Coast FIRE, explained with a real calculation

Coast FIRE is the savings balance that, left alone and compounding at a reasonable real return, grows into your full retirement number by your target retirement age without another dollar contributed.

The idea sits inside the broader FIRE movement (Financial Independence, Retire Early), which traces its modern shape to Vicki Robin and Joe Dominguez's 1992 book Your Money or Your Life and Peter Adeney's Mr. Money Mustache blog launched in 2011. Coast FIRE is the variation where you save hard early, hit a number, then stop contributing and let compounding finish the job. You still work. You still earn. You just stop force-feeding the retirement account.

The Coast FIRE formula

Two ingredients. A target retirement number, and the compound interest formula.

The target number comes from the 4% safe withdrawal rate, originally derived by financial planner William Bengen in his 1994 paper and reinforced by the 1998 Trinity Study. The shorthand: annual spending times 25. Want $48,000 a year in retirement? Target $1.2 million.

The compounding side uses the standard future value equation: A = P(1 + r)^t, where P is your current balance, r is the annual real return, and t is years until retirement. Rearranged to solve for the Coast FIRE number you need today:

Coast FIRE = Target / (1 + r)^t

Real returns matter, not nominal ones, because your target is in today's dollars. Historical S&P 500 nominal returns since 1928 average about 10% per year (Damodaran, NYU Stern), and long-run inflation runs roughly 3%, which lands real returns near 6.5% to 7%. We will use 7% throughout, which is the standard FIRE assumption. Use 5% if you want a margin of safety.

A worked example

Meet a 32-year-old with $80,000 already invested, aiming for $1.2 million at 65. That is 33 years of compounding ahead.

Coast FIRE number = $1,200,000 / (1.07)^33 = $1,200,000 / 9.325 = $128,649.

They are at $80,000. They need another $48,649 to hit Coast FIRE. At a $1,500 monthly contribution, with that same 7% real return compounding along the way, they cross the threshold in roughly two and a half years. From 35 onward, they can stop contributing entirely and still land at $1.2M by 65, assuming markets cooperate with the historical average.

Here is what the Coast FIRE number looks like at different starting ages, all targeting $1.2M at 65 with a 7% real return.

Age today	Years to 65	Coast FIRE number
25	40	$80,140
30	35	$112,396
35	30	$157,640
40	25	$221,123
45	20	$310,078

The penalty for waiting is brutal. A 25-year-old needs $80k. A 45-year-old chasing the same retirement target needs nearly $310k, almost four times as much, because they have 20 fewer years of compounding doing the work.

Why this matters more than full FIRE

Full FIRE asks you to save 50% to 70% of income for a decade or more, then never work again. Few people pull it off, and many who do regret the binary nature of the exit. Coast FIRE asks a softer question: can you front-load the saving, then stop?

The answer for a disciplined 25-year-old earning a middle-class salary is yes. Hit roughly $80,000 by age 25, and the math says you can stop retirement contributions forever and still retire at 65 with a million-plus portfolio. You still need income to cover rent and groceries and a kid's braces, but you no longer need to shovel money into a 401(k) you do not enjoy contributing to.

This is the case for taking a lower-paying job that you actually like, going part-time when a child is born, starting a business that pays poorly for three years, or moving to a city with no corporate jobs. The retirement math is already handled. You bought yourself optionality.

When Coast FIRE breaks

Three failure modes, all real.

First, sequence-of-returns risk in the wrong direction. The 7% assumption is an average across roughly a century of US market data. Japan's Nikkei peaked in 1989 and was still below that peak 30 years later. If your 33-year coasting window happens to land on a flat or negative real-return decade at the wrong end, your portfolio does not finish at $1.2M. The fix: pad the target, use a 5% return assumption, or contribute a smaller amount through the coast years as insurance.

Second, lifestyle creep. The $1.2M target assumes $48,000 a year of retirement spending in today's dollars. If by age 50 you have grown accustomed to $90,000 a year of spending, your real target is now $2.25M and your old Coast FIRE number is wrong by half. Coast FIRE works for people whose spending stays anchored.

Third, healthcare. The 4% rule says nothing about a $40,000 surgery at age 58 with no employer insurance. Coast FIRE on a part-time freelance income still needs an honest answer for medical coverage between the coast years and Medicare eligibility at 65.

The clean version of the calculation ignores all three. Run it anyway. Then run it again with a 5% return, a 10% spending bump, and a $200k healthcare reserve. If the answer still works, the plan is real.