Coast FIRE is the point where you have enough invested that compounding alone will reach your retirement target, without another dollar going in. You keep working, but only to cover this year's spending. Nothing more has to be saved.
It is the only version of financial independence that arrives while you are still in your thirties for most people who get there, because the number is not what you need to retire. It is what you need today so that the market does the rest of the work over the next thirty years.
The formula
Coast number = FI number ÷ (1 + r)n
Three inputs, and each one is a decision.
The FI number is annual retirement spending multiplied by the reciprocal of your withdrawal rate. At 4% that is 25 times spending. On $60,000 a year it is $1,500,000. The 4% rule article covers why that multiple moves to 28 or 30 times for a long retirement.
r is the annual return you assume, and it has to be a real return. More on that below, because it is where most Coast FIRE calculators quietly go wrong.
n is the number of years between now and the age you actually intend to stop working. Coast FIRE at 65 and Coast FIRE at 55 are different numbers by a factor of about 1.6.
Use a real return, not a nominal one
If you set your FI number in today's money, which everybody does, then you must discount it using a return with inflation already removed. Otherwise you have counted inflation once in the target and never in the growth, and the answer comes out too small.
US equities have returned roughly 10% a year nominally over the long run against inflation of about 3%, which is a real return near 7% for a portfolio held entirely in shares. A mixed portfolio returns less. Using 5% real for a diversified portfolio is a reasonable working figure, and 4% is the conservative one.
The mistake to avoid is entering 10% because that is the number people quote. On a forty-year horizon, discounting $1,500,000 at 10% instead of 5% gives a Coast number of $33,000 rather than $213,000. That is not a rounding error. It is the difference between having arrived and having barely started.
Coast numbers by age
Both columns target $1,500,000 in today's money at age 65, which funds $60,000 a year at a 4% withdrawal rate. The only difference between them is the assumed real return.
| Age now | Years to 65 | At 5% real | At 4% real |
|---|---|---|---|
| 25 | 40 | $213,100 | $312,400 |
| 30 | 35 | $271,900 | $380,100 |
| 35 | 30 | $347,100 | $462,500 |
| 40 | 25 | $442,900 | $562,700 |
| 45 | 20 | $565,300 | $684,600 |
| 50 | 15 | $721,500 | $832,900 |
| 55 | 10 | $920,900 | $1,013,300 |
| 60 | 5 | $1,175,300 | $1,232,800 |
A 25-year-old needs $213,100 and a 35-year-old needs $347,100 for the same retirement. Ten years of delay costs $134,000 of required capital, and that gap is pure compounding, not extra saving.
The two columns converge as the horizon shortens. At 25 the choice of return assumption moves the answer by $99,300. At 60 it moves it by $57,500 on a much larger base. Assumption risk is front-loaded in the same way compounding is, so the younger you are, the less certain your Coast number is.
Scale the table to your own target by multiplying. If your FI number is $2,000,000 rather than $1,500,000, multiply every figure by 1.333. If you plan to stop at 60 rather than 65, use the row five years older than you are.
Coast FIRE, Barista FIRE and FIRE are three different things
| What you have | What you still need from work | |
|---|---|---|
| Coast FIRE | Enough invested to reach the target by compounding alone | Full current living costs. No saving. |
| Barista FIRE | Enough to cover part of current spending from the portfolio | The remainder, plus usually health insurance |
| FIRE | The full target, 25 to 30 times spending | Nothing |
Coast FIRE is the least demanding of the three and the one most people reach first. It does not reduce the income you need this year by a single dollar. What it removes is the savings rate, which for someone saving 30% of their pay is the difference between needing a $100,000 job and needing a $70,000 one.
The prize is a career one rather than a financial one. It buys the option to take the interesting job, the shorter week, the role at the smaller company, or the year out. If you want the arithmetic on what your current job pays once commuting, childcare and unpaid hours are counted, the real hourly wage article is the companion to this one.
Stopping at the employer match is almost always wrong
The moment you hit your Coast number, the temptation is to stop contributing entirely. If your employer matches, doing that forfeits the match.
A 50% match on the first 6% of salary is an immediate 50% return on that money, before it has been invested in anything. There is no market assumption that competes with it. On an $80,000 salary, contributing 6% costs $4,800 and collects $2,400, and skipping it to free up $400 a month of spending is buying $400 for $200.
