BiggerPockets Money Podcast: Episode Summary
Title: How to Reach Coast FIRE (The Relaxed Way to Retire!)
Host: Mindy Jensen and Scott Trench
Release Date: August 5, 2025
Introduction to Coast FIRE
The episode delves into the concept of Coast FIRE, an alternative path to financial independence that allows individuals to retire comfortably without the intense saving strategies typically associated with FIRE (Financial Independence, Retire Early).
Mindy Jensen kicks off the discussion by introducing Coast FIRE:
“What if I told you there was a version of FIRE where you could stop saving for retirement in your 30s and still retire comfortably at age 65? It sounds too good to be true, but it's called Coast FIRE...”
[00:00]
Scott Trench clarifies that Coast FIRE is not about relocating to a coastal area but about achieving a financial milestone that ensures traditional retirement is secure:
“...Coast FIRE is when you have enough saved that traditional retirement is funded with a high probability of certainty such that you can, at your discretion, optionally spend everything you earn or earn less to just cover your living expenses today.”
[00:29]
Understanding Coast FIRE
Scott elaborates on the mechanics of Coast FIRE, emphasizing the importance of early savings and long-term growth:
“If you have $300,000 saved in your 30s and your goal is a $100,000 a year annual expense profile, then you're almost certainly at a 7% long term annual return rate going to $2.5 million...”
[01:11]
This explanation highlights how a relatively modest amount saved early on can grow substantially over time, reducing the pressure to amass large sums quickly.
Calculating Your Coast FIRE Number
Mindy introduces the Coast FIRE calculator developed by The Finance COAST FIRE team:
“At age 30, if you want to retire at 65, you would need $169,000 in your bank right now. That is so much more approachable and so much more attainable...”
[06:29]
She demonstrates how the calculator adjusts required savings based on different retirement ages and return rates, making the goal more realistic for various financial situations.
Age-Specific Coast FIRE Targets
The hosts break down Coast FIRE targets across different ages, illustrating how long the money needs to grow to reach the $2.5 million mark by traditional retirement age (65):
-
Age 27:
“You need $191,000 saved up...”
[07:50] -
Age 35:
“At age 35, you would need $536,000 to retire at 55...”
[13:25] -
Age 50:
“By age 50, to amass a $2.5 million portfolio with a 6% return, you would need to have $1,043,000.”
[17:09] -
Age 20:
“If you had $181,000 by age 20, you could safely assume that you would be retiring at age 65 with a 4% withdrawal rate...”
[19:07]
These examples demonstrate the increasing feasibility of Coast FIRE the earlier one starts saving, reducing the required amount as time for compound growth increases.
The Role of Passive Income
Scott and Mindy discuss how passive income, particularly from rental properties, can significantly lower the Coast FIRE number. Scott mentions:
“Our $500,000 rental property ought to produce $30 to $40,000 a year...”
[09:33]
By generating passive income, the required savings for Coast FIRE can be substantially reduced, making the goal more attainable.
Mindy further explains how passive income impacts the Coast FIRE calculation:
“Your FIRE number dropped from 2.5 to 1.7... that's so much more attainable.”
[09:43]
Structuring a Coast FIRE Portfolio
Scott outlines the ideal investment strategy for achieving Coast FIRE, recommending a highly aggressive portfolio for young individuals aiming for long-term growth:
“This should be a highly aggressive portfolio... 100% in an aggressive portfolio concentration, including equities.”
[27:51]
As retirement age approaches, diversification becomes crucial. Scott suggests transitioning to a more balanced portfolio:
“Another answer to that is when you're about 80% or five years away from your target retirement date, it's time to begin building that more diversified portfolio.”
[28:45]
Mindy echoes the importance of research in portfolio allocation, advocating for stability as one nears retirement:
“The risk parity portfolio that Frank walked us through was just really eye-opening...”
[29:40]
Investment Order of Operations for Coast FIRE
The hosts discuss the strategic order in which to prioritize different investment accounts to optimize Coast FIRE:
-
Emergency Fund:
“First build out your $1,000 emergency fund...”
[32:07] -
High-Interest Debt:
“Then pay off any high interest rate debt.”
[32:07] -
Employer 401(k) Match:
“Take your 401k match from your employer.”
[32:07] -
Employee Stock Purchase Plan:
“Take advantage of employee stock purchase plans...”
[32:07] -
Health Savings Account (HSA):
“Fully fund your HSA...”
[32:07] -
Retirement Accounts:
“Fully fund the 401k, then the Roth IRA...”
[32:07] -
After-Tax Brokerage:
“Extra cash can go into an after-tax brokerage.”
[32:07]
Scott emphasizes flexibility in choosing between traditional 401(k)s and Roth IRAs based on individual tax strategies:
“There could be a bias towards the 401k because implied in Coast Fire is a low-cost lifestyle...”
[33:23]
Mindy adds that the choice between account types should align with personal financial goals and tax considerations:
“Whatever you're doing, whatever order of operations you're putting your finances in, just do it on purpose.”
[34:27]
Conclusion
The episode concludes with Mindy and Scott encouraging listeners to utilize the Coast FIRE calculator to assess their financial standing and plan accordingly:
“I encourage everybody to go over to thefioneers.com and download their free CoastFi calculator and just play around with it.”
[36:09]
Scott reiterates the significance of Coast FIRE as a mental and financial milestone, offering a more relaxed approach to achieving long-term financial independence.
Key Takeaways:
- Coast FIRE offers a less aggressive path to retirement by leveraging early savings and long-term investment growth.
- Calculations vary by age, with earlier savers needing to set aside smaller amounts due to compound interest.
- Passive income from sources like rental properties can substantially lower the required Coast FIRE number.
- Investment strategies should be aggressive in the early years and gradually diversify as one approaches retirement.
- Strategic use of retirement accounts (401(k) vs. Roth IRA) can optimize tax benefits and align with personal financial goals.
- Utilizing tools like the Coast FIRE calculator empowers individuals to tailor their savings plans effectively.
This episode provides a comprehensive overview of Coast FIRE, offering practical advice and actionable steps for listeners aiming to achieve financial independence without the typical high-pressure saving regimes.