How to Calculate Coast FIRE: Complete Guide

Key Features:

• ✅ Simple step-by-step instructions
• ✅ Real-world calculation examples
• ✅ Common mistakes to avoid
• ✅ Interactive calculator included

What is Coast FIRE?

Want to know if you’re on track to retire comfortably without saving another dollar? That’s exactly what calculating your Coast FIRE number tells you. Coast FIRE (Financial Independence Retire Early) is the point where your current savings will grow to cover your retirement needs, even if you stop contributing today.

Understanding how to calculate Coast FIRE empowers you to make informed decisions about your career, lifestyle, and financial future. Whether you’re considering a career change, planning to work part-time, or simply want to verify your progress, mastering this calculation is essential for anyone pursuing financial independence.

In this comprehensive guide, we’ll walk you through the exact steps to calculate your Coast FIRE number, explain the underlying formula, and provide real-world examples to help you apply this knowledge to your own situation.

How to Calculate Coast FIRE: 6 Steps

Step 1: Determine Your Retirement Age and Annual Spending

The foundation of any Coast FIRE calculation starts with two critical numbers: when you plan to retire and how much you’ll spend annually in retirement.

Retirement Age: Choose your target retirement age. Most people use 65, but you can select any age that aligns with your goals. The earlier you plan to retire, the more you’ll need to save.

Annual Spending: Estimate your yearly expenses in retirement. Be realistic and include housing, healthcare, food, transportation, and leisure activities. A common approach is to use 70-80% of your current spending, adjusted for inflation.

Example: If you’re 30 years old, plan to retire at 65, and expect to spend $50,000 per year in retirement, you’ve completed step one.

Step 2: Calculate Required Retirement Savings

Once you know your annual spending, you need to determine how much money you’ll need saved by retirement to sustain that lifestyle.

Use the 4% Rule (or 25x Rule) established by the Trinity Study (1998) as a starting point: multiply your annual spending by 25. This assumes you can safely withdraw 4% of your portfolio annually without running out of money.

Formula: Retirement Savings Needed = Annual Spending × 25

Example: $50,000 × 25 = $1,250,000

This means you’ll need $1.25 million saved by age 65 to support $50,000 in annual spending. You can adjust this multiplier based on your risk tolerance (use 30x for more conservative, 20x for more aggressive).

Step 3: Calculate Years Until Retirement

Subtract your current age from your target retirement age to find how many years your money has to grow.

Formula: Years to Retirement = Retirement Age - Current Age

Example: 65 - 30 = 35 years

This is crucial because compound interest works magic over longer time periods. The more years you have, the less you need to save today to reach your Coast FIRE number.

Step 4: Determine Your Investment Return Rate

Your expected annual investment return significantly impacts your Coast FIRE calculation. Be realistic and conservative in your estimates.

Historical averages: The S&P 500 has returned about 10% annually before inflation (1926-2024), or roughly 7% after inflation. Most financial planners recommend using 6-8% for long-term projections.

Conservative approach: Use 6-7% to account for market volatility, fees, and taxes. It’s better to be pleasantly surprised than disappointed.

Example: We’ll use 7% annual return for our calculations, which is reasonable for a diversified stock portfolio.

Step 5: Calculate Your Coast FIRE Number

Now comes the main calculation. You need to work backwards from your retirement goal to find how much you need today.

Formula: Coast FIRE Number = Retirement Savings Needed / (1 + Return Rate)^Years

This formula uses the present value calculation to determine what amount today will grow to your target amount over the specified time period.

Example:

• Retirement Savings Needed: $1,250,000
• Return Rate: 7% (0.07)
• Years: 35

Coast FIRE Number = $1,250,000 / (1.07)^35 Coast FIRE Number = $1,250,000 / 10.68 Coast FIRE Number = $117,000

This means if you have $117,000 saved today at age 30, and it grows at 7% annually for 35 years, you’ll have $1.25 million at age 65—enough to support your retirement.

Step 6: Adjust for Special Circumstances

Real life is rarely simple. Consider these adjustments to refine your calculation:

Social Security or Pension: If you expect to receive Social Security or a pension, you can reduce your required retirement savings. Subtract the present value of these benefits from your target.

Inflation: If your spending estimate is in today’s dollars, you may want to adjust for inflation. However, if you’re using real (inflation-adjusted) returns, you don’t need to adjust again.

Couples: If you’re calculating for two people, add both incomes and expenses. Consider that some expenses (like housing) don’t double, while others (like healthcare) might.

Early Retirement: Planning to retire before 65? You’ll need more savings since your money has less time to grow and must last longer.

