Coast FIRE explained

Coast FIRE is the point where your current investments may be large enough to grow to your retirement target by a future age without major new contributions.

It does not mean you are financially independent today. You still need to pay rent or mortgage, food, insurance, taxes, childcare, travel, and everything else between now and retirement.

The practical benefit is pressure relief. If the retirement portfolio can coast, you may be able to take a lower-stress job, work fewer hours, switch careers, start a business, save for housing, or spend more on life now without abandoning retirement.

The math works backward from a future retirement target measured in today's purchasing power. First estimate the portfolio you want at retirement, then discount that target back using an expected real return and the number of years left.

Real return means return after inflation. Using real return keeps the calculation focused on buying power instead of inflated future dollars.

The basic formula is: Coast FIRE number = purchasing-power retirement target divided by (1 + real return) to the power of years until retirement. The formula is simple. The assumptions are the hard part.

Coast FIRE only works because compound growth can build on itself. A portfolio that grows for 25 or 30 years has more time for returns on earlier returns to matter.

That is also why age matters so much. A 30-year-old has decades for compounding to work. A 50-year-old has less time, so the required starting portfolio is much closer to the final retirement target.

Compounding is not magic. Fees, taxes, weak returns, inflation, and bad timing can all reduce the result.

These examples use a simplified $1,000,000 retirement target and a 4% real return. They ignore taxes, fees, CPP/QPP, OAS, pensions, account type, and contribution room. Use them only to see how time changes the number.

For Canadians, Coast FIRE should not ignore CPP or QPP, OAS, workplace pensions, RRSP/RRIF taxes, TFSA withdrawals, taxable-account drag, and provincial tax differences.

CPP or QPP and OAS may reduce the portfolio needed later, but timing matters. Early retirement or semi-retirement may require a bridge before benefits begin.

Account type matters too. A dollar in a TFSA is not the same as a dollar in an RRSP if future withdrawals are taxed differently.

The biggest Coast FIRE risk is false precision. A clean spreadsheet can make a fragile assumption look solid.

Market returns may be lower than expected. Inflation may be higher. Retirement spending may rise. Taxes may change. Health costs may grow. You may retire earlier or later than planned.

Sequence risk also matters. Bad returns early in the coasting period can leave the portfolio below the path you expected, even if long-term averages look fine later.

Coast FIRE can create room to choose a job for fit instead of maximum pay. It can also help you spend more time with family, reduce burnout, move cities, go part-time, or start something slower.

The tradeoff is that you may still need earned income for years. Coast FIRE reduces retirement contribution pressure, but it does not pay today's bills.

It can also reduce flexibility later if the plan assumes you stop contributing and markets disappoint. A smaller ongoing contribution can be a useful safety margin.

Coast FIRE suits people who have already built a meaningful portfolio and want more life flexibility before traditional retirement.

It can work well for high savers who are burned out, parents who want more time, people switching careers, or households that want to reduce income pressure without abandoning retirement.

It is a weaker fit for people with unstable cash flow, high-interest debt, no emergency fund, uncertain housing costs, or retirement spending they have not estimated.