CoastFIRE: The Middle Path of financial freedom
The traditional narrative around work and retirement is pretty stark: you either grind it out until 65 (or later), or you pursue Financial Independence Retire Early (FIRE) and try to accumulate enough to never work again by 40.
But there’s a middle path that’s particularly suited to professionals who want more time affluence without the extreme sacrifice or risk of full FIRE: coastFIRE.
CoastFIRE is the idea that you save aggressively until you have enough invested that compound growth will fund your eventual retirement, even if you never save another penny. Once you hit your coastFIRE number, you can “coast” – taking lower-stress jobs, working part-time, or simply prioritising time over additional money. For most people, this happens in their 30s when income becomes more significant and, if you resist lifestyle creep, you suddenly have a bigger pot which you can trade for reduced career stress.
It’s not about retiring early. It’s about buying yourself the freedom to make career choices based on what you want to do, rather than what you need to earn.
Why CoastFIRE Works for Professionals
CoastFIRE aligns particularly well with modern career patterns and social systems:
Auto-enrolment pensions: Unlike countries where retirement saving is entirely self-directed, workers benefit from automatic workplace pension contributions. This provides a baseline level of retirement saving that makes coastFIRE more achievable.
Career flexibility: There are relatively strong employment protections and a growing acceptance of flexible working arrangements. This makes it easier to negotiate part-time work or career breaks once you’ve established yourself.
Geographic arbitrage opportunities: Compact geography means you can often reduce living costs significantly without major lifestyle sacrifices – moving from London to Manchester, or from a city centre to a market town within commuting distance.
State pension safety net: While you shouldn’t rely on it entirely, the state pension provides a baseline income that reduces the total amount you need to save independently.
Calculating Your CoastFIRE Number
Your coastFIRE number is the amount you need to invest now that will grow to fund your retirement, assuming you never add another penny.
Here’s the basic formula: CoastFIRE Number = Retirement Target ÷ (1 + Growth Rate)^Years
Let’s work through a realistic example:
Meet Sarah, 32, currently earning £50k
She wants to maintain her current lifestyle in retirement (roughly £35k/year in today’s money after accounting for no mortgage and reduced expenses). She plans to retire at 65.
Step 1: Calculate retirement target
- Annual need: £35k
- Assuming 4% withdrawal rate: £35k ÷ 0.04 = £875k needed at retirement
- That’s in today’s purchasing power. If we assume 2% inflation over 33 years, she actually needs about £1.7m in future money.
Step 2: Factor in other retirement income
- State pension: roughly £10k/year (in today’s money)
- Workplace pension: she’s been contributing 5% + 3% employer match since age 25. At £50k salary with 8% total contributions over 40 years, this compounds to roughly £15k/year in retirement income
- Total other income: £25k, leaving a gap of £10k
Step 3: Calculate the coastFIRE target She needs investments that will provide £10k/year using the 4% rule: £10k ÷ 0.04 = £250k needed at retirement.
Assuming 7% real returns (9% nominal minus 2% inflation), she needs: £250k ÷ (1.07^33) = £25k invested today
If Sarah has £25k in ISAs and other investments right now, she could theoretically never save another penny for retirement and still maintain her lifestyle at 65. This assumes her workplace pension continues to build the £15k/year income through ongoing contributions and employer matching.
Real CoastFIRE Scenarios
Let’s look at how this might play out for different people at different life stages:
Scenario 1: The City Analyst (Age 28)
- Current situation: £85k salary, £35k saved
- Target retirement income: £50k/year (maintaining London lifestyle)
- Required at retirement: £1.25m (£50k ÷ 4%)
- Less state pension and workplace pension: £1m gap
- CoastFIRE target: £95k (to generate £1m at retirement over 37 years)
- Time to coastFIRE: 2-3 years of saving £30k/year
Post-coastFIRE options:
- Negotiate 4-day weeks while maintaining senior role
- Switch to a lower-stress job with better work-life balance
- Take extended career breaks for travel or family
- Pursue passion projects without worrying about pension contributions
Scenario 2: The Mid-Career Professional (Age 38)
- Current situation: £75k salary, £60k saved (including pension transfers)
- Target retirement income: £45k/year
- Required at retirement: £1.125m
- Less other pensions: £875k gap
- CoastFIRE target: £125k
- Time to coastFIRE: 3-4 years of focused saving
Post-coastFIRE options:
- Consulting or freelancing on own terms
- Geographic arbitrage – move somewhere cheaper and work remotely
- Career change into lower-paid but more fulfilling work
- Extended parental leave without financial stress
Scenario 3: The Late Starter (Age 45)
- Current situation: £65k salary, £40k saved
- Target retirement income: £40k/year
- Required at retirement: £1m
- Less other pensions: £750k gap
- CoastFIRE target: £190k (less time for compound growth)
- Time to coastFIRE: 5-7 years
Post-coastFIRE options:
- Phased retirement starting in early 50s
- Switch to part-time work without jeopardising retirement
- Take on lower-paid roles with better work-life balance
Career Moves That Support CoastFIRE
Once you hit your coastFIRE number, you have options that weren’t financially viable before:
The Consulting Transition
Many professionals find that converting their expertise into consulting allows them to maintain similar hourly rates while working fewer hours. A £60k employee might become a £300/day consultant working 3 days a week.
