Coast Fire

Coast FIRE: Work Less Now, Retire Later (The Math)

Most FIRE conversations center on a single question: how fast can you accumulate enough to stop working? Coast FIRE asks a different question: how much do you need saved right now, such that if you never invested another dollar, your portfolio would grow on its own to fund a conventional retirement at a normal age?

The answer to that question is often smaller than people expect. And reaching it changes the math on everything that follows.

WHAT COAST FIRE MEANS

Coast FIRE is the point at which your existing invested assets, left untouched and growing at an assumed real rate of return, will compound to your target retirement number by a defined future date—without any additional contributions.

Once you've reached your Coast FIRE number, you've "earned the right to coast." You still need to work—you need income to cover current living expenses—but you no longer need to aggressively save and invest. You can reduce your hours, take a lower-paying job you enjoy more, work part-time, or pursue work with non-financial value (creative projects, caregiving, lower-stress employment) without sacrificing your retirement outcome.

THE FORMULA

Coast FIRE number = Target retirement portfolio / (1 + r)^n

Where: - Target retirement portfolio is the amount needed to fund retirement (commonly calculated as annual expenses / 0.04, using the 4% withdrawal rule) - r is your assumed annual real rate of return (commonly 5% to 7% real, after inflation)

- n is the number of years until your target retirement age

A concrete example: You plan to retire at 65. You're 35 now—30 years away. You estimate you'll need $1,500,000 in today's dollars to retire (spending $60,000 per year at a 4% withdrawal rate).

Using a 6% real return assumption:

Coast FIRE number = $1,500,000 / (1.06)^30 = $1,500,000 / 5.74 = approximately $261,000

At 35 years old, if you have $261,000 invested, you never need to contribute another dollar. That money, growing at 6% real annually for 30 years, becomes $1,500,000 by age 65 without any further input.

That $261,000 is your Coast FIRE number. Everything you earn beyond covering living expenses after reaching it is discretionary—no longer obligated to retirement.

WHY THE NUMBER CHANGES DRAMATICALLY WITH AGE

The power of Coast FIRE is entirely in compounding time. The earlier you reach your Coast FIRE number, the smaller that number needs to be. This relationship is not linear—it's exponential.

Same scenario ($1,500,000 target, 6% real return):

- Coast at age 25 (40 years to compound): $1,500,000 / (1.06)^40 = approximately $146,000 - Coast at age 30 (35 years): approximately $195,000

- Coast at age 35 (30 years): approximately $261,000

- Coast at age 40 (25 years): approximately $349,000 - Coast at age 45 (20 years): approximately $468,000

- Coast at age 50 (15 years): approximately $626,000

Each decade of delay roughly doubles the Coast FIRE number required. A 25-year-old needs to reach $146,000. A 45-year-old needs $468,000—more than three times as much—to achieve the same outcome.

This dynamic makes early aggressive saving especially impactful. The goal is not to save forever; it's to accumulate enough early enough that compounding does the heavy lifting.

HOW TO CALCULATE YOUR NUMBER

Step 1: Estimate your annual retirement spending in today's dollars. Be honest and specific—account for housing, healthcare, travel, and lifestyle. Many people underestimate by omitting healthcare costs and leisure spending.

Step 2: Divide by 0.04 (or 0.033 for a more conservative 3.33% withdrawal rate) to get your target portfolio.

Step 3: Determine your target retirement age.

Step 4: Calculate years remaining from today to that age.

Step 5: Apply the formula: divide your target portfolio by (1 + assumed real return) raised to the power of years remaining.

Online Coast FIRE calculators—available at sites like walletburst.com and engaging-data.com—allow you to test different return assumptions and retirement ages interactively. Running multiple scenarios (5% vs. 7% real return, age 60 vs. 65 retirement) shows how sensitive your Coast FIRE number is to your inputs.

THE RETURN ASSUMPTION MATTERS

The rate of return assumption is the most consequential variable in the calculation, and it deserves scrutiny.

Using 7% real (roughly the historical U.S. stock market real return over long periods) produces the smallest, most optimistic Coast FIRE number. Using 5% real produces a larger, more conservative number. The gap between these assumptions, compounded over 30 years, is substantial.

For a $1,500,000 target at age 35, with 30 years to retirement:

- At 7% real: Coast FIRE number = approximately $197,000 - At 6% real: approximately $261,000 - At 5% real: approximately $347,000

The difference between a 5% and 7% assumption is $150,000 in the required Coast FIRE number. Most people planning in their 30s are likely to experience a mix of these returns. Using 6% real as a base case, with a 5% scenario as a stress test, is reasonable.

WHAT COASTING ACTUALLY LOOKS LIKE

Reaching Coast FIRE doesn't change your income requirements—it changes your income flexibility. You still need to earn enough to pay for housing, food, healthcare, and other current expenses. What it removes is the pressure to maximize income and savings rate specifically to fund retirement.

Common post-Coast patterns:

- Transitioning from a high-stress, high-income job to a lower-paying role that's more sustainable or fulfilling

- Reducing to part-time work

- Starting a small business or freelance practice that covers expenses without a high income ceiling - Taking extended time off between roles without financial anxiety about retirement

The behavioral shift is the real benefit. Many people in high-earning careers feel unable to slow down because every year of reduced income feels like it costs them retirement security. Coast FIRE quantifies the point at which that pressure legitimately goes away.

A WORD ON SEQUENCE RISK DURING THE COAST PERIOD

Coast FIRE assumes your portfolio grows uninterrupted at an average rate. In practice, markets move up and down, and a significant downturn in the years immediately following your Coast FIRE date could delay the compounding trajectory.

This risk is mitigated by the coasting period itself. Because you are not drawing from the portfolio during the working years after reaching Coast FIRE, market downturns during that period are recoveries waiting to happen—not losses locked in by withdrawals. Dollar-cost averaging through volatility with contributions helps; in Coast FIRE, volatility during the accumulation-to-compounding transition is absorbed by a long runway.

The greater risk is coasting too early with too aggressive a return assumption, then experiencing a decade of below-average returns in the critical compounding window. Stress-testing your number with a 4% to 5% real return assumption, rather than the historical average, builds in a buffer for this scenario.

Coast FIRE is a permission structure. The math tells you when you've done enough investing. What you do with that permission is the more interesting question.