Coast FIRE: Front-load Your Retirement

Steve Cummings

coast fire

The FIRE community comes up with ways to figure out how to live your best life while having enough money to retire. FIRE stands for Financial Independence Retire Early. The concept of coast fire is attractive to many people. 

  • First, it gives us the ability to front-load our investments and then coast our way to traditional retirement.
  • Secondly, it gives us the ability to choose our job and path once we hit our coast fire number. 
  • Last, it helps us to attain our FIRE dreams. Living a life of purpose, retiring with enough money, and having financial independence. 

What is this Coast FIRE you are talking about? How can it help me? These are all great questions to think about.

What is Coast FIRE?

Coast FIRE is about having enough investments and savings to allow you to coast your way to retirement. So basically, if you can get enough invested early, you will not have to invest any more money, and you could coast your way to retirement. 

When we talk about the FIRE movement, we talk about different types of FIRE. Coast FIRE is not retired early, but it is all about being financially independent. It follows the same rules with saving and investing to ensure a good retirement. 

The FIRE movement is based upon investing enough to be financially independent. We usually use the 4% rule to determine a safe withdrawal rate. 

So if you want to retire with about $40,000 a year, you will need to save up to $1 million. 

The way I get that number is taking $40,000 x 25 = $1,000,000. That is the 4% rule. We can then safely withdraw 4% of our liquid net worth to have our money last for our entire life. 

Using this rule, we can determine when how much we need to retire on. The good news is that the more you save, the more time you have for that money to compound. More time will equal less money you have to invest in hitting financial freedom. We rely on compounding interest to help get that money to work for us. 

That is what coast fire is all about. We allow compounding interest to work to make our money grow to the point where we no longer have to work.

How Does Compounding interest Work?

compounding interst chart

Compounding interest is the interest upon interest. It is a growing force of your investments. As your assets gain more money, it will grow larger like a snowball rolling down a hit.

Suppose you were to invest $1000 with an interest rate of 10%. The first year you will make $100. That $100 will be added to the original $1000, and then the following year, the 10% will create even more. In 7 years, that $1000 will double. Then it will double again and again.

In 40 years, $1000 will be worth $45,260 without adding more money to the pile.

We just used a relatively low number. Let’s say we can grow a pile of $100,000 and use 7%, which is a more conservative rate of return.

$100,000 at 7% in 10 years = $196,716

$100,000 at 7% in 20 years = $386,969

$100,000 at 7% in 30 years = $761,266

$100,000 at 7% in 40 years = $1,497,446

Just being able to get $100,000 saved up and invested for the future is enormous. Compounding interest does wonder on this amount of money. Charlie Munger once said, “ The First $100,000 is a bitch, but you gotta do it.” Then after that, the compounding machine can work on it.

Coast FIRE is all about compounding interest working to grow your money over time. How much do I need to hit that Coast FIRE number?

How to Calculate Your Coast FIRE Number?

To calculate how much you need to hit Coast FIRE, you first need to know your FIRE number.

Let’s take my example from earlier. If we want to have $1 million when we hit our retirement age, how much do we need to acquire to hit Coast FIRE?

FI / (1+ rate of return)^ years left to retirement = Coast FIRE #

If I want $1,000,000 in 35 years at a growth rate of 7% then my formula would look like this:

$1,000,000 / (1+0.07) ^ 35 = $93,662

That is the amount of money I need to coast to retirement. So now all you have to do is save and invest enough money to hit $93,662 to coast for the next 35 years to retirement.

After seeing this math, I think anyone can make some tremendous financial goals out of this. Most people work until they are age 65. If you can get this amount of money by age 30, you will retire a millionaire by 65. This does not seem that hard at all.

Now we have goals to achieve.

Coast FIRE calculation

Our Expectations for Returns

As we continue to make goals for our future, we need to know how to get some of these returns. One of the best places to grab some good returns is through investing in the stock market.

