Coast FIRE: The Strategy That Lets You Stop Saving for Retirement
Coast FIRE is the point where an existing retirement portfolio may grow to a target without further contributions, based on the return and inflation assumptions used.
What Is a FIRE Number and How Do You Calculate Yours?
A FIRE number is an estimate based on spending and withdrawal assumptions, not an exact guarantee. Learn the formula, worked examples, and the variables to stress-test.
What is a FIRE number?
Your FIRE number is an illustrative portfolio target based on a spending estimate and withdrawal-rate assumption. The name comes from the FIRE movement: Financial Independence, Retire Early. It is not an exact amount that guarantees financial independence.
The shorthand estimates a starting portfolio from annual spending. Actual withdrawals may be funded by returns and principal, and taxes, fees, inflation, longevity, and market sequence all affect how long the portfolio lasts.
Most people have no idea what their actual number is. They have vague goals like "save a lot" or "have enough." The FIRE number replaces that vagueness with a specific, calculable target — and that specificity changes everything about how you plan.
The 25x rule: the simplest FIRE number formula
The most widely used method is the 25x rule:
FIRE Number = Annual Expenses × 25
If you spend $40,000 per year, your FIRE number is $1,000,000. If you spend $60,000 per year, your FIRE number is $1,500,000. If you spend $80,000 per year, your FIRE number is $2,000,000.
The 25x multiplier is the inverse of a 4% initial withdrawal rate. At a $1,000,000 starting portfolio, 4% is $40,000 in year one. That is withdrawal arithmetic, not a promise that returns will equal the withdrawal or that the portfolio will last indefinitely.
Why annual expenses matter more than income
Most financial advice focuses on income. FIRE planning focuses on expenses — and for good reason. Your expenses determine two critical variables simultaneously:
1. How large your FIRE number is. Lower expenses = smaller target. 2. How fast you reach it. Lower expenses = more money saved each month.
A person earning $80,000 and spending $40,000 reaches FIRE faster than someone earning $200,000 and spending $150,000. The savings rate — not the income — is the engine.
The Trinity Study: why 4% became the standard
The 4% withdrawal rate isn't arbitrary. It comes from the 1998 Trinity Study, a rigorous analysis by finance professors Cooley, Hubbard, and Walz at Trinity University.
They analyzed historical U.S. market data beginning in 1926, testing withdrawal rates across portfolio mixes and horizons. Results vary by portfolio, data window, and whether withdrawals are adjusted for inflation. See Sustainable Withdrawal Rates From Your Retirement Portfolio.
"Success" meant the historical portfolio ended the tested period above zero. It did not mean the strategy was guaranteed to work in future markets or preserve principal.
Key assumptions behind the 4% rule: - Portfolio split between stocks and bonds (typically 60/40 or 70/30) - First-year withdrawal equals 4% of starting portfolio - Each subsequent year, withdrawal increases by the inflation rate - Based on historical US market returns (~10% nominal, ~7% real)
FIRE numbers by annual spending level
Here's what the 25x rule means across different spending levels:
| Annual Spending | FIRE Number (4%) | FIRE Number (3.5%) | FIRE Number (3%) |
|---|---|---|---|
| $30,000 | $750,000 | $857,000 | $1,000,000 |
| $40,000 | $1,000,000 | $1,143,000 | $1,333,000 |
| $50,000 | $1,250,000 | $1,429,000 | $1,667,000 |
| $60,000 | $1,500,000 | $1,714,000 | $2,000,000 |
| $80,000 | $2,000,000 | $2,286,000 | $2,667,000 |
| $100,000 | $2,500,000 | $2,857,000 | $3,333,000 |
The 3.5% and 3% columns show more conservative withdrawal rates — important if you're planning a 40-50 year retirement rather than a standard 30-year horizon.
Which withdrawal rate should you use?
The historical research commonly associated with the 4% rule focused on horizons up to 30 years. A person retiring at 35, 40, or 45 may need to plan for 50 years or more, while even a retirement beginning at 65 can exceed 30 years.
Use 4% if: - You're planning a traditional 30-year retirement (retiring at 62-67) - You have flexibility to reduce spending in bad market years - You have other income sources (pension, Social Security, part-time work)
Use 3.5% if: - You're retiring in your 40s (30-40 year horizon) - You want a meaningful safety margin - You're risk-averse and want to sleep well
Use 3% if: - You're retiring in your 30s (40-50+ year horizon) - Your spending is fixed with little flexibility - You want maximum portfolio durability
Some FIRE plans test 3.5% for horizons longer than 30 years. It starts with a lower withdrawal than 4%, but no fixed rate guarantees success and the result still depends on markets, inflation, fees, taxes, allocation, and spending flexibility.
How to reduce your FIRE number without earning more
Your FIRE number is directly tied to your spending. Every dollar you permanently remove from your annual budget reduces your FIRE number by $25. This creates a powerful lever that most people underestimate.
Example: Sarah spends $65,000/year. Her FIRE number is $1,625,000. She renegotiates her rent, switches to a used car, and cuts subscriptions — reducing annual spending to $55,000. Her new FIRE number is $1,375,000. She just eliminated $250,000 from her target by reducing spending $833/month.
