What compels me most about financial independence, retire early (FIRE) culture is the promise of peace of mind. I don't want to work this hard for the rest of my life, and neither do you. I like the idea of building up wealth sooner rather than later so that I'm less stressed out down the road.
Fortunately, there’s a way to set up cruise control with your money so that you can take your foot off the gas. 🚗
It’s called coast FI (aka coast FIRE), and it’s one of the first benchmarks you hit in your financial independence journey. In Coast FIRE, you aspire to reach a net worth at which your existing investments will eventually compound to your target net worth without having to make any additional contributions.
This frees up money you would normally continue depositing into a retirement or brokerage so you can enjoy it now, guilt-free.
- Becoming financially independent is different from retiring.
- In FIRE lifestyle, you aspire to have enough money such that your passive income sources fund your lifestyle, without depleting your nest egg.
- Pursuing coast FI lets you be more aggressive with saving now so you can relax later.
- This freedom could let you transition to a lower paying job, especially if you’re young.
(Switches to grammar snob voice) Technically, the correct terminology for this wealth benchmark is coast FI, not coast FIRE, because your aspiration is not necessarily to retire early. But people look for this information using the term “coast FIRE“ often, or coastfire, or coast fi, and, well... (gestures to algorithms). So we’ll use both terms interchangeably throughout this article.
(Want your number right now? Use this Coast FI calculator.)
What is Coast FIRE (Coast FI)?
Coast FIRE (or Coast FI) means you’ve already invested enough that compounding alone will grow your portfolio to full financial independence by traditional retirement age, without contributing another dollar,.
Instead of continuing to aggressively save and invest, coast FI practitioners "coast" along with their existing investments and let time work its magic.
For some, Coast FIRE is just about peace of mind. They want to know the money they’ve invested so far will be enough for them to live off of in the future.
For others, the benchmark is more intentional; you want to hit this milestone now so you can downshift to a less stressful career or free up money to pursue the things in life you love.
How to calculate your Coast FI number
To calculate Coast FI and path to financial independence, first calculate your regular FIRE number. This is the number you’ll need to hit to live off of interest from invested assets alone.
A (very) approximate formula to calculate your FIRE number is to take your expected annual expenses in retirement and multiply by 25. This 25x rule of thumb traces back to the 1998 Trinity Study on safe withdrawal rates.
FIRE number = Annual expenses x 25
To calculate your Coast FI number, first, calculate how much time your invested assets will have to compound, and their approximate rate of return. Then divide your FIRE number by this figure to arrive at your investment portfolio target.
The Coast FIRE formula
FIRE Number / (1 + (Annual Rate of Return %))^(Years until target retirement age)
In this formula:
- “FIRE number” can be calculated with the 4% rule (annual expenses x 25).
- “Annual rate of return” is the rate of return you expect annually on your investments. This number will always be an estimate, since investments rarely compound evenly from year to year.
- “Years until target retirement age” is based on an age you define. If I am 35, and want to retire at 55, this number for me would be 20 (55 minus 35 equals 25).
An example of Coast FIRE
Sarah is 25 years old and in a high-pay (but also high-stress) job. She wants to build her investments quickly now, then have the confidence that she'll still have enough money saved at 60 if she reduces or even stops her contributions in the near future.
Calculating her Coast FIRE number will give her that inflection point.*
- Current age: 25
- Target retirement age: 60
- Expected annual expenses In retirement: $50,000 (in today's dollars)
- FIRE number (estimate): $1,250,000 (in today's dollars)
Let's also use a slightly-conservative real return of 6% here. (Many calculators default to ~7%, the long-run real return of the S&P 500. Adjust to your own assumptions.)
Coast FIRE by 30
If Sarah can reach her Coast FIRE by 30, her investments will have 30 years to compound before she retires at 60. Longer timeline = more time to grow = less money needed initially.
- Her coast FI number will be $217,638 in investments.
- Over 30 years, this $217,638 would compound to $1,250,000 (at annual 6% real return), even if she never puts another penny into her accounts.
Coast FIRE by 35
Sarah could also save less aggressively and aim to hit Coast FI by 35 instead. This would give her investments less time to compound — 25 years instead of 30 — so her Coast FIRE number is higher.
- Her coast FI number will be $291,248 in investments.
- Over 25 years, this $291,248 would compound to $1,250,000 (at annual 6% real return).
Coast FIRE by 40
If Sarah aims for Coast FIRE by 40, and still wants to retire at 60, her coast FI number jumps up to $389,756. This is 15 years out from her current efforts, though, so she'll want to recalculate her expenses projections from time to time as things change.
