What is Coast FIRE? A Balanced Way to Retire (With Video)

Ever wondered how you could achieve financial freedom without waiting until you’re 65? Or how you could work less now, but still retire comfortably later? That’s exactly the kind of balance Coast FIRE offers. 

Unlike traditional financial independence plans that demand strict savings and intense frugality, Coast FIRE invites you to save with intention early on, then let compound interest carry you the rest of the way.

It’s a lifestyle choice that gives you financial security and more freedom to live the way you want right now.

Imagine building up your investments just enough so they can grow on autopilot. With Coast FIRE, you don’t need to add more to your retirement fund every month because your initial savings are working hard for you.

It’s about finding that “coasting” point, where you can sit back and relax a bit, knowing your money is moving you toward retirement.

Coast FIRE is not the strategy I did. I fully retired. But I can see the appeal of Coast FIRE.

Coast FIRE 101: What’s It All About?

Coast FIRE is like planting a financial seed early. Once it’s strong enough, it doesn’t need much tending, you’re free to enjoy the present, pursue new passions, or scale back on work if you like. Here’s the idea:

Early Savings Focus

Rather than saving aggressively throughout your life, Coast FIRE emphasizes saving early on, ideally in your 20s or 30s, though it’s never too late to start.

Compound Interest at Work

By building a substantial nest egg early, you let compound interest (the “snowball” effect of growing your money) do the heavy lifting, so your investments grow exponentially over time.

Reduced Savings Later

When you’ve reached your Coast FIRE number, you can pause or reduce contributions to retirement accounts without worrying about your future. Your investments will continue growing, ultimately meeting your retirement needs.

It’s a flexible, middle-ground strategy, balancing security and freedom. Instead of pushing yourself to the edge of frugality, Coast FIRE lets you build stability while enjoying the journey.

How to Calculate Your Coast FIRE Number

Determining your Coast FIRE number is all about setting yourself up early so you can “coast” the rest of the way. Here’s how to calculate it step by step, with an example to make things clearer.

1. Set Your Retirement Goal
   • First, estimate how much you’ll need for retirement. Think about the lifestyle you want and the possible costs. For some, a target of $1 million might feel safe; for others, it might be more or less.
   • For instance, if you estimate needing $40,000 per year in retirement and expect to live 25 years post-retirement, a general target of $1 million makes sense ($40,000 x 25 years). Consider your own lifestyle, location, health needs, and if you’ll need more for things like travel, hobbies, or healthcare.

2. Estimate Annual Investment Growth
   • Assume an average return of 6-8% on your investments, factoring in a mix of stocks, bonds, and other assets. Although this rate isn’t guaranteed (and markets fluctuate), it gives a reasonable benchmark for projecting your Coast FIRE number.
   • For example, let’s say you’re 30 years old and want to retire by 65. With 35 years ahead, investing $150,000 today with a 7% annual return could potentially grow to $1 million by retirement, without additional contributions. This growth relies on compound interest, which means the more time you allow, the less you’ll need to contribute.
3. Determine Years Until Retirement
   • Next, decide when you’d like to retire. The younger you are, the more time your investments have to grow, giving compound interest more room to work its magic.
   • Let’s say you’re 40 and want to retire at 65. That’s 25 years for your investments to grow, which may require a larger initial investment to hit your goal compared to someone who starts earlier. But the beauty of Coast FIRE is flexibility: you might decide to shift to part-time work, freelance, or explore new interests without strict retirement rules.
4. Calculate Your Current Savings
   • Finally, tally up your current assets, including retirement accounts, real estate equity, and other investments. These contribute to your Coast FIRE base. Tools like Vanguard’s retirement planner or FIRECalc help you project future values, showing if you’re on track or need to save a bit more.

Using these steps, Coast FIRE helps you pinpoint when you can ease off intense saving while still being on a secure path toward retirement.

Coast FIRE Formula Example

Here’s a simplified formula to estimate if you’re ready to coast:

Future Value = Current Savings × (1+Annual Growth Rate) Years Until Retirement 

For instance, if you have $200,000 saved now, and your goal is to reach $1 million by retirement with 25 years ahead at an average 7% growth rate, this formula will project if your savings will meet that target on their own.

Coast FIRE Compared to Other FIRE Strategies

Coast FIRE isn’t a “one-size-fits-all.” To understand it fully, it helps to see how it compares to other FIRE approaches. Here’s a snapshot of each to show where Coast FIRE fits in and why it might be your ideal path. For more depth, my article on FIRE strategies offers a full rundown.

Each path offers different pros and cons, appealing to different lifestyles. Traditional FIRE requires high savings, whereas Lean FIRE suits those who prefer a low-expense lifestyle.

Coast FIRE strikes a middle ground: you don’t need to give up lifestyle quality or work intensely forever.

Once you’ve hit your Coast FIRE number, you can pursue part-time work, hobbies, or a lower-stress career path while knowing your investments will support your retirement.

Related: Light Your FIRE: Financial Independence Retire Early Strategies Explained

The Pros and Cons of Coast FIRE

Coast FIRE can be an appealing option for those seeking financial independence without a strict, high-savings lifestyle.

While it has plenty of benefits, like reduced work pressure and increased flexibility, it also comes with some challenges to consider. Here’s a closer look at the pros and cons of this strategy.

