What is the Coast FIRE movement? How to save to retire early

FIRE first became popular in the early ’90s with the book Your Money Your Life by Vicki Robin and Joe Dominguez, who brought the idea of financial independence to the forefront. The movement requires an intense savings strategy that involves doubling down on budgeting and investing to quickly build a large nest egg—experts typically advise 25 times your annual expenses—so one can retire decades early.

The movement surged in popularity over the past decade, with emerging FIRE influencers such as Bryce Leung and Kristy Shen, who retired at 31 with $1 million, and The Financial Samurai, who retired at age 34 with $3 million. The lifestyle can be extreme: a lawyer earning $250,000 a year said he lived off rice and beans as he saved for FIRE, and one couple says they struggle with a scarcity mindset they developed around money after retiring in their 40s with $4.3 million.

But the movement has evolved in recent years to become more of a Chipotle-style customizable lifestyle than a one-size-fits-all mandate. “The FIRE movement has really kind of expanded to encompass a wide variety of people and attitudes towards retirement,” former FIRE fanatic Gwen Merz, 33, tells Fortune. 

Now, there are offshoots ranging from the more luxurious “Fat FIRE” (where one saves more than usual for a more expensive lifestyle) to the penny-pinching “Lean FIRE” (a more minimalist approach). Then, there’s the chiller “Coast FIRE” movement, which is what Merz follows today; she ditched the traditional FIRE lifestyle after feeling that gig work was stressful and that she was missing out on her social life. She defines this younger FIRE sibling as “front loading savings early on so compound interest and time in the market will combine to cover your expenses in retirement.” 

Because it takes advantage of compound interest on an initial lump sum, allowing savers to sit back and relax while their savings grow—or “coast”—the “Coast Fire” method is supposed to be easier than the original FIRE movement. This means adherents can stop saving at a certain point and don’t need to retire quite as early, often holding onto their job but only for daily living expenses.

Consider that Merz once aimed to retire at age 35 with $635,000 in the bank under the traditional FIRE movement. Now she has about $400,000 saved, per documents reviewed by Fortune, which she says she anticipates compounding into about $1.8 million when she plans to retire at age 55. 

As The Financial Samurai, whose real name is Sam Dogen, explains in his blog, someone on the Coast FIRE track is “a person who is on the slow path to financial independence and still needs a job to eventually live the FIRE lifestyle. The job tends to be a low-stress job that doesn’t pay a lot.” For Merz, that means still working as an IT auditor in the banking sector in St. Louis. 

How do I Coast?

Coast FIRE still involves a frugal mentality of penny pinching until you reach your goal lump sum stopping point. And this sub-genre is best for someone in their 20s or 30s who has several decades left for it to grow over time. To understand what your Coast FIRE sum would be, one would need to follow the following formula: 

Goal savings number for financial independence/(1+annual growth rate)^{years to grow}

To figure out your goal number, recall the aforementioned rule of thumb for the classic FIRE movement—25 times your annual spending. Let’s look at an example, assuming a 7% annual return rate, commonly considered a good growth rate accounting for inflation, and the 4% withdrawal rule that has been deemed a sustainable spending rate during retirement. 

In our example, Jill, a 25-year-old, would love to leave work at age 55. She’s spending $72,000 a year, similar to what the average U.S. household spent last year (this would likely be lower for Jill at this age if she’s single, but we’ll go with it for hypothetical purposes). 

To get her goal savings number for financial independence, we’ll multiply $72,000 by 25, which brings us to: $1.8 million.

Let’s plug that into the formula, along with the 7% annual return rate and the 30-year growth period between Jill’s current age and desired retirement age:

$1,800,000/(1+.07)³⁰ years = $236,460

So, when Jill has $236,460 saved, she can stop saving and allow that lump sum to grow to $1.8 million over the next 30 years.

Merz says she prefers the Coast FIRE lifestyle because, since reaching her savings target, she doesn’t have to track her budgeting spreadsheets as much as she once did, no longer has to worry about money, and can enjoy her social life more. “Now, money is very rarely my first consideration when I’m trying to decide between things, because money doesn’t matter as much,” she says.

In its early days FIRE was more catered to a certain individual, she adds—typically a married, often cerebral engineer type known for scrimping and saving at all costs. But it’s expanded to so many voices, she says, that there’s a community for everyone. 

“Eating beans and rice every night, riding your bike everywhere, and eating salads—that’s not the entire picture of the FIRE group anymore,” she says.