The same spending reduction also increases her monthly savings — a double benefit that no investment return can replicate.
High-impact expense categories to target
Housing (typically 30-35% of spending): Moving to a lower-cost area, downsizing, or house hacking can reduce this by $500-1,500/month.
Transportation (typically 15-20%): The average American car costs $12,000/year including purchase, insurance, fuel, and maintenance. A paid-off used car might cost $3,000-4,000/year.
Food (typically 10-15%): Restaurant spending averages $400-600/month for many households. Cooking at home reduces this by 60-70%.
Subscriptions: The average household pays for 4-6 streaming services, gym memberships, software subscriptions, and other recurring charges adding to $200-400/month.
How to calculate how long it will take to reach your FIRE number
Once you know your FIRE number, you need two more inputs: current savings and monthly contribution.
Formula: Using compound interest with monthly contributions, your time to FIRE depends on: - Current invested assets (your starting point) - Monthly investment contribution (your fuel) - Expected annual return (typically 6-8% real, 7% is commonly used) - Your FIRE number (the target)
Example calculation: - FIRE number: $1,250,000 - Current savings: $75,000 - Monthly contribution: $2,000 - Expected return: 7%
Result: approximately 17.5 years to reach the FIRE number.
Reduce monthly spending by $500 (which also increases monthly contribution by $500 to $2,500): now it's approximately 15.5 years — saving 2 full years.
Use our FIRE Number Calculator to run your own numbers instantly with a live chart showing year-by-year progress.
What to include (and exclude) in your FIRE number calculation
Include in your annual expenses:
- Housing (rent or mortgage + insurance + property tax)
- Food and groceries
- Transportation
- Healthcare and insurance
- Utilities and subscriptions
- Travel and leisure
- Clothing and personal care
- Gifts and charitable giving
- Any debt payments you expect to carry into retirement
Exclude from your FIRE number (calculate separately):
- Social Security: Model a personal U.S. benefit estimate only from the chosen claiming age and fund the bridge years before it starts.
- Pension income: Model the amount, start date, inflation treatment, taxes, and survivor terms separately.
- Rental income: If you own rental properties generating $15,000/year, subtract from annual expenses.
- Home equity: Count only liquid, investable assets. Your primary residence is not a retirement asset — you need somewhere to live.
FIRE number vs. Coast FIRE number
Your full FIRE number is the portfolio needed to retire completely. But there's an intermediate milestone worth knowing: your Coast FIRE number.
Coast FIRE is an estimate of the amount that could grow to a full FIRE target by the planned retirement age without further contributions, if the assumed return and inflation rates occur.
If you're 30 with a FIRE number of $1,500,000 targeting retirement at 60 (30 years), your Coast FIRE number at 7% is approximately $197,000. Once you hit that, you can stop saving for retirement and only need to cover current living expenses.
Calculate your Coast FIRE number →
Common mistakes people make calculating their FIRE number
Mistake 1: Using current expenses without adjusting for retirement. Some costs disappear in retirement (commuting, work clothes, childcare). Others increase (healthcare, travel, hobbies). Model your actual expected retirement spending, not just current spending.
Mistake 2: Ignoring inflation. $60,000/year today won't buy the same lifestyle in 20 years. The 4% rule accounts for inflation in withdrawals, but your FIRE number calculation should use your expenses in today's dollars — the math handles the rest.
Mistake 3: Mixing nominal and real assumptions. If investments return 10% and inflation is 3%, the exact real return is about 6.8%: (1.10 ÷ 1.03) − 1. Use nominal returns with inflated future expenses or real returns with today's purchasing power.
Mistake 4: Not including healthcare. U.S. early retirees without employer coverage should use current personalized premium, subsidy, deductible, and maximum out-of-pocket estimates. Costs vary substantially by age, location, household, income, and plan; other countries have different systems.
Mistake 5: Setting the target and never revisiting it. Life changes — expenses change, goals change, returns differ from projections. Recalculate your FIRE number annually.
Frequently asked questions
How do I calculate my FIRE number if I have kids? Include all child-related expenses in your annual spending calculation. If children will be financially independent before you retire, model retirement expenses without them. If you'll support children into retirement (college costs, helping adult children), include those costs.
Does the FIRE number include an emergency fund? Your invested FIRE target can be tracked separately from an emergency reserve. The appropriate reserve depends on income sources, spending flexibility, insurance, and risk; cash can reduce the need to sell during a downturn but cannot prevent every forced sale.
What if markets perform poorly right after I retire? This is called sequence of returns risk — the danger of a major bear market early in retirement. Solutions include: keeping 1-2 years of expenses in cash, reducing withdrawal rate to 3-3.5%, using a flexible spending strategy (spend less in down years), or maintaining some part-time income for the first 3-5 years of retirement.
Can I retire with less than my full FIRE number? Potentially, if a realistic income plan covers the gap and the risks are acceptable. Model the amount, reliability, duration, taxes, and start date rather than using a universal percentage of the target.
What's the difference between financial independence and early retirement? Financial independence (FI) means your portfolio covers your expenses — you could retire. Early retirement (RE) means you actually do retire. Many people reach FI but continue working because they enjoy their work. The goal is choice, not necessarily stopping work.