Coast on everything above the match and keep contributing to the match itself. Details of how matches are structured, including the ones that only true up at year end, are in the 401(k) true-up article and what counts as a good match.
Coasting raises your tax bill
Traditional 401(k) contributions come out before tax. Stopping them does not hand you the full contribution as spending money, because that income is now taxable.
Someone in the 22% federal bracket who stops contributing $12,000 a year gains $12,000 of gross income and roughly $9,360 after federal tax, less again after state tax. The freed-up cash is about three quarters of what the contribution line says.
This cuts both ways in the plan. It means coasting frees up less than expected, and it means the salary you need to cover your spending is higher than a simple spending-minus-contributions sum suggests. Work the number from take-home pay, not gross.
The number moves every year
The Coast number is computed from today's balance and an assumed return. Both move.
A 30% market fall the year after you stop contributing does not just reduce the balance by 30%. It puts you back below the line, and because you are no longer contributing, the only thing that can recover it is the market. Someone still saving through that fall is buying at lower prices. Someone coasting is not.
Three things follow from that.
Check the number annually. Recompute the balance against a target that is one year closer. It takes two minutes.
Build in a margin. Coasting at exactly 100% of the number leaves no room for the return assumption being wrong. Coasting at 120% does, and the extra year or two of saving that buys it is cheap insurance against a decade of undershoot.
Keep the ability to start again. The failure mode is not the market fall. It is having restructured your life around a lower income so completely that resuming contributions is impossible. Coasting is reversible only if you keep it reversible.
The site covers how bear markets are defined and how long they last and what to do when a 401(k) is down.
What the freed-up money buys
Coasting does not have to mean spending everything you stop saving. Four uses, roughly in order of how often they are the right answer.
Reducing hours rather than income. Four days a week at 80% pay, with the 20% coming from what used to be the savings rate. This is the version that changes daily life most and the balance sheet least.
A taxable bridge account. If you intend to retire before 59½, money in a 401(k) is not available without navigating the early withdrawal rules. Coasting on retirement accounts while funding a taxable account instead converts an untouchable balance into a usable one.
Clearing debt. A 7% mortgage is a guaranteed 7% return. It beats the 5% real assumption in the table above with no variance at all.
Spending it. The argument for this is made properly in Die With Zero, and the short version is that a portfolio which will reach its target regardless is a portfolio with surplus, and surplus spent at 35 buys experiences that the same money at 70 cannot.
Frequently asked questions
What is a Coast FIRE number?
The amount invested today that will grow to your retirement target by your chosen retirement age with no further contributions. It is your FI number divided by (1 + real return) raised to the number of years remaining.
How much do I need for Coast FIRE at 30?
About $271,900 if you want $1,500,000 by 65 at a 5% real return, or $380,100 at 4%. Multiply those by your own target divided by $1,500,000. Someone aiming for $2,000,000 needs about $362,500 at 5%.
What return should I use for a Coast FIRE calculation?
A real return, meaning after inflation, because your target is in today's money. 5% is a reasonable figure for a diversified portfolio and 4% is the conservative one. Using a 10% nominal figure understates the number you need by a factor of about six over forty years.
Should I stop contributing to my 401(k) once I hit Coast FIRE?
Not below the employer match. A 50% match is an instant 50% return that no market assumption competes with. Coast on contributions above the match instead.
What is the difference between Coast FIRE and Barista FIRE?
Coast FIRE means you no longer save but still cover all your current spending from work. Barista FIRE means the portfolio covers part of your current spending, so you work fewer hours or take a lower-paid role, often specifically for the health insurance.
What happens to Coast FIRE if the market crashes?
You are no longer coasting. The number is a function of today's balance, so a fall puts you below it, and with contributions stopped only market recovery can fix it. This is the argument for coasting at 120% of the number rather than 100%, and for checking it once a year.
Does Coast FIRE include my house?
No. The formula compounds invested assets into a portfolio that funds spending through withdrawals. A house you live in produces no withdrawals. It affects the other side of the calculation instead, because owning it outright by retirement lowers the spending your FI number has to cover.