Coast FIRE
• Why children and generational wealth plans matter when it comes to Coast FIRE

Where to Listen or Watch

• YouTube
• Apple Podcasts
• Spotify

Key Takeaways from Sam Dogen (Financial Samurai)

Here are my top three takeaways from my conversation with Sam Dogen.

Your Annual Expenses May Change

When you’re planning for financial independence or Coast FIRE, consider how your financial situation may change in the future. 

Of course, we will all experience the inevitability of inflation. That is a given. 

But also, think about other factors. 

• Are you considering children in the future?
• Or more children than you already have?
• Can you truly see yourself staying in the living situation you’re in (or a comparable one) for the long term?
• How old are your vehicles? Are you saving up to replace them?

On the other hand, you can also think about how your expenses may decrease (outside of inflation of course) in the future:

• Will you eventually become mortgage-free by retirement?
• With your kids grown and gone, will you downsize your home?
• With your kids grown and gone in the future, how much extra money will you have when you’re not paying for daycare, college tuition, extra groceries, etc?

In short, be mindful that things may change over time so continue to update those numbers and ensure you’re still on the right track. 

No One Knows What The Market Will Do

With all of the stock market projections out there, one thing is for certain … no one can predict the future. 

You’ve got the major optimists like Dave Ramsey and team calling for 12% average annual growth and an 8% withdrawal rate. 

And then you have some conservative FIRE folks like Sam who call for 5% average annual growth and a 3% withdrawal rate or less. 

And even the Vanguard team projects lower returns than 5% for the overall stock market over the next 10 years. 

Do your research, make an educated estimate and go back to living your life. Personally, I like a 7% average annual growth and a 4% withdrawal rate but I’ll be honest with you. It’s just a guess. And it’s based on the historic growth of my specific asset allocation. Not the future growth.

The best thing to do is to meet with a financial advisor who knows your situation best.

I’d suggest an advice-only financial advisor through a service like Nectarine who you can pay by the hour for their time.

Generational Wealth Is Defined By You

A big part of this Coast FIRE conversation is how much (if anything) you plan to leave for your kids. 

For my wife and I … while we’re fans of the Die With Zero mindset (sorry kids!), it’s REALLY hard to figure out how to actually die with zero. 

On the other end, we both don’t want to tirelessly work until our dying days to leave our kids with an abundance of money. That type of mindset will sacrifice our health and our time with our kids while they are young. That’s just not what we want to do. 

So, once again, you, me, we … we need to find our happy middle ground. 

The way we’re living is …

1. Eliminate the high-interest debt
2. Build up a healthy emergency fund
3. Hit Coast FIRE
4. Eliminate the low-interest debt
5. Find part-time work you enjoy doing
6. And then teach our kids how to do the same thing

If we mess up on any of these steps, find that our emergency fund is not full or we’re not “Coast FIRE”, we’ll jump back into them and ensure they are complete. 

I’m in a season right now where I need to make more money to beef up our emergency fund after a house flood. So part-time work is turning into like ¾ time work for a while. 

To Sam’s point, be flexible and update the numbers as you go. Because there’s only one thing in life that is certain and that’s change. 

Guest Bio – Sam Dogen

Sam Dogen worked in investing banking for 13 years before starting Financial Samurai, his personal finance website. He has been featured in major publications including The Wall Street Journal, The Sydney Herald, The Chicago Tribune and The L.A. Times. Sam’s new book “Buy This, Not That: How to Spend Your Way to Wealth and Financial Freedom” is out now.

Carpe Diem Quote:

“Realize deeply that the present moment is all you have. Make the NOW the primary focus of your life.”

Eckhart Tolle

What do you think of our discussion with Sam Dogen from Financial Samurai? Are you a fan of Coast FIRE or do you think its irrational?

Please let us know in the comments below.