*All figures are in today's dollars, and the 6% is a real, inflation-adjusted return — i.e., growth on top of inflation. This is what keeps the $1.25M target and the $50k lifestyle in sync.
What are the benefits of Coast FIRE?
One of the major benefits of Coast FI is the reduced financial stress during the working years.
By front-loading their savings and investments, individuals can experience the peace of mind that comes from having a substantial financial cushion. This can provide the freedom to make career choices based on personal fulfillment, rather than financial necessity.
Coast FI allows individuals to strike a balance between enjoying their youth and actively pursuing their financial goals. By reaching a comfortable savings milestone early on, they can choose to scale back their work hours, take sabbaticals, or explore different career opportunities without jeopardizing their long-term financial stability.
What are the risks of Coast FIRE?
It's important to consider the potential risks and challenges associated with this approach. Relying solely on existing investments without making additional contributions may expose individuals to market risks. Economic downturns or sudden market fluctuations can also significantly impact portfolio performance.
It is also essential to ensure that the initial savings milestone is sufficient to sustain the desired level of living expenses in retirement. Regular evaluations and adjustments may be necessary to ensure the continued viability of the Coast FIRE strategy.
Coast FIRE alternatives: Barista, Lean, and Fat FIRE
FIRE benchmarks
FIRE benchmark | Invested assets | Attributes | Work commitments |
Coast FIRE | $200k-$400k invested | Compounding does the retirement account growth for you | Still working full-time |
Barista FIRE | $500k-$1M | Investment income covers part of your expenses | Still working, but can work part-time or a less intense job |
Lean FIRE | $1M (for $40k/yr on 4% rule) | Retire earlier by living more frugally | No longer need to work |
Fat FIRE | $2.5M+ | Higher target, but $100k/yr+ in investment income (4% rule) | No longer need to work |
Coast FIRE is particularly appealing to individuals who have well-paying jobs early in their careers or have the ability to save a significant portion of their income. It requires discipline and the ability to live within one's means during the accumulation phase.
But let's be clear: Coast FI is not early retirement. The FIRE number is too low. If you actually want to become work-optional, consider one of these other FIRE strategies instead.
Coast FI vs. Barista FI
Barista FI (also known as Barista FIRE) is a nod to Starbucks, which offers employees health insurance if they average a 20-hour work week.
In Barista FI, you have enough money saved up that you can downshift at work, but not retire completely. Think of your investments as supplying a passive income stream that can help you decompress your career. Many Barista FIRE adherents maintain a job just for health insurance coverage, which is expensive in the United States.
Coast FI vs. Lean FIRE
Lean FIRE is a form of FIRE that gets you out of the workforce sooner by living very frugally.
In online forums, this benchmark is defined as having $40,000 or less in annual expenses, which means a FIRE number of less than $1 million, but these benchmarks were established in the 2000s and may no longer be accurate.
Coast FI vs. Fat FIRE
Fat FIRE is a version of FIRE for people who expect to need a higher budget in retirement.
Usually, Fat FIRE is defined as needing more than $100,000 a year to cover your expenses. This might be because of lifestyle choices, but also applies if you're retiring while still raising kids, taking care of family members, or want to live in a more expensive city.
Is Coast FIRE right for you?
Coast FI offers an alternative path to financial independence, emphasizing front-loading savings and allowing investments to grow over time.
By achieving a significant savings milestone early on, you can enjoy a sense of financial security and strike a balance between work and personal fulfillment. ◆
Coast FIRE FAQ
What is considered a traditional retirement age?+
Traditional retirement age in the U.S. is 65. FIRE-movement proponents aim to retire years or decades ahead of schedule.
Can you reach Coast FIRE on $500k?+
It depends on your age — the question is whether $500,000 has enough time to compound the rest of the way without further contributions.
Can you Coast FIRE on $300k?+
Possibly — if you’re young. $300k left to compound at ~6–7% for 30+ years can reach a $1.25M FIRE number, but not with only 15 years. Run it through the Coast FI formula.
What’s a good age to hit Coast FIRE?+
Earlier is cheaper because compounding has more time, but there’s no single “right” age — it’s a trade-off between how much you invest now and how long you leave it to grow.
How do you calculate your FIRE number?+
An exact FIRE number requires careful planning. A theoretical ballpark figure can be calculated by multiplying your expected annual expenses in retirement by 25.
