The Math To Reach CoastFIRE In Every Decade

CoastFIRE is a financial strategy allowing individuals to stop saving aggressively once a specific investment portfolio value is reached, letting time and compounding grow the balance until comfortable retirement.

• CoastFIRE allows you to stop saving aggressively early, letting investments grow passively until retirement.

• The required initial investment for CoastFIRE increases significantly with age due to less time for compounding.

• Calculations account for inflation and aim to replace 80% of pre-retirement income with a 4% withdrawal rate.

CoastFIRE involves saving a target amount early in life, then allowing investments to grow independently until retirement. This strategy's required investment amount varies significantly with age, with younger individuals needing less due to the power of compounding over time. The calculations account for 2% annual inflation and aim to replace 80% of pre-retirement income using a 4% withdrawal rate, assuming lifestyle costs rise only with inflation.

CoastFIRE in Your 20s

• 00:01:35 If starting CoastFIRE at age 25 with a median income of $45,000, you would need to have approximately $45,126 invested. Over 40 years, this amount, compounding at 9.5% annually, can grow to nearly $2 million, which is sufficient to replace 80% of an inflation-adjusted income of $99,362 by age 65. The primary advantage at this stage is the extensive time for compounding to do the heavy lifting, provided lifestyle creep is managed.

CoastFIRE in Your 30s

• 00:02:45 For someone aged 35 with a median income of $64,000, the CoastFIRE target requires a significantly higher initial investment of about $182,670. With 30 years until retirement, this portfolio, growing at 8.5% annually, can still reach a goal of roughly $2.32 million to support an inflation-adjusted retirement income of $92,742. While time is still an ally, the window for 'ultra-cheap' compounding has narrowed, necessitating a larger starting base.

CoastFIRE in Your 40s

• 00:03:59 By age 45, with a median income of $70,000, the math for CoastFIRE becomes stricter, requiring an initial investment of approximately $466,000. Assuming a 7.5% rate of return over 20 years, this can compound to the target $2 million needed to replace 80% of an inflation-adjusted income of $104,000. Compounding still works, but it's less forgiving, meaning the upfront investment carries more of the load, and risk tolerance shifts, leading to lower assumed returns.

CoastFIRE in Your 50s

• 00:05:05 For individuals at age 55 with a median income of $65,720, CoastFIRE focuses more on preservation than acceleration, requiring about $838,000 invested. With only 10 years until age 65, and assuming a conservative 6.5% return, this balance can grow to approximately $1.6 million to fund a $64,000 annual retirement income. At this stage, there's little room for underfunding, making the initial CoastFIRE number much closer to the final retirement goal.