I like to keep things pretty simple while investing in the stock market. One of the best places to invest your money is through index funds. Index funds give us a simple way to invest in many stocks with minimal fees and actual market returns.

The average annual return of the stock market is from 8-10%. Investing in a total market index fund can help get you these stock market returns. There will be years when the market is down, and there will be years when the market is up. With these returns, you can make some goals towards your future financial goals.

What Can you Do after Hitting Coast FIRE?

After you hit Coast FIRE, you have so many options open to you. You can now make life changes that can help you with your happiness and life/work balance.

Taking a Different Job.

You now have the opportunity to choose a different job as some of us may experience that some jobs do not give the most pleasant experience. That burnout feeling is natural, and after hitting Coast FIRE, we can now choose a career that brings more meaning to our lives. As long as that job can continue to pay off our expenses, we should be okay financially.

Reduce Work Hours

We are now able to reduce some of our work hours. Hustling every day can bring on much stress. With the ability to have some FU money and hitting Coast FIRE, we can now choose to reduce some of those working hours. We have the option to make choices that can help better our lives. 

That is one of the most incredible things in the FIRE movement is to have options. Not everyone is fortunate enough to have options, but from simply hitting our Coast FIRE number, we now have to give ourselves many different options to do more.

Freelance and Entrepreneurship Opportunities.

There are new opportunities on the horizon. With these opportunities, we can decide how we want to spend our time. Through freelancing and entrepreneurship, we can create our products and work for ourselves. This gives us a significant level of autonomy.

Our only goal is to make sure our annual expenses are being covered. This can be helped by a high savings rate and some great cash flow from these opportunities. There is less stress of retiring without any money; we now have the confidence to go out and make our way.

Coast FIRE vs. Barista FIRE

As we talk about Coast FIRE, it makes us think back about Barista FIRE. These are two FIRE concepts that are pretty different, but they can be similar. 

Barista FIRE is when you are close to regular FIRE but need a part-time job like being a barista to take care of a small number of daily expenses and some healthcare. You will have enough retirement savings to cover most of your annual expenses, but you need some part-time income. 

Coast FIRE is front-loading your investments early to coast to retirement. 

The key to Coast FIRE is that we are not that close to Financial Independence yet. Retirement may be another 20-30 years, so we saved and invested enough to let those investments just compound and grow. 

With Barista FIRE, we are very close to hitting financial independence.

Final Thoughts

As we start to get our financial goals in line, we need to look at our options. The more you can save and invest today, the longer that compound interest can work on those investments. With the annual growth coming from the compounding, we will have an ample amount of retirement savings. This is good for your future financial objectives. 

With Coast FIRE, we can now be able to coast to retirement. Each part of this is part of personal finance. Not each way is suitable for each individual, so take time and make the right decisions for your personal finance. 

There will be many opportunities to choose from as we are reaching coast FIRE. Work can be seasonal work, freelancing, or even entrepreneurship. We now have more options to live the life we want to live. 

Does Coast FIRE seem appealing to you?

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4 thoughts on “Coast FIRE: Front-load Your Retirement”

  1. I really like the concept of Coast FIRE. It gives you more freedom than a lot of other FIRE terms- work really hard to frontload and then you can have freedom while waiting for retirement- sort of the best of both worlds! All young people should read this and try to save as much as they can when they are young. It will change their lives.

  2. One of the interesting things about the concept of ‘Coasting’ is that given the way the economy has been and continues to be we are likely to see an generation with huge minorities of CoastFI people and people who will never FIRE. I wonder what that will mean for creative jobs/PT jobs like you mentioned

  3. Great article! I think one of the best things about Coast FI is having that peace of mind that even if you stop saving and investing for your retirement now, you will still be fine.
    I think, however, that most of those pursuing FIRE will not stop with Coast FI. Instead, it is more of a milestone along the way. A significant milestone that is.

  4. I’ve learned so much more about the different types of FIRE, and I think Coast or barista probably fits my goals the best. You still get to enjoy life now while also pursuing the early retirement. Or, like you say, achieve early financial independence.


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