The financial independence retire early (FIRE) movement has been sweeping the nation for years, promising an escape from the 9-5 grind much earlier than the traditional retirement age with a few simple lifestyle tweaks.
While many are looking for an escape, others may enjoy their job or want to take advantage of their high-earning potential. However, if you already have a healthy nest egg, a sound investment strategy, and a high enough income to give pause to the idea of early FIRE retirement, there is still a way to live the FIRE life.
With Coast FIRE financial independence, you can have your cake and eat it too.
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What Is Coast FIRE?
Many high-income earners can save enough money at an early age to easily reach financial independence and traditional FIRE or Fat FIRE. But, just because someone has enough money invested to cover living expenses for the rest of their days doesn’t mean they want to ride off into the sunset.
CoastFI is a way of reaching financial independence without giving up your career. It’s an alternative to the FIRE path that allows high-net-worth individuals to enjoy life while still having enough to support retirement.
Reaching Coast FIRE is when you have enough money invested in the stock market for retirement accounts and others to retire at the traditional retirement age without making further contributions.
Coast FIRE works through the magic of compound interest. If you can save a large enough nest egg at a young age, your money will compound throughout your career without saving more money. Once you hit CoastFI, you can cruise throughout the rest of your working life, spending on what you want, knowing you have the financial freedom to do so.
The beauty with Coast FIRE is that once you’ve hit your number, you know you’ll have enough to cover your expenses in retirement without additional contributions. Although you’ll need to continue working, the world becomes your oyster once you’ve reached Coast FIRE.
You could continue to save money and reach complete financial independence, switch jobs, or take a less stressful job that pays enough to cover your yearly expenses until your reach age 65. After that, you could completely switch gears and pursue Lean FIRE or traditional FIRE and early retirement.
This flexibility makes CoastFI such an attractive alternative to regular FIRE and is why we recently chose to pursue our blog and writing business after reaching Coast FI at age 25.
Coast FIRE Pros
- The easiest path to financial independence
- Design your life how you want with less sacrifice
- Continue taking advantage of high-earning potential
- Provides a buffer for unexpected expenses
Coast FIRE Cons
- Still tied to employment
- Retiring early before age 65 may not be an option
- Easier for those with a high income and net worth
- Your coast FIRE number will depend on your current age and years to retirement
Example of Coast FIRE
The Coast FIRE formula requires building significant investments and a higher net worth at an early age so you can stop contributing and continue to build wealth until age 65.
While it’s easier to reach your Coast FIRE number faster if you earn and invest more money at a young age, almost anyone can reach Coast FIRE and financial independence.
Calculating Your Coast FIRE Number
Your Coast FIRE number will depend on your current age, yearly expenses, and years to retirement. It will also depend on your expected rate of return.
First, you’ll need to calculate your traditional FIRE number, which is your annual expenses x 25.
Once you have that, your Coast FIRE number will be as follows:
Coast FIRE number = FIRE number/(1 + rate of return)^(time)
For example, let’s say that your FIRE number is $1,250,000 ($50,000 a year x 25) at age 25 with an estimated 7% rate of return. In this case, you’d have 40 years to retirement if you plan to retire at age 65. With this example, your Coast FIRE number would be as follows:
Coast FIRE number = 1,250,000/(1 + 0.07)^(40)
Coast FIRE number = $83,475
Coast FIRE Calculator
While you can use the Coast FIRE formula above, this simple calculation doesn’t account for inflation and a few other factors that could impact your numbers.
If you want to find your full FIRE number, check out our ultimate financial independence calculator, and if you’re looking to reach Coast FIRE, check out this Coast FIRE calculator here. You can also check out our compound interest formula calculator.
How to Achieve Coast FIRE
Achieving CoastFI will likely be easier for most than traditional FIRE because you won’t need to be financially independent until retirement age. Unlike those who want to retire early, if you plan to work until your 60s, all you need to do is make sure that you reach financial independence at that time.
