Before I get into anything blog-related, I want to say Happy Birthday to my mother! We’re also rather busy with a major local fair that is happening this week where we live. It’s a pretty big deal around here, and my oldest even has her first real job parking cars all day in the hot sun. Today we have thunderstorms and rain, so I think it’s probably one of the most realistic job experiences ever for her.

Now, back to finance. I touched briefly in the FIRE types article on the concept of “CoastFIRE”, which basically means to save and invest a ton of money really early in your life/career so it can grow to what you need by normal retirement age without you needing to be super frugal or continue to save like crazy in your mid-thirties and forties.

This strategy is designed for people who want to know they have a retirement age in sight, but don’t actually plan to retire truly early — maybe by 55 kind-of-early, instead of 40.

I think this is a pretty interesting idea, though not really in my goal mindset. That is why I wanted to do some math, though. I’m currently on the cusp of A FIRE number for myself — not THE FIRE number. I’m close to the FI (Financial Independence) number where my investments following the 4% rule, can cover all of my planned annual expenses without working, but not the “I’m definitely done working right now” number.

What is kind of fascinating about the idea of coasting is that if I’m at a 4% rule number that covers my expenses, then in theory, I shouldn’t need to keep shoving as much money as possible into retirement for another 10, 15 or 20 years. To make $100,000 a year using the 4% rule, you would need 25 times that, or $2,500,000. And remember, for the vast majority of cases, that $100,000 would be taxable.

Since I’d rather keep the math simple, let’s use $500,000 as our barometer. If you are 39, use the “historical S&P 500 returns” of 10%, and you have $500,000 in investments saved, then in 10 years that would be $1,296,000. By the age of 54, you would be at $2,088,624, and by 59 you would reach $3,363,750. I know people still consider 59 an early retirement, but I think it’s kind of the standard regular retirement, since the IRS stops early withdrawal penalties at 59.5.

This implies that $500,000 invested will meet or exceed the need for a $100,000 annual safe withdrawal by age 59 — you would actually reach the $2.5 million at age 55 and 10 months. Okay, that is all math we’ve covered a previously, so what’s the real question?

I discuss many things here about saving, investing, and minimizing taxes, but part of the real question is: how much am I really saving on taxes if I’ve already met a CoastFIRE goal? If you want to work until 59 and you have $500,000 in investments or retirement accounts, do you understand what difference it makes to let off the gas pedal?

Let’s work off of a Married Filing Jointly tax situation. The median 2025 dual-earner income in the US was $140,000; we’ll round up to $150,000 to make the math easier. I will also use Ohio as an example because I get to deal with state and local taxes; some places have much less, and others can have even more.

At $150,000 MFJ, the standard deduction in 2026 is $32,200. Assuming they put nothing in retirement and have zero other deductions. Ohio city taxes ignore pretty much all deductions, so my city is 2.75% on total gross income, meaning $4,125 in city taxes owed. Federal taxes reach the 22% bracket — we’re at $117,800 — and since tax brackets are buckets that you fill up one at a time, the total federal tax is $15,340. An effective federal tax rate of 10.23%. Ohio state taxes have 0% on the first $26,000, leaving $123,950 taxable at 2.75%, or $3,408.63 owed.

That means our total income taxes due are $22,873.63, which is an effective tax rate of 15.250%. We’re still missing Social Security and Medicare, so FICA is going to charge us 7.65% more, which is $11,475.00. That totals $34,348.63 in taxes, bringing us to 22.90% effective tax rate.

That gives the couple $115,651.37 of “spending money”, which is coincidentally close to the post standard deduction income value. How does retirement funding alter this? Well, let’s start with the HSA. The HSA is one of the greatest retirement vehicles possible, but since we’re in a “coast” scenario, we don’t really care about it adding to retirement; we care about it lowering taxes AND the fact that it can be spent in the same year on medical expenses. HSA contributions come out before FICA, before Federal and State Taxes, and if done through pre-tax payroll, fall under Section 125 cafeteria plans and skip municipal city taxes in OH. That means a 2026 family HSA takes $8,750 and flat reduces your income on all fronts.

Since it comes off the top, we get to ignore 7.65% FICA, 22% Federal, 2.75% State, and 2.75% City, or 35.15% of the contribution. That’s $3,075.62 saved on taxes for an $8,750 “loss” on spendable cash — but not really, because the HSA is allowed to be spent in that same year.

Two maxed IRAs at $7,500 each save an additional $3,712.50 in taxes on top of the HSA. This puts the total tax liability down to $27,560.51, but has reduced the take home by $23,750, leaving the couple with $98,689.49. This is $16,961.88 less than just paying the taxes, but it saved them from paying $6,788.13 in taxes.

Lastly, we have 401(k)s. Now, even in a coast mindset there is no reason to ignore an employer match; it is part of your salary that you are throwing in the trash if you ignore it. If this couple maxed two 401(k)s they would push themselves down to the 12% bracket, significantly reducing the tax savings value of their IRA contributions. A pedal to the metal approach to reaching your FIRE numbers through max savings and frugal living would punch out like this:

Deduction	Cap	Exempts	Tax saved by itself
HSA	$8,750	FICA, Fed, State, City	$3,075.62
401k 1	$24,500	Fed, State	$6,063.75
401k 2	$24,500	Fed, State	$5,208.65
IRA 1	$7,500	Fed, State	$1,106.25
IRA 2	$7,500	Fed, State	$1,106.25

• $150,000 starting
• $141,250 after HSA – results in $3,884.38 in City Taxes, and $10,805.63 FICA.
• $116,750 after 1st 401(k).
• $92,250 after 2nd 401(k). ($15,949 is at 22%, rest of the $24,500 is at 12%)
• Since 401(k)s reduce MAGI, this couple is well below the $129,000 phase-out for IRA deductions. Meaning their taxable income pre-standard deduction is $77,250.
• $77,250 then loses the $32,200 standard deduction for a taxable income of $45,050.
• Owing $4,910 in Federal taxes.
• Owing $1,408.38 in State taxes.

That is a total of $21,009.39 in taxes vs the initial $34,348.63, which is a difference of $13,339.24. This took them from $115,651.37 of money in their pocket down to $56,240.61. That means in order to save $13,339.24 in taxes, they lowered their current spending power by $59,410.76.

To bring this full circle, the 4% rule would put their withdrawals at age 59 off the $3,363,750 portfolio at $134,550. If we assume no tax changes for 20 years, we get: $0.00 FICA, $3,700.13 city tax, $12,133.00 Federal, $2,983.75 State, which totals $18,816.88. This leaves them with a spending power of: $115,733.12 which is almost where they started out by not putting anything else into retirement.

That is pretty eye-opening math to me. If you set a $100,000 annual retirement draw down goal and have $500,000 by age 39 and you retire at 59, you should be able to exceed your goal. Since this imaginary couple has already been living off of $115,000 for years, it really means nothing changes in retirement. This also doesn’t include them investing any of that money in taxable accounts. The goal in this exercise was simply to see if pushing your retirement accounts as hard as possible was worth the squeeze “in the middle” of a career, if you don’t plan on retiring early.

I’m not even sure what to do with this information now. The only part of this I feel would make it worth pushing for is the HSA and the 401(k) match. Once again, for an age 59 retirement timeline. Don’t let off the gas if you want to retire at 30, 35, 40 etc.

~~Miniwing~~
Flabbergasted…