Why Coast FIRE is Better than Traditional FIRE

March 26, 2023

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While money might not be able to buy happiness from the store, wealth building certainly has an impact that we can’t ignore. When people want more time with their kids and are looking to unlock more freedom, they often turn to financial independence. You’ve probably already heard of the traditional FIRE movement. Now it’s time to learn more about something that might be even better: Coast FIRE!

While I embraced the early retirement movement initially, we’ve settled on something a little different for our family. Coast FIRE still offers the financial independence we craved. It’s also allowing us to enjoy ourselves more fully now. 

Here’s why Coast FIRE is better than traditional FIRE…at least for us!  

What is Coast FIRE?

Coast FIRE is a type of financial independence. It is the point when you've saved enough in your retirement accounts that you can coast into retirement. You don't have to make more contributions to your account. Instead, you can let time and compounding work their magic.

That means that once you hit your Coast FIRE number, you only have to cover your current expenses. You no longer have to put aside any money for retirement.

So that means that Coast FIRE gives you the opportunity to tackle other financial goals, grow your wealth in other ways, or downshift into something else. Maybe that's part-time work, or perhaps it's entrepreneurship. Or maybe it's a different type of work that feels more fulfilling with less of a focus on pulling in a big income or clocking a ton of hours.

No matter how you look at it, Coast FIRE spells flexibility and freedom.

Take a deeper dive into Coast FIRE with our podcast about reaching Coast FIRE in your 30s, 40s, or even 50s!

Why We Like Coast FIRE More

Most people stumble onto the concept of financial independence when they are looking for more freedom. Maybe they are spending too many hours away from their kids or come home feeling burned out.

That's not unlike where I was when I discovered FIRE. I had a job I was not thrilled about, was away from my family more than I liked and FIRE felt like a way out for me.

Traditional FIRE requires a gazelle-like intensity. And for a while, I was motivated to get there as fast as I could. Saving and investing 50% of our income or more for years was financially effective, but that did cause a lot more money fights in our marriage.

We had some major disagreements on how much we were saving versus how much we were enjoying our lives today.

Ultimately (through time, marriage counseling and some marital compromise), I realized that changing career paths could make a major impact on my happiness.

That's what I did. And my wife did as well.

With a paid-off mortgage and a bunch of FU Money, we both transitioned out of careers we didn't enjoy. Today, we work part-time in jobs we actually DO enjoy!

Our happiness levels have increased dramatically! And now, that desire for FIRE has faded considerably. Retire early? For what?

But there was still one financial to-do that still loomed largest …. Taking care of our retirement in our 60s and beyond.

With all the FIRE-motivated investing we were doing, we realized that we had already achieved Coast FIRE at 40 years old with $550,000 stocked away.

Coast FIRE offers that security I was looking for with the added bonus of ticking a task off your to-do list.

Ultimately, becoming Coast FIRE allows us to use money as a tool to reduce stress and anxiety. Saving 50% of our income was causing stress instead of reducing it. So Coast FIRE feels like a healthy compromise for us. We unlocked more freedom within our budget while still securing our financial future.

Of course, this works for us because we want to continue working in some capacity. Personally, I enjoy working. And my wife does too. We thrive off of opportunities to help people. If we didn't feel this way about work, it would likely tip the scales toward traditional FIRE instead.

How to Calculate a Coast FIRE Number

couple on laptop together
Photo by Matthew Henry

Are you ready to give Coast FIRE some more thought? Then, you need to calculate your Coast FIRE number. 

Here’s how you can see how close you are to coasting into financial freedom in 6 easy steps!

Step 1: Determine what it costs for you to live comfortably 

Virtually all of us know how much money we make. Your salary, your last paycheck amount, your income from when you file taxes. If you can’t recall these numbers from memory (or at least ballpark them!), you can quickly access them.

Additionally, if you’ve been pursuing financial independence for any amount of time, you’re already probably pretty dialed into how much you save and invest. 

But where many of us struggle is actually the most important part of calculating your Coast FIRE number. You need to know how much money you spend each year. 

Identifying this number likely means that you need to take a deep dive into your spreadsheet, your spending tracker, or your favorite budget app. After you identify how much you spent the past month, multiply by 12 to give yourself a basic estimate. 

Step 2: Fine-tune your targeted spending amount

You have an estimate of what you spend from step one. Now, it’s time to really assess that number to see how accurate it is. 

Ask yourself if you are looking at what it costs to survive or if you calculated an amount that you can live on comfortably. Those can be two very different things!

If the month you looked at in step one included a no-spend challenge or really purposeful frugal living, ask yourself if you see yourself repeating that forever. The opposite is also true. If the month in step one was an incredibly costly one, maybe your estimate is going to be on the high side.

When we calculate our targeted spending amount, we make sure to include household expenses and costs related to having kids. We also include vacations and giving generously. Basically, we make sure that our targeted annual spending amount allows us to spend money on all the things that matter to us. 

That puts us somewhere between $60,000 and $80,000 per year based on our family makeup, cost of living, and other considerations specific to us. Your number might be lower. It could also be much higher. The important thing is to identify a number that reflects a comfortable spending amount for you personally.