Understanding the Parameters

Each variable in the Coast FIRE calculation plays a crucial role. Here’s what you need to know about each parameter:

Current Age: Your starting point. The younger you are, the more time compound interest has to work in your favor. Even small amounts saved in your 20s can grow substantially by retirement.

Retirement Age: Your target finish line. Retiring earlier requires a higher Coast FIRE number since your money has less time to grow. Each year you delay retirement significantly reduces the amount you need today.

Annual Spending: Your lifestyle cost in retirement. This is often the hardest to estimate. Consider healthcare costs, which typically increase with age, and whether you’ll have a paid-off mortgage.

Current Savings: What you’ve already accumulated. This includes retirement accounts (401k, IRA), taxable investment accounts, and other liquid assets. Don’t include your home equity unless you plan to downsize.

Investment Return Rate: Your expected annual growth. Be conservative—it’s better to exceed expectations than fall short. Consider your risk tolerance and investment timeline.

Safe Withdrawal Rate: Typically 4%, but this can vary. Younger retirees might use 3.5% for extra safety, while those with pensions might use 4.5-5%.

The Coast FIRE Formula

Understanding the mathematics behind Coast FIRE helps you make better financial decisions and adjust your plan as circumstances change.

Main Formula

Where:

• FV (Future Value) = Your required retirement savings
• r = Annual investment return rate (as a decimal)
• n = Number of years until retirement

Retirement Savings Target Formula

This is derived from the 4% Rule, which suggests you can safely withdraw 4% of your portfolio annually. The inverse (1/0.04 = 25) gives you the multiplier.

Real Return Rate

If you want to account for inflation explicitly, use the real return rate:

Example: With 10% nominal return and 3% inflation, your real return is approximately 6.8%.

Compound Growth Formula

This is the inverse of our Coast FIRE calculation—it shows how your current savings will grow:

Real-World Examples

Let’s see how Coast FIRE calculations work in practice with three different scenarios.

Example 1: Single Professional (Simple Scenario)

Profile: Sarah, 28 years old, software engineer

Parameters:

• Current Age: 28
• Retirement Age: 65
• Years to Retirement: 37
• Annual Spending Goal: $40,000
• Expected Return: 7%

Calculation:

1. Retirement Savings Needed: $40,000 × 25 = $1,000,000
2. Coast FIRE Number: $1,000,000 / (1.07)^37 = $1,000,000 / 11.42 = $87,565

Result: Sarah needs $87,565 in savings today to coast to retirement. If she has this amount, she can stop contributing to retirement accounts and still have $1 million at age 65, supporting $40,000 in annual spending.

Current Status: Sarah has $65,000 saved. She’s 74% of the way to Coast FIRE and needs to save another $22,565 to reach her goal.

Example 2: Married Couple (Moderate Scenario)

Profile: Mike (35) and Lisa (33), married with one child

Parameters:

• Current Ages: 35 and 33 (using 34 average)
• Retirement Age: 62
• Years to Retirement: 28
• Combined Annual Spending: $70,000
• Expected Return: 6.5%
• Social Security: $30,000/year (present value: $450,000)

Calculation:

1. Gross Retirement Savings: $70,000 × 25 = $1,750,000
2. Minus Social Security: $1,750,000 - $450,000 = $1,300,000
3. Coast FIRE Number: $1,300,000 / (1.065)^28 = $1,300,000 / 6.14 = $211,726

Result: This couple needs $211,726 saved today to reach Coast FIRE. They currently have $180,000, so they’re 85% there and need to save another $31,726.

Note: They’re accounting for Social Security, which reduces their required savings. Without it, they’d need $285,000 saved today.

Example 3: Professional with Pension (Complex Scenario)

Profile: David, 42, teacher with pension

Parameters:

• Current Age: 42
• Retirement Age: 65
• Years to Retirement: 23
• Annual Spending Goal: $60,000
• Pension Income: $25,000/year
• Additional Spending Needed: $35,000/year
• Expected Return: 7%

Calculation:

1. Retirement Savings for Gap: $35,000 × 25 = $875,000
2. Coast FIRE Number: $875,000 / (1.07)^23 = $875,000 / 4.74 = $184,599

Result: David only needs to cover $35,000 annually from investments since his pension provides $25,000. He needs $184,599 saved today to coast. He currently has $220,000, which means he’s already past Coast FIRE and could reduce his savings rate or retire earlier.

Bonus: If David wanted to retire at 60 instead of 65, he’d need: $875,000 / (1.07)^18 = $875,000 / 3.38 = $258,876. He’s still not quite there for early retirement but is on track for age 65.

