What is Coast FIRE? Meaning, formula and a worked example

Coast FIRE is one of the most searched ideas in the financial-independence world right now. Rising Trends, a search-trend tracker, lists “coast fire calculator” among the fastest-growing personal-finance searches of 2026. The appeal is easy to see: instead of chasing one enormous number, Coast FIRE asks a gentler question — have I already saved enough that time can finish the job? This guide explains the idea in plain English, shows the formula, works through an example with real arithmetic, and lists the assumptions you should test before relying on it.

The short definition

FIRE stands for financial independence, retire early. Being financially independent means your investments could pay your living costs indefinitely, so work becomes optional. The investment total that achieves this is usually called your FIRE number.

Coast FIRE is a milestone on the way there. You have reached Coast FIRE when the money you have already invested would grow into your full FIRE number by your chosen retirement age without any further contributions. From that point, in this simplified model, you only need to earn enough to cover today’s bills. You could take a lower-paid job you enjoy, work fewer hours, or simply stop worrying about whether you are saving enough for retirement.

Coast FIRE does not mean you can stop working. It means you can stop saving for retirement, on the assumptions you chose. That distinction matters, and it is the most common misunderstanding of the term.

The formula

There are three steps, and each one is simple arithmetic.

1. Spending the portfolio must cover. Take your expected annual spending in retirement, in today’s dollars, and subtract any other reliable income such as a pension or Social Security, also in today’s dollars.
2. FIRE number. Divide that spending by your withdrawal rate. At a 4% withdrawal rate you multiply by 25; at 3.5% by about 28.6.
3. Coast FIRE number. Discount the FIRE number back to today: FIRE number ÷ (1 + real return)^{years until retirement}.

The “real return” is the growth rate after inflation. Because the spending figure is in today’s dollars, the growth rate must be too. Mixing a nominal return with today’s-dollar spending is the single biggest error in home-made Coast FIRE spreadsheets; our guide to real and nominal returns explains why.

A worked example

Alex is 35 and would like the option to retire at 65. Alex currently spends about $40,000 a year and expects similar spending in retirement, in today’s money. Alex chooses a 4% withdrawal rate and wants to test a 5% real return.

• Spending the portfolio must cover: $40,000 (Alex leaves Social Security out to be conservative).
• FIRE number: $40,000 ÷ 0.04 = $1,000,000.
• Years until retirement: 65 − 35 = 30.
• Growth factor: 1.05³⁰ ≈ 4.322.
• Coast FIRE number: $1,000,000 ÷ 4.322 ≈ $231,377.

If Alex has $250,000 invested for retirement, Alex is about $18,600 past the Coast FIRE number on these assumptions. With no new money, $250,000 growing at 5% real for 30 years would reach roughly $1,080,000 in today’s dollars. You can reproduce these figures with the Coast FIRE calculator.

Now change one assumption. At a 3% real return, the Coast FIRE number for the same $1,000,000 target is about $411,987. At 7% it is about $131,367. Alex is comfortably past Coast FIRE at 5% or 7% and well short at 3%. That spread is the honest answer: Coast FIRE is not a single number but a range that depends on what markets do.

How Coast FIRE compares with other FIRE labels

Label	What it describes	Do you still earn income?
Full FIRE	Portfolio covers all spending now	Optional
Coast FIRE	Portfolio will grow to full FIRE by a later age without new contributions	Yes, enough to cover current spending
Barista FIRE	Portfolio covers part of spending now; part-time work covers the rest	Yes, part-time
Lean FIRE	Full FIRE on a frugal budget	Optional
Fat FIRE	Full FIRE on a generous budget	Optional

These are informal community labels, not technical terms. The comparison guide covers them in more depth.

Why people find Coast FIRE useful

For many people a seven-figure FIRE number feels unreachable. Coast FIRE breaks the problem into a nearer goal. Someone in their late twenties or thirties who saved hard early may discover they are much closer to coasting than to full independence, and that knowledge can change decisions: switching to a lower-stress job, taking a career break, starting a business, or working part-time while children are young.

It also highlights the power of time. Money invested at 30 has 35 years to compound before 65; money invested at 55 has 10. In the Coast FIRE formula that shows up as a much smaller target for younger people. Our Coast FIRE number by age table makes this concrete.

The risks the simple model leaves out

Returns are not constant. The formula assumes the same real return every year. Real markets deliver strong years and losing years. A fall shortly after you stop contributing can set you back, and you will not know whether you “really” coasted until much later. A margin of safety — a lower return assumption, or continuing small contributions — helps.

Spending can change. Children, housing, health and lifestyle all move retirement spending. The figure you enter today is a guess.

Taxes and fees. Withdrawals from traditional 401(k) and IRA accounts are generally taxable, and fund fees reduce returns. Include expected taxes in spending or lower the return.

Access rules. Much retirement money sits in accounts with rules about withdrawals before age 59½. The IRS describes a 10% additional tax on many early distributions, with exceptions. See our early-access guide if you plan to retire before then.

Health insurance. Medicare eligibility generally starts at 65. If you plan to retire earlier, you need to budget for coverage; read the health insurance guide.

How to use Coast FIRE sensibly

1. Calculate your Coast FIRE number at three returns, such as 3%, 5% and 7% real.
2. Count only money meant for retirement — not your emergency fund or house deposit.
3. Recheck every year with your actual balance. If markets fell, you may need to resume contributions for a while.
4. Consider keeping some contributions going, especially any employer match, which is part of your pay.
5. For a personalised plan, a fee-only fiduciary adviser can model taxes, Social Security timing and sequence risk.

Bottom line

Coast FIRE is a helpful way to see how far compounding can carry the savings you already have. The arithmetic is simple — FIRE number divided by growth over the years remaining — but the result is only as good as your assumptions. Use it to make better-informed choices, not as a guarantee. This guide is educational and is not investment advice.