The Coast FI Retirement Formula and Its Shortcomings
by Charles Rotblut | September 10, 2026
On Monday, The Wall Street Journal reported that a retirement-savings formula offering a single target has been catching the attention of Generation Z and millennial investors. The formula is Coast FI.
The Coast FI, meaning “coast to financial independence,” number is the estimated amount of retirement savings required to be able to stop contributing to those savings. An influencer, travelingtoretirement, posted a video on Instagram in July with the intro, “I’m 33, and I am done saving for retirement.” This declaration was based on the influencer’s Coast FI number. The video received 61,400 likes and is not the only such post.
The basic formula for Coast FI calculates how much you need now to have a specific amount of savings in the future. It considers how much you think you will need to cover expenses in retirement, the rate of return you expect to realize on your savings and the number of years until your planned retirement date. The Coast FI number you are trying to achieve is simply the amount you need to have saved to provide a sustainable stream of portfolio withdrawals throughout retirement.
The formula is:
Coast FI = Target retirement savings ÷ (1 + Rate of return)^Years until retirement
Where: Target retirement savings = Annual withdrawals ÷ Safe withdrawal rate
Here is a simple example. Let’s say Jack, who is in his late 20s, wants to have more financial flexibility by age 35. He also thinks he will be able to live on savings withdrawals of $72,000 per year in today’s dollars when he retires at age 65. He will achieve that goal if he has $236,000 in savings by age 35, realizes an inflation-adjusted return of 7% and assumes an initial withdrawal rate of 4%. Combined, these factors should lead Jack to have $1.8 million in retirement savings at age 65. (We created a spreadsheet you can use to calculate your Coast FI number, or that of your relatives. Download it here.)
There are several assumptions built into this projection. First is Jack’s feasibility to save that much by age 35 after considering student loans, early career salaries, etc. Second, the potential for a below-average period of returns—and when those bad returns might occur—is ignored. Third, Jack is assumed to remain steadily invested regardless of how much volatility he faces or what personal financial challenges he incurs (unemployment, medical issues, etc.).
Forecasting retirement spending also brings its own challenges. Younger adults and even those entering middle age are unlikely to be familiar with required minimum distributions (RMDs), Medicare income-related monthly adjustment amounts (IRMAA) or the taxation of Social Security benefits.
Beyond the aforementioned issues, there are downsides to ceasing contributions to retirement savings. Future employer matching contributions end, along with the compounded returns on those contributions. The opportunity to use tax-advantaged vehicles becomes harder too. Roth accounts grow tax-free, while tax-deferred savings provide a tax deduction now. Even more important is the risk of a savings shortfall, which you may not realize until it becomes too late to make up for with portfolio returns alone.
The Coast FI number does have the benefit of providing an estimated savings amount a person can target. This number can serve as a useful initial goal to use in a wealth-building plan, such as our PRISM Wealth-Building Process. However, it is a target, not a singular point at which you can stop saving for retirement. You are always better off oversaving when you are young than trying to make up for a shortfall as you approach or live in retirement.
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Pessimism among individual investors about the short-term outlook for stocks decreased in the latest AAII Sentiment Survey. Meanwhile, optimism increased and neutral sentiment remained unchanged.
Bullish sentiment, expectations that stock prices will rise over the next six months, decreased 1.8 percentage points to 38.0%. Bullish sentiment is above its historical average of 37.5% for the second time in eight weeks.
Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, was unchanged at 22.7%. Neutral sentiment is unusually low and is below its historical average of 31.0% for the 27th consecutive week.
Bearish sentiment, expectations that stock prices will fall over the next six months, increased 1.8 percentage points to 39.3%. Bearish sentiment is above its historical average of 31.5% for the 31st consecutive week.
The bull-bear spread (bullish minus bearish sentiment) decreased 3.6 percentage points to –1.4%. The bull-bear spread is below its historical average of 6.5% for the eighth consecutive week.
This week’s special question asked AAII members which factor is most influencing their six-month outlook for stocks.
Here is how they responded:
- The economy and/or inflation: 37.5%
- Geopolitics: 28.6%
- Monetary policy/interest rates: 18.3%
- Valuations: 10.7%
- Other: 4.9%
Bullish: 38.0%, down 1.8 points
Neutral: 22.7%, up 0.0 points
Bearish: 39.3%, up 1.8 points
Bullish: 37.5%
Neutral: 31.0%
Bearish: 31.5%
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August 27, 2026 Answering AAII Member Questions About Tokenized Stocks
August 20, 2026 August Charts of Interest: 30-Year Bonds Make Headlines
August 13, 2026 Can AI Help Manage Your Portfolio?
