Coast FIRE Strategy: How Much You Need Before Compounding Takes Over

Coast FIRE means you've saved enough that compound interest alone will grow your portfolio to your full retirement target by a traditional retirement age (e.g., 60 or 65). Once you reach Coast FIRE, you only need to earn enough to cover current living expenses — no more retirement contributions required.

This differs from full FIRE (Financial Independence, Retire Early) because you're not quitting work entirely. Instead, you gain the freedom to pursue lower-paying but more fulfilling work, reduce hours, or eliminate financial stress.

The Coast FIRE formula is:

Coast FIRE Number = Retirement Target ÷ (1 + r)^n

Where:

• Retirement Target = annual expenses × 25 (based on the 4% rule)
• r = expected annual real return (typically 5-7%)
• n = years until traditional retirement age

Example: If you need $1.5M to retire and have 30 years, with a 7% real return: $1,500,000 ÷ (1.07)^30 = $197,000. Once your portfolio hits ~$197K, you've reached Coast FIRE.

Coast FIRE relies on several key assumptions:

1. Market returns average 7% real (after inflation) over long periods
2. You don't touch the invested money before retirement
3. Your retirement spending target doesn't drastically increase
4. Inflation is accounted for by using real returns

The biggest risk is a prolonged bear market early in the coasting phase, which could delay when compounding reaches your target. Using a more conservative return assumption (5-6%) adds a safety margin.

Coast FIRE is most powerful when you're young because time amplifies compounding. A 25-year-old who hits their Coast FIRE number has 35-40 years of growth ahead.

It's ideal for:

• People experiencing burnout who want to downshift careers
• Those who enjoy working but want to remove financial pressure
• Parents who want to work part-time while kids are young
• Anyone who values lifestyle flexibility over early retirement

The younger you reach Coast FIRE, the more conservative your number can be because time compensates for lower savings amounts.