Start by calculating your CoastFI number to see what you’ll need to save. Once you know your desired or anticipated annual spending, use the formula above to find your number. Then, begin or continue saving and investing money until you reach the tipping point where you no longer need to continue investing.
However, it will be important to routinely recalculate your number if you’ll need to save money for several years to reach it. This is because your years to retirement will constantly change as you get older, so your CoastFI number at age 25 will be different than at 35.
Like other forms of FIRE, the key to achieving financial independence CoastFI is saving money, keeping your current expenses in check, and increasing your net worth. Then, once you’ve reached your number, you can let compound interest do the rest.
Know the Differences in FIRE
There are five main types of FIRE, each with a slight variation on the concept of FIRE and the retirement plan you’ll need to reach it. They are:
Coast FIRE vs. Barista FIRE
BaristaFI is very similar to CoastFI because you’ll need to keep working. However, it differs because the individual will drop to part-time work and partially live off their savings. This type of FIRE allows individuals who haven’t saved enough to be fully financially independent to leave a stressful or toxic job situation and partially retire.
Coast FIRE vs. Regular FIRE
Regular or Traditional FIRE is when you’re fully financially independent and can choose a work optional life. Whether you decide to retire or not, you’ve reached a point where you could cover all your annual spending with your investments. This differs from your CoastFI number, where you’ll need to keep working until closer to the typical retirement age to reach FIRE.
Things to Keep In Mind When Planning for CoastFI
Suppose you like your career and are okay working until the traditional retirement age. In that case, reaching CoastFI might be an excellent way to balance the FIRE lifestyle while making sure you’ll be able to cover all your retirement expenses once you get there.
However, it’ll be essential to consider the impact of inflation, taxes, and the economy’s volatility when retirement planning. You’ll also want to consider your health, family matters (children or elderly relatives), and other expenses you may encounter.
It’s always better to be safe than sorry, so we recommend building a buffer to your CoastFI number and plans. Save more than you think you’ll need and refrain from major excesses in your lifestyle once you’ve reached your Coast FIRE number.
Coast FIRE FAQ
What Is Flamingo FIRE?
Flamingo FIRE combines Semi-Retirement, Early Retirement (FIRE), and Traditional Retirement so that you can gradually work your way into full retirement. The premise is to build your net worth, then semi-retire and let compound interest work in the background until you retire.
How Much Do You Need to Achieve Coast FIRE?
That will depend on how much money you need to cover your expenses, age, and years to retirement. Use the formula above to calculate your number.
What Age Can I Retire With CoastFI?
You can reach CoastFI very young, we did it at 25! The sooner you’re able to shovel money into your retirement accounts, the sooner you’re able to reach CoastFI. When you choose to retire is entirely up to you. Slow down and work part time, or continue working full time and retire even earlier – the choice is entirely yours.
What Is the Average Coast FIRE Number?
The average Coast F.I.R.E. number will be a six-figure number rather than the seven-figure numbers typically required for Traditional FIRE. This is especially true if you’re able to start saving early in your career.
Final Thoughts—Is Coast FIRE Right for Me?
CoastFI offers an alternative to the FIRE movement that allows you to have the best of both worlds. You can keep working and let your money grow without saving another penny knowing you’ll be covered in your golden years.
If you enjoy working, don’t mind retiring in your 50s or 60s, and want to live a little more throughout your life, then CoastFI might be the perfect balance.
Samantha Hawrylack is a personal finance expert and full-time entrepreneur with a passion for writing and SEO. She holds a Bachelor’s in Finance and Master’s in Business Administration and previously worked for Vanguard, where she held Series 7 and 63 licenses. Her work has been featured in publications like Grow, MSN, CNBC, Ladders, Rocket Mortgage, Quicken Loans, Clever Girl Finance, Credit Donkey, Crediful, Investing Answers, Well Kept Wallet, AllCards, Mama and Money, and Concreit, among others. She writes in personal finance, real estate, credit, entrepreneurship, credit card, student loan, mortgage, personal loan, insurance, debt management, business, productivity, and career niches.