Pros of Coast FIRE

1. Flexibility and Freedom
   One of the standout benefits of Coast FIRE is the freedom it offers. By focusing on saving early, you’re able to reduce your work hours or take a lower-stress job without financial worry. This flexibility allows you to pivot towards work that fulfills you personally, even if it doesn’t offer a high salary.
2. Reduced Burnout
   Since Coast FIRE removes the need for aggressive saving as you near retirement, it can relieve the pressure that comes with demanding jobs or rigid savings goals. Instead of grinding toward financial independence, you can take a slower pace, balancing financial security with a more relaxed, enjoyable life.
3. More Time with Family and Passions
   Many people pursuing Coast FIRE find that stepping back from work commitments allows for more time with family, hobbies, and other interests. This strategy makes it easier to prioritize life experiences over work, which can be deeply rewarding, especially as family or personal interests evolve over time.
4. Balanced Approach to Saving and Spending
   Coast FIRE is more sustainable than some other FIRE paths, as it doesn’t require extreme frugality. With a Coast FIRE plan, you can save in a way that still allows for enjoyment and fulfillment today, rather than delaying all pleasures until retirement.

Cons of Coast FIRE

1. Early Discipline is Required
   Coast FIRE demands significant discipline early on. Building up the initial savings base is key to coasting later, so it requires intentional spending and regular contributions in the initial stages. For some, it may feel restrictive to delay lifestyle upgrades while peers might be splurging.
2. Market Risk
   Since Coast FIRE relies on investments to grow without additional contributions, market downturns can impact the plan. Relying on compounding means your savings must be wisely invested and diversified to reduce risk, especially in volatile markets. Regular portfolio monitoring is essential to ensure your Coast FIRE number stays on track.
3. Purpose and Motivation Without Financial Pressure
   When financial necessity is no longer the primary reason to work, staying motivated can be challenging. Some may find it difficult to maintain a sense of purpose without a pressing financial goal, so it’s important to find meaningful pursuits, such as hobbies, volunteer work, or part-time employment. 
4. Longer Time Horizon
   Coast FIRE assumes a longer investment growth period, meaning it might not suit those looking for early retirement in the traditional sense. For Coast FIRE to work, you’ll need time for your investments to mature, which may not appeal to those who wish to stop working entirely within a decade or two.

Coast FIRE is ideal for those who value balance and want financial security without sacrificing today’s happiness.

It’s especially fitting for people willing to save strategically upfront and who feel comfortable navigating investment risks.

While it requires early discipline, Coast FIRE offers the reward of a more flexible, fulfilling work-life balance as you get closer to retirement.

Addressing Common Misconceptions about Coast FIRE

Many people think Coast FIRE is only for high-income earners or extreme savers. In reality, it’s achievable for anyone willing to save consistently early on, allowing their investments time to grow. Here are a few common myths:

Myth: Coast FIRE requires high income.

Reality: It’s about maximizing savings in your early years. Small, regular contributions add up, especially when combined with compound growth.

Myth: You need to give up fun and comfort to save enough.

Reality: Coast FIRE encourages balanced saving without extreme frugality. It’s more sustainable than ultra-restrictive budgets, giving you room to enjoy the present while planning for the future.

Myth: Coast FIRE is only for people who start saving in their 20s.

Reality: While starting early is ideal, it’s never too late. The key is to build a strong savings base as soon as possible, letting compound interest work over time.

Myth: Coast FIRE means you’ll never work again.

Reality: Coast FIRE actually supports flexible, fulfilling work. It lets you continue working on your terms, including part-time work, transitioning to a new career, or focusing on a passion project, all without the burden of financial pressure.

Practical Tips to Get Started on Your Coast FIRE Journey

Coast FIRE’s flexibility is one of its greatest advantages. No matter if you are just starting out or are already midway through your career, here are some actionable tips to help you achieve Coast FIRE.

1) Start Saving Early and Consistently

The earlier you start, the easier it is to reach Coast FIRE. Automate contributions to retirement and investment accounts, ensuring you save before spending. Small, consistent contributions will grow significantly over time.

2) Diversify Your Investments

A diverse portfolio spreads out risk and smooths out returns. Combine stocks, bonds, and real estate to create a balanced mix that can weather market changes. Target-date funds and index funds provide good options for easy diversification.

3) Balance Accessibility and Growth

While retirement accounts offer tax benefits, consider putting some money into non-retirement investments for more accessibility. This flexibility lets you make career changes, explore new interests, or take breaks as needed.

4) Minimize Lifestyle Inflation

Lifestyle inflation, spending more as you earn more, can derail savings goals. Be mindful of expenses and prioritize experiences over material items. Avoid unnecessary debt and focus on what truly adds value to your life.

What Is Coast FIRE (VIDEO)

I also made this video explaining what is Coast FIRE.

Ready to Begin Your Coast FIRE Journey?

Coast FIRE isn’t just a financial goal; it’s a lifestyle shift. If you’re eager for financial freedom but don’t want to sacrifice years of your life to rigid saving, Coast FIRE might be your path.

Remember, the journey is about balancing today’s happiness with tomorrow’s security.

Ready to begin? Calculate your Coast FIRE number, automate savings, and embrace the journey to a financially secure and fulfilling life.

Financial independence is not only about a far-off destination, it’s a journey that allows you to live fully, right here, right now.

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