Step 3: Decide when you intend to retire

After you figure out a best guess for what you'll spend each month and then fine-tune that amount, you need to figure out when your retirement will actually start.

If you ask five people what “traditional retirement age” means, you’d likely get five different answers. So ask yourself, do you plan to retire at 65? Maybe you want to hang in there until 67. Perhaps 59.5 sounds good.

Whatever number you decide upon, subtract your age from that number! You need it for what comes next.

Step 4: Explore the power of compound interest

By identifying your target retirement age, you can then calculate the length of time your money has to grow with some very basic subtraction. Subtract your current age from your target retirement age. That’s how long compound interest has to work its magic on your money.

Use a compound interest calculator to see how much your retirement accounts will be worth after the length of time you just calculated.

For example, maybe you have $500,000 in all of your retirement accounts. If you have 15 more years until you plan to retire, you can input these figures into a calculator to see what your accounts might actually be worth. 

Step 5: Use the 4% Rule to see how close you are

compound interest calculation

The 4% Rule is one way to estimate how much you can spend each year in retirement. Let’s return to our scenario from earlier. Someone with $500,000 in their retirement accounts will have over $1.37 million in their portfolio after 15 years, assuming a 7% interest rate (accounting for inflation). 

The 4% Rule says that they can spend 4% of that total each year in retirement. 4% of $1.37 million means that you could spend about $54,000 each year. 

If $54,000 is close to your comfortable spending amount from steps 1 and 2, congratulations. It’s time for a victory lap! You’re Coast FIRE. 

Step 6: Adjust to your comfort level

There are a few different areas of your Coast FIRE number that you might consider tweaking. You can adjust the interest rate you use to estimate how much your portfolio will be worth. For example, some people use an aggressive rate of return of about 10%. After all, that is the average return for the stock market.

However, other people take a more cautious approach by putting in a 5% or 6% interest rate. We personally use 7% after considering what the stock market average returns are and then adjusting for the average inflation rate. 

You may also end up adjusting the way you calculate how much you can spend each year in retirement. The 4% rule has long been the gold standard in the FIRE crowd. However, many people are more comfortable using 3.5% or 3%. 

This is just one more way that personal finance is personal. You want your Coast FIRE calculations to reflect your risk tolerance. So make sure to adjust your numbers accordingly

What do I do after I’m Coast FIRE?

This is one of the reasons why Coast FIRE is so much more appealing than traditional FIRE. Coast FIRE opens up a lot of options much sooner. 

You basically have two paths you can choose once you hit your Coast FIRE number. The first option is to slow down on investing for retirement and use more of your money to enjoy life today or simply work fewer hours (because you don't need as much money to live). Alternatively, you can simply choose to continue growing your wealth – there are many positives to this approach as well like being able to give generously in the future and leave your kids a legacy of generational wealth.

Of course, many people find themselves doing a combination. After working so intensely to reach Coast FIRE, you might take your foot off the gas for a year and really lean into relaxing. Then, you might be ready to invest some money into a small business, look into real estate, or do other things to grow your wealth now like stashing money in a taxable brokerage or opening a custodial account for your kids.

The beauty of Coast FIRE is that no matter which path you choose, your retirement nest egg is growing in the background without any additional contributions from you! 

Final Thoughts on Why Coast FIRE is Better Than Traditional FIRE

Coast FIRE is the financial freedom that our family wanted and needed. We no longer have to worry about saving for retirement. Instead, we can focus on designing a lifestyle that suits us right now.

If you are looking for flexibility and financial freedom without leaving the workforce entirely, Coast FIRE might fit better into your family finances. You'll find yourself presented with more choices and more time to say yes to more of the things that you want to do. Whether that's growing wealth through entrepreneurship or soaking up more time together as a family, Coast FIRE could be the key to designing a life you love.

Are you on team Coast FIRE or traditional FIRE? How are you pursuing financial independence as a family?

Please let us know in the comments below.

Andy Hill

Andy Hill, AFC® is the award-winning family finance coach behind Marriage Kids and Money - a platform dedicated to helping families build wealth and happiness. With millions of podcast downloads and video views, Andy’s message of family financial empowerment has resonated with listeners, readers and viewers across the world. When he's not "talking money", Andy enjoys being a Soccer Dad, singing karaoke with his wife and relaxing on his hammock.


  • So you basically just build up some investments and then keep working, stop contributing and leave them alone to compound ? So is this the fat fire version of Barista FI?

    • You got it! Except I suggest decreasing the amount of hours you work if possible.

  • I’m on the traditional FIRE path for sure. But I’m impressed by all the new types since I started writing about financial independence in 2009.

    Money is so psychological. So if identifying as Coast FIRE can help one live better and feel lesser stressed, then wonderful!

    I just feel there’s little difference between Coast FIRE and a person who goes to work and saves for retirement.

    The real challenge is whether both you and your wife can stop working today forever and raise a family. If the answer is yes, that is a great feeling.



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