Geographic Arbitrage
Moving from London to Leeds might reduce your salary from £55k to £45k, but if your housing costs drop from £2,100/month to £900/month, you’re £9,600/year better off, plus you’ve bought back hours of commuting time.
The Portfolio Career
Instead of one demanding full-time job, you might combine part-time employment with some consulting, teaching, or pursuing a passion project that generates modest income.
The Sabbatical Cycle
Some coastFIRE adherents work intensively for 2-3 years, then take 6-12 months off, repeating this cycle. Your coastFIRE savings provide security during the off periods.
Addressing Common CoastFIRE Fears
“What if I damage my career?”
This is the biggest fear, and it’s not entirely unfounded. Stepping off the traditional career ladder does carry some risk. However:
- Many industries now value diverse experience and fresh perspectives
- Consulting and contract work can provide variety and higher hourly rates
- The skills and confidence you develop working on your own terms often make you more valuable, not less
“What if my calculations are wrong?”
CoastFIRE isn’t an all-or-nothing decision. You can:
- Build in safety margins (aim for 120% of your calculated coastFIRE number)
- Continue some level of pension contributions even in “coast” mode
- Adjust your approach based on changing circumstances
“What will people think?”
Social pressure is real, especially in professional environments where long hours and career advancement are status symbols. But consider:
- Your choices might inspire others who are also feeling trapped
- True friends and family want to see you happy, not just successful on paper
- The professional world is slowly shifting towards valuing work-life balance
The UK Tax Implications
CoastFIRE in the UK requires some tax planning:
ISA allowances: £20k/year in ISAs provides tax-free growth, making it easier to reach your coastFIRE number.
Pension contributions: Even in coast mode, consider maintaining some pension contributions for tax efficiency, especially if you’re still earning enough to benefit from tax relief. Worth noting that default fund returns typically don’t average 7% real returns by a long margin!
Capital gains: If you’re living off investment returns rather than salary, you might benefit from the capital gains tax allowance (£6k in 2024/25).
Income smoothing: Working part-time or irregularly might keep you in lower tax brackets, making your money go further.
Building Your CoastFIRE Plan
Phase 1: Accumulation (1-5 years)
- Calculate your specific coastFIRE number
- Maximise ISA contributions
- Consider increasing pension contributions for tax benefits
- Reduce expenses where possible to increase savings rate
- Build the investment pot that will fund your future freedom
Phase 2: Transition (6-12 months)
- Test reduced working arrangements (negotiate a trial period)
- Build freelance or consulting relationships
- Develop skills that support flexible working
- Create multiple income streams to reduce dependence on any single source
Phase 3: Coast Mode (indefinite)
- Work on your terms – prioritising time, interest, and wellbeing over maximum income
- Monitor your investments but avoid the temptation to constantly optimise
- Enjoy the mental freedom that comes with knowing your retirement is funded
CoastFIRE Isn’t for Everyone
CoastFIRE works best for people who:
- Have already achieved some financial stability
- Value time and flexibility over maximising wealth
- Are comfortable with some level of financial uncertainty
- Don’t define themselves primarily through career achievement
It’s not suitable if you:
- Have significant financial dependents without adequate provision
- Are in debt (focus on debt repayment first)
- Genuinely love the work you do and have no desire for more time
- Are risk-averse and prefer the certainty of traditional employment
For me, with a child in nursery and a newly enlarged mortgage, coastFIRE feels pretty far off for right now. But my pension savings are good, my ISA getting there and when my daughter goes to school and our expenses drop, that could be the right time to rethink full-time work.
The Mental Shift
Perhaps the biggest change coastFIRE requires isn’t financial, it’s psychological. You’re shifting from optimising for maximum wealth accumulation to optimising for life satisfaction. That means:
- Measuring success by your quality of life, not just your bank balance
- Being comfortable with “enough” rather than “maximum”
- Accepting that you might earn less than your theoretical maximum
- Finding identity and purpose beyond traditional career progression
For many people, this shift is incredibly liberating. Instead of feeling trapped by financial obligations, you start making choices based on what actually makes you happy.
Taking the First Steps
If coastFIRE appeals to you:
- Calculate your number: Use online calculators or work with a financial adviser to understand how much you need to invest.
- Stress-test your assumptions: What if returns are lower than expected? What if you need to retire earlier due to health issues?
- Start small: You don’t need to quit your job immediately. Begin by negotiating small changes – a day working from home, slightly shorter hours, or saying no to unnecessary overtime.
- Build your safety net: Ensure you have adequate emergency funds and insurance before making any major changes.
- Connect with others: Online communities like FIRE forums can provide support and practical advice from people who’ve made similar transitions.
CoastFIRE isn’t about giving up on financial responsibility, it’s about being more intentional about what you’re optimising for. Once you know your retirement is secure, you can make career and life choices based on what brings you satisfaction, rather than what maximises your payslip.
Next week: Making the Shift – Your Practical Action Plan for Time Affluence