What It Means
Coast FIREFIRE movementA personal finance approach, short for financial independence, retire early, built on saving a large share of income so that work becomes optional early. See more is a style of the FIRE (financial independenceFinancial independenceHaving enough savings, investments or other income to cover your living costs without needing a paycheck from a job. See more, retire early) movement where you save enough early on that your investments, left alone to grow, could reach your retirement goal by a later age with little or no more saving. From that point your paycheck only has to cover today's costs. Charles Schwab notes this can give you room to change jobs, work fewer hours or ease off heavy saving. Whether the balance really gets there depends on returns nobody can promise.
Try It: Check Whether Your Savings Could Coast
The growth rates are examples after inflation, so the goal stays in today's dollars. Real returns vary from year to year and aren't guaranteed.
At this example rate, today's balance could grow to the goal without new contributions.
Not there yet at this example rate. You'd need about more invested today.
How It Sounds at Home
- "I hit coast FIRE, so now I only need to cover my bills."
- "Once we're coasting, I'm going part time."
- "Our coast number looks very different at 3% than at 5%."
The Breakdown
Formula
Coast number = retirement goal ÷ (1 + yearly growth rate) raised to the number of years until you retire.
Worked example. Jordan is 35, wants to retire at 60 (25 years away) with $1,000,000 in today's dollars, and has $150,000 invested for retirement. Growth rates here are examples after inflationInflationA general rise in the prices of goods and services over time, so the same amount of money buys less than it did before. See more.
| Example growth rate | Coast number needed today | What $150,000 could grow to |
|---|---|---|
| 3% | $477,606 | $314,067 |
| 4% | $375,117 | $399,875 |
| 5% | $295,303 | $507,953 |
What the result means. At none of these rates has Jordan reached coast FIRE yet, since $150,000 is below every coast number in the table. The table also shows how sensitive the idea is: two percentage points of growth move the coast number by more than $180,000. If your plan only works at the highest rate, run it at the lower ones as well, and consider keeping some saving going as a cushion.
Good to Know
Coasting stops new saving, and the growth still has to happen. Charles Schwab's FIRE guide lists market downturns and rising costs among the risks, and a weak stretch early on leaves less time for the balance to recover. If your retirement goal falls before age 59½ and the money sits in a 401(k)401(k)A retirement plan run through an employer that lets you put part of each paycheck into investments, before tax or as Roth, up to a yearly IRS limit. See more or IRATraditional IRAAn individual retirement account where contributions may be tax-deductible, growth is tax-deferred, and withdrawals are taxed as income. See more, the IRS generally adds a 1010,000 stepsA popular daily step goal that began as the name of a 1960s Japanese pedometer; later studies find health benefits begin well below it. See more% tax on the taxable part of early withdrawals unless an exception applies. Rechecking your coast number once a year with your real balance shows whether you're still on track.
FAQ
What is coast FIRE?
A style of the FIRE movement where you save enough early that your investments could grow to your retirement goal without much more saving. Charles Schwab notes it can give you flexibility to change jobs, cut your hours or pause heavy saving.
How do I calculate my coast FIRE number?
Divide your retirement goal by (1 + the yearly growth rate) raised to the number of years until you retire. With a $1,000,000 goal, 25 years and an example growth rate of 4% after inflation, that's about $375,117.
Can I stop saving for retirement once I hit coast FIRE?
The idea allows it, but the math rests on a growth rate nobody can promise. Keeping a smaller contribution going gives you a cushion if returns come in low, and rechecking each year shows whether the plan still holds.
Do It in Buhata
Goals
Set your retirement goal as a Goal in Buhata, a Plus tool, and update the invested balance once a year so you can see whether you're still on course to coast.
Open BuhataRelated Terms and Categories
- FIRE movement
A personal finance approach, short for financial independence, retire early, built on saving a large share of income so that work becomes optional early.
- Financial independence
Having enough savings, investments or other income to cover your living costs without needing a paycheck from a job.
- Compound interest
Interest paid on your original amount and on the interest it has already earned, so each year's interest is a little bigger than the last.
- Barista FIRE
A FIRE style where you leave full-time work once savings cover part of your costs, and part-time work or a side business pays for the rest.
- 401(k)
A retirement plan run through an employer that lets you put part of each paycheck into investments, before tax or as Roth, up to a yearly IRS limit.
Sources
Charles Schwab, "What Is the FIRE Movement? Financial Independence, Retire Early"; Internal Revenue Service, "Topic no. 558, Additional tax on early distributions from retirement plans other than IRAs"; IRS, "Topic no. 557, Additional tax on early distributions from traditional and Roth IRAs"
Last updated .