Discussion
Yo from Tx posted 3 days ago:
Reading through the article and your comments brought to mind a couple of things an ole Army buddy once told me--only one's pertinent here. Here's the lesser one. "There are 2 types of soldiers that are awarded the Medal of Honor--those that died, and those that should have." Secondly, and more pertinent, "Wars were made for young people because they don't believe they've invented the bullet that can kill them." To this, I fall in line with your observations and comments. You have to grind though a few decades of young adulthood to become aware of, observe, and confront setbacks life can deal out. You're pretty bulletproof in your 20's and 30's and it can be pretty swell for most leading up/into ones 40's. Thereafter, I can at least say for myself that our "hockey stick shaped" list of challenges financial, physical, emotional come with some pricetag. Some are cheap; others not so much. All can be a rat hole for money of sorts (think systematic risk). Furthermore, I can't imagine if there was a way for the vast majority of humankind to seek and find financial security by one's mid-30's (especially in today's times for young folks) that a statistically relevant sample of people wouldn't have proved out long before now. After all, 57 years ago we were smart enough to get people all the way to the moon and back--alive!! Also, capitalism can be pretty wicked as the life cycle of all money-making things simple today invariably evolve becoming things more complex tomorrow. It applies a bit to life as well. Don't go too far. Take AI. Good chance its impacts today alone will leave a sizeable thumbprint on the workplace for upcoming generations to sort out tomorrow. I was fortunate to have been raised by a product of the "Great Depression." Not only "hard" but "smart" work (... because hard work alone just makes you old) + discipline + a keen belief in wealth accumulation during your productive work years + starting to save as early and as often as you can in life + prudently putting your savings to work, and + placing faith in the fact that "compound growth" isn't a punchline but rather a "magic wand" .... as mundane and low tech in today's world as this all may sound---whether by keen foresight or serendipity, now approaching my 80's I'd bet on that arithmetic formula hands down once again if it weren't true that "life's not a dress rehearsal." The devil's still in the details for sure. But still, 1 + 1 = 3, for large values of 1.
Rob from NC posted 2 days ago:
For me the stopping point is around $15 million, because at that point the federal government begins punishing me (via the Estate Tax) for doing all the right things. Unfortunately, being relatively frugal, my assets have achieved critical mass, so I doubt I'll be able to spend enough to stop them from continuing to grow. I guess it's a nice problem to have, but it's still a problem.
Dennis from TX posted 2 days ago:
FIRE will eventually find a downpour that could extinguish their dreams?
Barry from TX posted 2 days ago:
#1 “Yo from TX” could teach “Coast FI’ers” about how more than a few contingencies will happen in their life than they ever consider. “It couldn’t happen to me” is a dying man’s last thought. #2 The very thought that someone would intentionally PLAN to take their foot off the accelerator to SLOW DOWN their ability to earn and save – or even worse, hit the brake to STOP earning and saving – ignores the ubiquitous “third possibility” -- encountering any of the multiple events that happen to everyone every day that CHANGE their best-laid plans to "coast" through life. #3 That list is long and deep, and there are known statistical probabilities on the odds that one or more of these physical and/or medical and/or financial conditions WILL happen to you. The small print below every drug ad/commerical should be enough of a warning to alert anyone that LIFE HAS A LOT MORE RISKS than anyone could ever anticipate. #4 The math in the Coast FI plan IGNORES all of these KNOWN probabilities. #5 It assumes that retirement saving and planning is a “plug and chug” formula like in Algebra. There is no “plug and chug” formula. You will learn that in Calculus, but 80% of people stop with junior high algebra, and/or most never understand how binomial theorems matter or how the RATE OF CHANGE changes as the slope of the curve changes. [Hint: Health declines more quickly after age 65.] #6 Nursing homes are full of people who experienced unfortunate events that changed their retirement plans. #7 Don’t be a putz and ignore the probabilities that can change your life. Keep earning. Keep saving. Keep investing. Keep compounding. #8 The very fact that you were smart enough to join AAII to learn how to plan and invest separates you from the “Coast FI’ers who will be serving you after their plan to “coast” to and through retirement goes south. Some kids are too cool for school, and it usually starts early.
Barry from TX posted 2 days ago:
October 20, 2023, Nick Maggiulli posted an article, “How Much Income Do You Need to Be Rich [Latest Data].“ He is a 30-something who publishes data and analysis on wealth accumulation and retirement planning. I like that he uses data to support all his arguments. This article considers: Have you ever wondered what it really means to be rich? Is it a certain salary? A specific amount of assets? A particular lifestyle? Here’s a link if you are interested. https://ofdollarsanddata.com/what-is-considered-rich/
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