When people think about FIRE (Financial Independence Retire Early), it often conjures up images of extreme frugality, cutting out all luxuries, and saving aggressively to retire in your 30s or 40s. But what if I told you there’s a way to achieve financial independence without having to deprive yourself of the things you enjoy today? Enter Coast FIRE—a lesser-known but powerful strategy within the FIRE community that lets you build wealth and secure your future without making big sacrifices right now. Let’s dive in and explore what Coast FIRE is, how it differs from traditional FIRE, and how you can calculate whether you’re on track.
What is Coast FIRE?
Coast FIRE is a financial strategy where you save and invest enough money early in life so that your investments grow on their own to fund your retirement, without the need for additional contributions. The idea is simple: once you’ve hit your target savings number, you can “coast” into retirement. From there, you don’t have to keep saving aggressively or at all. Instead, you can focus on covering your current expenses without worrying about future retirement contributions. It’s a way to achieve peace of mind without overburdening yourself financially in the present. The goal with Coast FIRE is to front-load your retirement savings. As long as you hit that target early enough and let compound interest do its magic, you can work more flexibly or take less stressful jobs, knowing that your retirement is already taken care of.
How Does Coast FIRE Differ from Regular FIRE?
Coast FIRE is a different beast compared to traditional FIRE in several ways:
- Focus on Early Contributions: Unlike regular FIRE, where you’re constantly saving a high percentage of your income every year, Coast FIRE emphasises early, significant investments. Once you’ve saved enough early on, you can reduce or even stop retirement contributions while still allowing compound interest to take over.
- Flexibility in Lifestyle: While regular FIRE often demands a lifestyle of extreme saving and minimal spending to reach financial independence quickly, Coast FIRE is more about balance. It allows you to enjoy a more relaxed present while securing your future. Instead of racing toward early retirement, you can “coast” at a more leisurely pace.
- No Need for Extreme Frugality: Coast FIRE appeals to those who don’t want to give up today’s pleasures or be tied to a strict budget. You don’t have to give up the little luxuries (or the big ones) as long as you’re hitting your early investment targets.
- More Gradual Work-Life Balance: With Coast FIRE, you might not retire early, but you can reach a point where you no longer have to save for retirement. You can downshift your career, work part-time, or even take a job you love that doesn’t pay much—without stressing about retirement savings.
An Example: Coast FIRE in Action
Let’s look at an example to make this concept more concrete. Meet Sarah, a 30-year-old who wants to retire at age 60. Sarah currently has £20,000 saved in her retirement accounts, and she’s able to contribute £1,000 per month. Using a tool like WalletBurst’s Coast FIRE Calculator, we can estimate whether Sarah is on track for Coast FIRE. The assumptions are:
- Sarah is investing in a diversified portfolio with an expected annual return of 7%.
- She plans to retire at 60 and wants her investments to cover her expenses during retirement.
- Sarah doesn’t want to save for retirement forever but wants to coast in the next 10–15 years.
Plugging these numbers into the calculator, we find that Sarah would need to save approximately £225,000 by age 45 to stop contributing entirely and still reach her retirement goals by age 60. That means she has 15 years to hit this target. Given her current savings rate, she’s well on her way to Coast FIRE.
If Sarah continues investing £1,000 per month with a 7% annual return, she’ll have around £308,000 by age 45. At this point, she could theoretically stop contributing to her retirement accounts altogether, and compound growth would carry her to her goal. By the time Sarah hits 60, her investments could grow to well over £800,000, enough to cover her retirement needs without any further savings after age 45.
This approach allows Sarah to potentially reduce her work hours, switch to a lower-paying but more fulfilling job, or even take extended time off after age 45—all without jeopardizing her retirement. That’s the power of Coast FIRE.
How to Test Coast FIRE for Yourself
So, how do you figure out if Coast FIRE is right for you and what your “coasting” number looks like? Here’s a step-by-step process:
1. Determine Your Retirement Number
First, estimate how much you’ll need to retire comfortably. This could be based on your current or expected annual expenses. A common rule of thumb is to multiply your annual expenses by 25 to get a rough estimate of your FIRE number (the amount you’ll need to retire). For example, if you expect to spend £40,000 a year in retirement, your FIRE number is £1,000,000.
2. Use a Coast FIRE Calculator
Now, use a Coast FIRE calculator like the one on WalletBurst to figure out how much you need to save and invest today for your portfolio to grow enough to meet that retirement number by your target retirement age. This tool will show you how much your investments need to grow each year and how much you should be contributing now to “coast” later.
3. Assess Your Current Savings
Compare your current savings to the target suggested by the calculator. If you’re on track, you might consider coasting sooner. If not, adjust your contributions or investment strategy to reach your target.
4. Factor in Compound Growth
One of the most important aspects of Coast FIRE is the power of compound growth. The earlier you start investing, the more time your money has to grow exponentially. Don’t underestimate how much a few years can impact your trajectory—every pound you invest today is working for you over the long term.
5. Plan for Flexibility
Coast FIRE is all about flexibility. Once you hit your target number, you have options. Maybe you’ll want to continue saving, but without the pressure of having to max out your retirement accounts. Or perhaps you’ll downshift into a part-time role or take time off to travel, knowing that your future is secure.
Conclusion: Is Coast FIRE Right for You?
Coast FIRE isn’t for everyone, but it’s an ideal strategy if you want to balance enjoying life today with ensuring financial security in the future. Unlike traditional FIRE, which can feel like an all-or-nothing race, Coast FIRE gives you room to breathe. You can still save aggressively early on but then relax later, knowing your future is in good hands.
The beauty of Coast FIRE is its flexibility. It allows you to invest in your future while living a fulfilling life in the present. If the idea of not having to constantly save for retirement appeals to you, start running your numbers, see what’s possible, and decide when you’re ready to start coasting into financial independence.
To find out more about early retirement, check out our articles on retirement and investing.
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