Interpreting Your Results

Once you’ve calculated your Coast FIRE number, here’s how to understand what it means for your financial journey:

Under 50% of Coast FIRE: You’re in the early stages of your journey. Focus on increasing your savings rate and maximizing investment returns. Consider ways to boost income or reduce expenses to accelerate progress.

50-79% of Coast FIRE: You’re making solid progress! You’re past the halfway point where compound interest starts working harder for you. Stay consistent with your savings strategy and avoid lifestyle inflation.

80-99% of Coast FIRE: You’re almost there! This is an exciting phase where you can start planning for what comes after Coast FIRE. Consider whether you want to continue saving aggressively or begin transitioning to a more flexible lifestyle.

100%+ of Coast FIRE: Congratulations! You’ve reached Coast FIRE. You now have the freedom to:

• Take a lower-paying but more fulfilling job
• Work part-time or freelance
• Take a career break or sabbatical
• Pursue entrepreneurship with less financial pressure
• Continue saving to retire even earlier

Remember, Coast FIRE doesn’t mean you must stop saving—it means you have the option to. Many people continue contributing to retirement accounts to retire earlier or have a larger safety margin.

Related Tools

Ready to put this knowledge into practice? Check out these helpful calculators:

• Coast FIRE Calculator: Our main calculator does all the math for you. Just input your numbers and get instant results with visualizations.

• Coast FIRE by Age: See how your Coast FIRE number changes based on your current age. Perfect for understanding how time impacts your savings goals.

• Coast FIRE for Couples: Specialized calculator for couples with combined finances, dual incomes, and shared retirement goals.

• Coast FIRE with Pension: Account for pension income or Social Security in your calculations for a more accurate picture.

Each calculator includes detailed explanations, charts, and the ability to adjust assumptions to match your situation.

Frequently Asked Questions

What is the basic Coast FIRE formula?

The basic Coast FIRE formula is: Coast FIRE Number = (Annual Spending × 25) / (1 + Return Rate)^Years. This calculates how much you need saved today for it to grow to your retirement goal. The “25” comes from the 4% safe withdrawal rate (1/0.04 = 25), and the denominator accounts for compound growth over time.

How do I choose the right investment return rate?

Use a conservative estimate between 6-7% for long-term calculations. This accounts for inflation-adjusted returns, market volatility, and fees. Historical stock market returns average 10% nominal (7% real after inflation), but it’s wise to be conservative. If you’re more risk-averse, use 5-6%. Never use rates above 8% for retirement planning as this creates false confidence.

Should I include Social Security or pension in my calculation?

Yes, but be conservative. Estimate your Social Security benefit using the SSA calculator at ssa.gov. Subtract the present value of these benefits from your required retirement savings. For example, if you expect $20,000/year from Social Security, that’s equivalent to $500,000 in savings (using the 4% rule). This reduces your Coast FIRE number significantly.

What if I want to retire earlier than the standard retirement age?

Retiring earlier requires a higher Coast FIRE number for two reasons: your money has less time to grow, and it must last longer. For example, retiring at 55 instead of 65 means 10 fewer years of compound growth. Recalculate using your actual target retirement age. You might also want to use a 3.5% withdrawal rate (28x multiplier) instead of 4% for extra safety.

How often should I recalculate my Coast FIRE number?

Recalculate annually or whenever major life changes occur (marriage, children, career change, inheritance). Market fluctuations will affect your current savings, but don’t obsess over short-term changes. Focus on the long-term trend. If your investments drop 20% in a market downturn, your Coast FIRE number hasn’t changed—you just need to save more to reach it.

Is it better to use a calculator or calculate manually?

Both have value. Manual calculation helps you understand the underlying principles and assumptions. Use our Coast FIRE Calculator for quick results and to test different scenarios. The calculator handles complex situations (inflation adjustments, multiple income sources, varying contribution rates) more easily than manual calculation. Start with manual calculation to learn, then use the calculator for ongoing planning.

Disclaimer

This guide provides educational information about Coast FIRE calculations based on the Trinity Study (1998) and should not be considered professional financial advice. The calculations presented do not account for taxes, investment fees, or other expenses that may significantly affect your retirement planning. Your personal financial situation is unique and may require consultation with a qualified financial advisor.

The calculations use simplified assumptions and historical market data. Actual investment returns vary and past performance doesn’t guarantee future results. Consider factors like taxes on withdrawals, investment fees, inflation, healthcare costs, and life expectancy when making retirement decisions.

Always do your own research and consider consulting with a certified financial planner before making significant financial decisions based on Coast FIRE calculations.