Coast FIRE in Plain English

"Coast FIRE" sounds like internet finance jargon, and it is — but underneath the term is one of the most useful retirement-planning ideas of the last twenty years. It answers a specific question: "Do I have to keep saving aggressively for retirement, or have I already saved enough that I can stop and just let compounding take it from here?"

The core math

Coast FIRE is the savings balance today that, if left alone for the rest of your working life, would compound into your retirement target by the time you stop working — without any further contributions.

The formula is straightforward: your retirement target, divided by (1 plus the real return rate, raised to the number of years until retirement). For example, if you need $1.5 million at age 65, and you are 35 years old (30 years to go), and you assume a 5 percent real return (after inflation), your Coast FIRE number is roughly $347,000.

If you have $347,000 saved in retirement accounts at age 35, you can theoretically stop contributing entirely. The existing balance will grow into the $1.5 million you need by 65, on its own, assuming the long-run real return holds.

Why this is useful even if you do not coast

Most people who hit Coast FIRE do not actually stop saving. They keep contributing to their 401(k), keep the employer match, keep taking the tax break. The value of knowing your Coast FIRE number is that it gives you optionality.

If your job becomes intolerable and you want to take a pay cut to switch industries, knowing you have already hit Coast FIRE means you can take that pay cut without sabotaging retirement. If you want to take a sabbatical, start a business, or work part-time for a few years, Coast FIRE tells you whether you can do it.

The assumptions that matter

The number is only as good as the inputs.

• Real return rate. Coast FIRE math should always use the inflation-adjusted return, not the nominal one. 7 percent nominal minus 3 percent inflation gives you a 4 percent real return — not the 7 percent the spreadsheet wants you to use. Using nominal returns will dramatically understate the number you need today.
• Retirement target. The most common target is 25 times your expected annual spending in retirement (the "4 percent rule"). If you plan to spend $60,000 a year, your target is $1.5 million.
• Sequence risk. Coast FIRE assumes returns are smooth. They are not. A bad first decade of market returns can derail the whole plan, so it is worth re-running the number every few years.

Coast FIRE versus Full FIRE

Coast FIRE is the milestone where you can stop saving. Full FIRE is the milestone where you can stop working entirely — when your savings can support your spending without any additional income. The Coast FIRE number is always a fraction of the Full FIRE number, and it usually arrives a decade or more earlier.

How the number shrinks as you age

The most encouraging feature of Coast FIRE is how much smaller the required balance is when you are young. Because the number is your target divided by compounding over the years remaining, every additional decade of runway dramatically lowers what you need today. For a $1.5 million target at a 5 percent real return, a 25-year-old needs roughly $443,000, a 35-year-old needs roughly $347,000, a 45-year-old needs roughly $565,000, and a 55-year-old needs roughly $921,000. The earlier you front-load your saving, the less total money you ever have to set aside, because compounding does progressively more of the work the longer it runs.

Coast FIRE versus Barista FIRE

A close cousin of Coast FIRE is "Barista FIRE," where you stop saving and also cut back to part-time work that covers your current living expenses but adds nothing to retirement. The retirement math is identical — the existing balance coasts to the target on its own — but Barista FIRE also solves the question of health insurance and day-to-day cash flow during the coasting years, which pure Coast FIRE leaves open. Many people who reach their Coast FIRE number use it not to quit, but to justify a lower-stress, lower-paid role they would otherwise be afraid to take.

Our Coast FIRE Calculator finds your number based on your current age, retirement age, target nest egg, and assumed real return.