What is Coast FIRE? The Smart Path to Financial Freedom

If you've ever felt overwhelmed by the aggressive savings requirements of traditional FIRE (Financial Independence, Retire Early) strategies, Coast FIRE might be the perfect middle ground you've been looking for. This innovative approach to financial independence offers a more achievable path to long-term financial security without requiring you to save every penny or retire in your 30s.

Understanding Coast FIRE

Coast FIRE, short for Coast Financial Independence, is a strategic milestone within the broader FIRE movement. The concept is elegantly simple: save and invest aggressively early in your career until you reach a specific target amount. Once you hit this "coast number," you can essentially stop contributing to your retirement accounts and let compound growth do the heavy lifting for the remainder of your working years.

Think of it as front-loading your retirement savings. Instead of saving consistently for 40 years, you save intensively for perhaps 10-15 years, then "coast" through the rest of your career knowing your retirement is already secure.

How Coast FIRE Differs from Traditional FIRE

While traditional FIRE requires building a portfolio large enough to fund immediate retirement (often 25 times your annual expenses), Coast FIRE targets a smaller milestone. Here's the key difference:

• Traditional FIRE: Save until you can retire completely and live off your investments
• Coast FIRE: Save until your current investments will grow enough to fund retirement at a traditional age (65-67)

This distinction makes Coast FIRE significantly more accessible. You don't need to accumulate $2-3 million in your 30s. Instead, you might only need $300,000-500,000, depending on your age and retirement goals.

The Power of Compound Growth

Coast FIRE leverages the most powerful force in investing: compound growth over time. The younger you are when you reach your coast number, the less you need to save upfront. Here's why:

A 30-year-old who saves $400,000 and lets it grow at 7% annually will have approximately $2.1 million by age 65 – enough to support a comfortable retirement using the 4% withdrawal rule. That same person starting at 40 would need to save roughly $750,000 to achieve the same result.

This is why starting early matters tremendously with Coast FIRE strategies.

Calculating Your Coast FIRE Number

Determining your Coast FIRE number involves several key variables:

1. Your target retirement age (typically 65-67)
2. Expected annual expenses in retirement
3. Safe withdrawal rate (commonly 3-4%)
4. Expected investment returns (historically 6-8% before inflation)
5. Your current age

The basic formula works backward from your retirement needs:

1. Calculate your FI number: Annual Retirement Expenses ÷ Safe Withdrawal Rate
2. Determine years until retirement
3. Apply the compound interest formula: Coast FIRE Number = FI Number ÷ (1 + growth rate)^years

For those who prefer not to crunch numbers manually, tools like coastfirecalc.org can help you calculate your specific Coast FIRE target with just a few inputs.

Real-Life Example: The Coast FIRE Journey

Let's follow Sarah, a 32-year-old marketing manager:

• Current age: 32
• Planned retirement age: 67 (35 years to grow investments)
• Expected retirement expenses: $80,000 annually
• Safe withdrawal rate: 4%
• Expected investment growth: 7% annually

Sarah's calculations:

1. FI number needed at 67: $80,000 ÷ 0.04 = $2,000,000
2. Coast FIRE number at 32: $2,000,000 ÷ (1.07)^35 = $188,000

Once Sarah accumulates $188,000 in retirement investments, she can stop contributing entirely and focus her income on current living expenses while her investments grow to support her retirement.

Benefits of the Coast FIRE Strategy

Financial Flexibility

Reaching Coast FIRE provides tremendous peace of mind. You know your retirement is secure, which opens up career possibilities you might not have considered otherwise. Want to switch to a lower-paying but more fulfilling job? Go for it. Interested in starting your own business? The safety net is already in place.

Reduced Pressure

Unlike traditional FIRE, which often requires extreme frugality for decades, Coast FIRE allows you to ease up on aggressive saving once you hit your target. This can prevent burnout and help you enjoy your current life while still securing your future.

Work-Life Balance

Coast FIRE enables you to potentially reduce work hours, take career risks, or pursue passion projects without jeopardizing your retirement security. Some people use this freedom to transition into "barista" jobs or part-time consulting work.

Potential Challenges to Consider

Front-Loading Difficulty

Coast FIRE requires aggressive saving in the early years, which can be challenging when you're also dealing with student loans, home purchases, or starting a family. The strategy works best for high earners or those with relatively low expenses early in their careers.

Market Risk

Coast FIRE assumes your investments will grow at historical rates over decades. While this is reasonable based on past performance, market volatility could impact your timeline. Some people build in buffer amounts to account for this uncertainty.

Career Transition Challenges

Finding part-time or flexible work that still covers your living expenses can be difficult in some professions. It's worth researching opportunities in your field before committing to the Coast FIRE path.

Who Should Consider Coast FIRE?

Coast FIRE works particularly well for:

• Young professionals with high earning potential
• People in demanding careers who want eventual flexibility
• Those seeking financial security without extreme early retirement
• Individuals who find traditional FIRE too aggressive but still want financial independence

Getting Started with Coast FIRE

1. Calculate your numbers: Use tools like coastfirecalc.org to determine your specific Coast FIRE target
2. Assess your current situation: Review your income, expenses, and existing savings
3. Create a savings plan: Determine how much you need to save monthly to reach your coast number
4. Invest consistently: Focus on low-cost index funds in tax-advantaged accounts
5. Track your progress: Regular check-ins help ensure you stay on track

The Bottom Line

Coast FIRE represents a practical middle ground between traditional retirement planning and aggressive FIRE strategies. By front-loading your retirement savings, you can achieve financial security earlier in life while maintaining the flexibility to pursue meaningful work and life experiences.

The strategy isn't right for everyone, but for those who can commit to aggressive early saving, Coast FIRE offers a compelling path to long-term financial freedom. It transforms the question from "How can I save enough to retire at 35?" to "How can I secure my retirement by 40 so I can live more freely afterward?"

Whether you're just starting your career or looking to optimize your current financial strategy, Coast FIRE deserves serious consideration as a achievable approach to financial independence. The key is starting early, staying consistent, and letting the power of compound growth work in your favor.

Ready to calculate your Coast FIRE number? Visit coastfirecalc.org to get started with a personalized calculation based on your unique situation.