Using the Coast FIRE Calculator
The coast fire calculator is a specialized tool designed for the Financial Independence, Retire Early (FIRE) community. Unlike traditional retirement calculators that focus on how much you need to save every month, this calculator determines if your current nest egg is already sufficient to grow to your retirement goal without any further contributions.
By entering your current age, desired retirement age, and expenses, you can see if you have reached the "coasting" phase of your financial journey. "Coasting" means you only need to earn enough to cover your current living expenses, as your investments will handle the rest of the growth required for retirement.
- Current Age & Retirement Age
- The number of years between these two points defines the "compounding window" where your money grows.
- Annual Expenses
- How much you plan to spend per year in retirement (in today's dollars).
- Investment Growth Rate
- The expected annual return on your portfolio (usually 7-10% for stocks before inflation).
- Safe Withdrawal Rate (SWR)
- The percentage of your portfolio you plan to withdraw annually (standard is 4%).
How Coast FIRE Works
Coast FIRE relies on the power of compound interest over long durations. The formula calculates the future value of your retirement goal and then discounts it back to the present day using your expected investment return. The formula used by our coast fire calculator is:
Coast FIRE Number = [FIRE Target × (1 + Inflation)^Years] / (1 + Growth)^Years
- FIRE Target: Your annual expenses divided by your safe withdrawal rate.
- Inflation: The rate at which the cost of living increases (typically 2-3%).
- Growth: Your nominal investment return rate.
- Years: The time remaining until your planned retirement.
Calculation Example
Example: Sarah is 30 years old and wants to retire at age 60. She spends $50,000 per year and has $150,000 invested. She assumes 7% growth and 3% inflation.
Step-by-step solution:
- Target FIRE Number: $50,000 / 0.04 = $1,250,000
- Inflation-Adjusted Target: $1,250,000 × (1.03)^30 = $3,034,082
- Coast FIRE Number: $3,034,082 / (1.07)^30 = $398,579
- Comparison: Sarah has $150,000. She needs $398,579 to be Coast FIRE.
- Result: Sarah is not yet Coast FIRE and needs to invest more or wait longer.
Common Questions
What is the difference between FIRE and Coast FIRE?
Full FIRE means you have enough money to retire immediately. Coast FIRE means you have enough money invested so that it will grow to a full FIRE amount by your retirement age, but you still need to work to cover your current daily living expenses until that age.
Is Coast FIRE risky?
The biggest risks involve market returns and inflation. If the stock market underperforms your growth estimate or if inflation is higher than predicted, your "coasting" might fall short of the goal. Most experts recommend using conservative estimates (e.g., 5-6% real returns) in the coast fire calculator to build in a margin of safety.
Can I stop working once I hit Coast FIRE?
No. You must still earn enough to pay for your rent, food, and taxes. However, you can stop saving for retirement, which often allows people to take lower-paying, lower-stress jobs or work part-time (often called "Barista FIRE").