Coast FIRE vs regular FIRE
By Jude Wallis
Regular FIRE is the number you can stop working on. Coast FIRE is the number you can stop saving on. At a 4 percent withdrawal rate, $40,000 of spending needs $1,000,000. A $200,000 pot growing at 7 percent for 20 years reaches $773,936.89, so it is $226,063.11 short of coasting.
| Coast FIRE | Regular FIRE | |
|---|---|---|
| What it lets you stop | Saving. The job still pays the bills. | Working, if the withdrawal rate holds. |
| The number here | Whatever grows to $1,000,000 over the years left. | $1,000,000, from $40,000 of spending at 4 percent. |
| What it depends on | The return assumption and the number of years, compounded. | The withdrawal rate and annual spending. |
| This saver's position | $200,000 grows to $773,936.89 in 20 years, so the gap is $226,063.11. | Not reached. The pot is well under $1,000,000 today. |
| Sensitivity | High. Each point of assumed return moves the answer by years. | Moderate. Each point of withdrawal rate moves the number by a quarter. |
| What it is used for | Deciding whether a lower-paid job is affordable. | Deciding whether to leave paid work. |
On this page
Two different questions, one target
Both numbers point at the same destination. Regular FIRE asks what the pot must be worth on the day you stop, and at a 4 percent rate that is 25 times spending: $40,000 needs $1,000,000. Coast FIRE asks what the pot must be worth today so that compounding alone gets it there by a chosen date.
That second question has a date in it, which is why the answer changes as you age. A saver 20 years out at 7 percent needs the invested amount that multiplies to $1,000,000. A saver five years out needs far more, because there are only five doublings' worth of time left to do the work.
Coasting is not stopping
The word coast describes contributions, not spending. A coasting saver still covers rent, food and everything else from earnings; what changes is that no further money has to be added to the invested pot. That is a real freedom, and it arrives years before the FIRE number itself.
This $200,000 saver is not there yet. Twenty years of 7 percent growth turns it into $773,936.89, which is $226,063.11 below target, so contributions still have work to do. The coast FIRE calculator shows the gap for any starting pot, and the FIRE number calculator sets the target it is measured against.
The assumptions each one carries
Coast FIRE rests on a compound growth rate held for decades. Regular FIRE rests on a withdrawal rate holding through whatever the portfolio does after you stop. Neither is a promise, and they fail in different places: a coasting plan is hurt by a weak decade early, a withdrawal plan is hurt by a weak decade late. Safe withdrawal rates covers the second, and 4 percent against 3 percent shows what a single point does to the target. This is educational material, not financial advice.
Worked examples
\$200,000 with 20 years to run
A saver has $200,000 invested, expects 7 percent a year, plans to retire in 20 years on $40,000 a year, and uses a 4 percent withdrawal rate. Are they at coast FIRE?
- The FIRE number is $40,000 divided by 4 percent, which is $1,000,000.
- Grow $200,000 at 7 percent for 20 years and it reaches $773,936.89.
- Compare the two: $773,936.89 against $1,000,000 leaves $226,063.11 of shortfall.
Not yet. The pot grows to $773,936.89, which is $226,063.11 short of the $1,000,000 target, so contributions still matter.
A longer runway at a lower return
A saver with $150,000 invested assumes 6 percent, has 25 years, spends $50,000 a year and uses 4 percent. Where do they stand?
- The target rises with spending: $50,000 at 4 percent is $1,250,000.
- $150,000 at 6 percent for 25 years reaches $643,780.61.
The gap is $606,219.39. A longer runway does not rescue a lower return and a higher spending target at the same time.
Common questions
Can you be at coast FIRE and still be far from FIRE?
Yes. That is the normal case. This saver would coast on a smaller pot than the $1,000,000 they eventually need.
What return should the calculation assume?
Whatever you would defend out loud. The answer moves sharply with it, so run a low case as well as a hopeful one.
Does coast FIRE assume the money is never touched?
Yes. Any withdrawal before the target date breaks the compounding the whole calculation rests on.
Is this financial advice?
No. It is educational material about two retirement targets and the arithmetic behind them.
Keep reading
This page is educational material, not financial advice. The figures come from the formula shown and assume the inputs you enter hold for the whole term. Your own rate, fees, taxes and timing will differ, so treat the output as arithmetic to check a decision against, not as a recommendation.