Coast FIRE is the point where your invested pot is large enough that compound growth alone will carry it to your retirement target, without another euro of contributions. Once you hit it, you can stop saving for retirement entirely. You still work, but only to cover today’s expenses, not to feed the future. For a lot of people that shift removes a weight they didn’t realize they were carrying.
What Coast FIRE actually means
Most paths to financial independence ask you to save aggressively for decades. Coast FIRE breaks that journey into two phases. In the first, you build a core pot fast. In the second, you coast: the pot grows on its own while your salary just pays the bills. You reach the milestone well before you have enough to live off your investments, which is why it lands so much earlier than full independence.
The liberation comes from what it lets you stop doing. No more funneling 40% of your income into index funds. No more turning down the job you’d love because it pays less. The savings pressure is gone years ahead of the finish line, and your future self is already taken care of.
The math behind it
Coast FIRE runs the compound interest formula backward. You start with your retirement target, then discount it back to today using your expected annual return over the years you have left before retirement.
- Decide your target retirement pot. A common rule is 25x your annual expenses, based on a 4% withdrawal rate.
- Pick a realistic real return, meaning after inflation. Many European investors model 5% to 7% for a global equity portfolio.
- Count the years until you want to retire.
- Discount the target back to today: divide the future target by (1 + return) raised to the number of years.
The result is your Coast FIRE number. If your current investments already meet or beat it, you’ve arrived. You can run all of this without touching a spreadsheet using the Coast FIRE calculator.
A European example
Say you’re 35, want to retire at 65, and your target pot is 750,000 EUR (25x annual expenses of 30,000 EUR). You assume a 6% real return over the 30 years ahead.
- You discount 750,000 EUR back 30 years at 6%: 750,000 divided by (1.06)^30.
- (1.06)^30 is roughly 5.74.
- That gives a Coast FIRE number of about 130,600 EUR.
So once you hold around 131,000 EUR in invested assets at 35, you can stop contributing. Left alone for 30 years at 6%, that pot grows into your 750,000 EUR target on its own. Everything you earn from then on covers rent, food, and life, not your retirement.
Who it suits
Coast FIRE fits people who want to downshift rather than quit. If you’d happily move to part-time work, switch to a lower-paid role you find meaningful, or start something of your own that won’t pay much at first, this is the milestone that makes it financially defensible.
- Career changers moving into work they care about more than the paycheck.
- Parents who want to cut their hours while the kids are young.
- Anyone who front-loaded their saving in high-earning years and now wants room to breathe.
The risks
Coast FIRE leans hard on one assumption: that your expected return actually shows up. Markets don’t deliver a smooth 6% every year, and a weak first decade can leave the pot short of target.
- Sequence risk. If returns are poor in the early coasting years, compounding has less to work with and you may need to resume saving.
- The temptation to raid the pot. Coast FIRE only works if you leave the money invested and untouched. Dipping into it resets the math.
- Optimistic inputs. An aggressive return figure or an underestimated retirement target can make you think you’ve arrived when you haven’t. Stress-test with a lower return, say 4%, and see if the number still holds.
A sensible habit is to recheck your number every year or two. If markets underperform your assumption, you can top up the pot before the gap widens. Modeling a few scenarios in a compound interest calculator shows how sensitive the outcome is to the return you assume.
Coast FIRE versus Barista FIRE
These two get mixed up often, but the difference is clean. With Coast FIRE you cover all of your current living costs from your own work; the investments simply grow in the background and you contribute nothing more to them. With Barista FIRE, part-time work covers only part of your expenses, often for the benefits it carries, while you draw on or rely on your portfolio for the rest.
Put simply: Coast means you’re still fully self-supporting through work, just free of the savings burden. Barista means work and portfolio share the load of funding your life right now. If you want to stop working sooner on a smaller pot, Lean FIRE sits in a different direction again, built around keeping expenses very low.
Where to start
Work out your retirement target first, then discount it back to find the figure you need today. The Coast FIRE calculator does the arithmetic for you and lets you test different ages, returns, and targets in seconds. Find the year your current pot crosses the line, and you’ll know exactly when the saving pressure can come off.
