Picture this: You're in your mid-40s and you've just quit your stressful corporate job. You've set aside enough money to fund your future retirement and now can work a more enjoyable (but lower paying) job to cover your living expenses until then.
This is the definition of Coast FIRE. You don't have enough assets to never work again, but you have enough to never save again. You can “coast” until you get to retirement. Sounds pretty nice, right?
This is why I love Coast FIRE. Out of all the variations of the FIRE movement, it's by far the most appealing. You get most of the flexibility of financial independence with fewer of the costs.
Under Coast FIRE, you don't need to acquire as many resources as you do with traditional FIRE, and you don't need to be as frugal either. Coast FIRE captures most of the benefits of FIRE without its extreme sacrifices.
But has this changed in the age of AI? With the recent discussion around AI bots replacing white collar workers in the near future, is retiring early still the right move?
Let's dig in.
How AI Could Impact Coast FIRE
If you've recently hit Coast FIRE or are thinking about it in the next few years, below are some potential issues to consider:
- Could AI Automate Your New Career?
- The premise of Coast FIRE is that you leave behind your traditional 9-5 job in favor of a new career or side hustle. That new career/side hustle might pay less than your prior job, but it pays enough to cover your living expenses until you reach retirement. So what happens if that new career/side hustle gets automated by AI?
- For example, imagine someone who quits their job to work as a graphic designer because they reached Coast FIRE. How do they keep their clients when AI can replicate some of their work for much cheaper? This isn't a rhetorical question either. This has already started happening. There's a reason why Fiverr (the online gig work platform) had its stock cut in half over the last year.
- Before you take the leap to pursue Coast FIRE, consider how future technological changes could impact your ability to coast. I'm not asking you to predict the future, but you should think deeply about how you'll earn money in a world where LLMs are even more powerful than they are today.
- How Will AI Impact Your Investments?
- Another area where AI could impact Coast FIRE is on the investment side. After all, those pursuing Coast FIRE must rely on the growth in markets to meet their future retirement needs. So how will AI impact future equity returns? I don't know (no one does). Nevertheless, some of the benefits of AI will accrue to public equity holders of AI and AI-adjacent businesses. While many AI companies are currently privately held, you'll still get plenty of exposure to AI in a broad U.S. index fund (via the Magnificent 7 and others). You could increase this exposure by owning a tech-focused index fund (like the NASDAQ), but I don't believe this is necessary.
- Overall, I don't think AI is going to impact your investments as much as it could impact your career. So, if you want to stay ahead of the curve when it comes to AI, focus on your paycheck, not your portfolio.
- Could AI Actually Help Coasters?
- While AI could harm some in the Coast FIRE community, there's an argument to be made that it could help some as well. There are people out there who could use the latest models to expand their business or get more done in less time. Instead of looking at AI as a competitor, you could team up with it to enhance your new career. For example, you could have an LLM check your work or summarize meetings and emails to save you time. While AI functionality is somewhat limited today, it won't be by the time many of you approach Coast FIRE.
- Additionally, coasters (Coast FIRE adherents) may be uniquely suited to benefit from AI because they tend to be flexible in their thinking/planning. If you're someone who regularly thinks about and plans your future, you are probably also someone who could use cutting-edge technology to find solutions to your problems. And AI may provide such solutions.
- Should You Grind it Out For a Few More Years to be Safe?
- Regardless of how you feel about AI, maybe you should ignore Coast FIRE for now to accumulate more capital before it's too late. There's a recurring argument in the AI community that you have 3 years (it always seems to be 3 years) before AI automates all of our jobs. While AI will definitely do more white collar work in the future, I don't believe the job market will be as dire as some AI fanatics believe.
- But what if I'm wrong? Wouldn't grinding it out for a few more years be the prudent thing to do? Why take the step back now when you could do it in a few years? After all, if AI doesn't take your job, you're fine. And if it does, you'll be glad you acquired as much capital as possible while you still had the chance.
- The problem with this logic is that there's always an excuse to keep grinding. It's easy to argue that AI or inflation or something else will require you to save more than you originally planned for. Unfortunately, if you start thinking this way, you'll never stop. It reminds me of that time John D. Rockefeller was asked, “How much money is enough?” and he replied, “Just a little bit more.” If you want to use AI as an excuse to delay Coast FIRE, go ahead, but you'll easily find another excuse in years ahead.
While there are many ways in which AI could impact those pursuing Coast FIRE, we won't know which of them will occur until after the fact. As much as I'd like to tell you everything will be okay, I don't know for sure.
Unfortunately, AI has injected a fair dose of uncertainty into all of our futures. But uncertainty is just part of the game. No matter when you retire, you'll run into it eventually.
For example, imagine pursuing Coast FIRE in 2007. The very next year the Great Financial Crisis would hit and you'd be questioning everything. You'd wonder if you should go back to work. You'd wonder if you could even go back to work.
You'd probably have the same experience coasting at the onset of COVID in 2020, during the tech crash in 2022, and the AI boom of today. The story changes, but the feeling remains the same.
This is true for all forms of early retirement. They all come with risk. You just have to accept these risks when you take the leap. AI isn't special in this regard. AI is merely the next unknown in a line of unknowns that will worry retirees into the future.
So, did AI kill Coast FIRE? Not necessarily. It's just the latest reason to worry about it.
Thank you for reading.
In Case You Missed It
Your Portfolio Holds 4,000 Stocks and Zero Diversification
This week I sat down with Leti and Kenji Asakura — dual-physician hospitalists who hit financial independence in three years through real estate — for a conversation that made two hundred docs rethink their portfolios in under an hour.
The short version: KKR data shows the average investor holds 95% of their wealth in stocks, bonds, and cash. Ultra-wealthy families hold 46% in alternatives. Physicians earn in the top 2% but invest like everybody else.
Three numbers that stuck. The Shiller P/E at 36, double the historical average. A real after-tax equity return of 4 to 5% at physician tax rates. A $7M career-long gap between a tax-efficient and conventional portfolio at identical savings rates.
We covered lost decades, drawdown math, real estate tax advantages, and why sponsor selection is the only due diligence that matters.
Jorge Sanchez, MD
Naples, Florida
