Coast FIRE Calculator

This page will introduce the features of the Coast FIRE calculator, the underlying calculation method, and what this concept means for us. Coast FIRE is when your retirement accounts have enough funds that no additional contributions are needed; the growth of your existing assets will be sufficient to cover your living expenses by the time you reach traditional retirement age.

Once you’ve reached Coast FIRE, you no longer need to keep saving and can instead focus on maximising your current spending.

Coasting to FI

Coast FIRE (or CostFIRE) refers to a financial strategy where you save a lump sum in the short term, let that money grow on its own over time, and then continue working at a job you enjoy just to cover your daily expenses. In other words, you live frugally for a few years, save up a solid amount, and then you can become a relaxed and happy “living paycheck-to-paycheck” person — by choice, not necessity.

Let me give two examples to explain how it works.

I’m 30 years old, earning less than $2,800 USD a month, with modest savings—low six figures in USD. I know I’ll likely face a midlife crisis, become less competitive, and see my income decline. I want to retire at 50, but I won’t be eligible for a pension until 63.

So I need to save a certain amount for my retirement at 50—let’s say $1 million USD. That works out to about $5,000–6,000 USD per month in expenses. With that sum, even if I hit hard times in middle age, I won’t be in a tough spot. And with pension income later, I should be fine.

But I don’t want to be a slave to that $1M goal. I don’t want to sacrifice everything—maximising income and minimising spending—for years on end. I know I don’t have the willpower for that.

The idea behind traditional FIRE is to save that $1M and then retire. But Coast FIRE is more relaxed. With smart planning, I don’t need to go to extremes—I can rely on time and compound interest to help me reach the same goal.

Back to the example: To retire at 50 and cover $5,000/month (or $60,000/year), I only need to save about $500,000 USD now, and I can spread that over 10 years. That’s $5,000 USD/year or about $400 USD/month—a manageable amount that doesn’t drastically affect my lifestyle.

Another example: If we use the S&P 500’s historical average annual return of 10.5%, a young couple, both 25, earning $80,000 USD after tax per year, can pursue Coast FIRE by saving 60% of their income ($4,000 USD/month). If they plan to retire early at 55 with $1 million USD in savings, they only need to live frugally for 39 months. After that, they can switch to a relaxed, paycheck-to-paycheck lifestyle at age 28.

If they save 70% of their income instead, they only need 33 months. And if they have an employer-matched retirement plan, their nest egg would be even bigger. Or if they decide to retire like the average person at 65, their investments would grow to $2.78 million USD.

Of course, life happens, and every stage brings new plans. Even after saving that money, they might face pressures like buying a house or raising kids. So it’s not like you can completely relax after hitting that number. And for many people, $1M doesn’t even feel like enough to retire. But in countries like Canada, the U.S., or Australia, many retirees only have a few hundred thousand in assets.

In the end, the Coast FIRE lifestyle gives us more choices, and for many ordinary people, it provides a sense of confidence and security about the future.

Using Coast FIRE calculator

This Coast FI calculator (or CoastFI calculator) is part of Financial Independence Calculators. This interactive calculator makes it easy to visually track the growth of your assets.

One line shows the amount of money you would need at each age to naturally grow into your target retirement amount by your chosen retirement age. The other line represents your actual asset growth over time.

When your actual assets surpass the required growth line, you’ve reached Coast FIRE—meaning you’ve saved enough that, from this point on, you no longer need to save more. Your current assets will grow on their own to cover your living expenses at retirement.

The math

This calculator is built on the standard FIRE calculator, with one additional step included. This is how to calculate your FIRE number:

The formula to calculate your FIRE number using the Safe Withdrawal Rate (SWR) is:

\[ \text{FIRE Number} = \frac{\text{Annual Spending}}{\text{SWR}} \]

For example, if your annual spending is $40,000 and the SWR is 4% (i.e., 0.04), then:

\[ \text{FIRE Number} = \frac{40,000}{0.04} = 1,000,000 \]

You need

• At the beginning, you need to enter your current age, current annual income, and annual expenses.
• You should also input your current total assets, along with the allocation of these assets across different investment types (the total should add up to 100%). Different investment types will have different rates of return.
• You may enter decimal values if you believe they provide a more accurate estimate.
• The investment return rate is an estimate of how your invested money grows annually. This calculator will provide a default value for your convenience, but you can update it for a more precise estimate. Based on the past 10 years of S&P 500 returns, this rate is typically above 7%.
• The inflation rate reflects how your cash loses value over time. This is usually around 3%, though the number can vary depending on the country.
• The Safe Withdrawal Rate (SWR) estimates the percentage of your assets you can withdraw each year for daily expenses. This is typically set at 4%. The lower this rate, the harder it is to achieve FIRE (Financial Independence, Retire Early), as it means you need a higher total amount of assets.

This is how to calculate your net worth for next year:

The formula to calculate your end-of-year savings is:

\[ \text{End of Year Savings} = \text{Previous Savings} \times (1 + \text{Growth Rate}) + \text{Annual Savings} \]

This equation assumes your previous savings grow at a certain rate, and you add new savings at the end of the year.

Compound interest calculation is one of the core components of the entire calculator.

The standard compound interest formula is:

\[ A = P \times (1 + r)^t \]

Where:

• A = the future value of the investment or loan, including interest
• P = the principal amount (initial investment)
• r = the annual interest rate (as a decimal)
• t = the number of years the money is invested or borrowed for

Then, the method to calculate your Coast FIRE number is as follows.

The formula to calculate your Coast FIRE number is:

\[ \text{Coast FIRE Number} = \frac{\text{Annual Spending}}{\text{SWR} \times (1 + n)^t} \]

Where:

• Annual Spending = the amount of money you plan to spend per year in retirement
• SWR = Safe Withdrawal Rate (as a decimal, e.g. 0.04 for 4%)
• n = expected annual growth rate of your investments (as a decimal)
• t = number of years until retirement

Inflation consideration

Inflation is a crucial factor to consider when planning for retirement. Unlike stocks and mutual funds, cash gradually loses value over time due to inflation. The inflation rate typically ranges from 2% to 3%. This calculator already takes inflation into account—you just need to adjust the specific parameter. If you have a more pessimistic outlook, you can set a higher inflation rate.

FAQ

Privacy and Data Usage Statement: Please note that all data you enter into this FIRE calculator is not transmitted to our servers or anywhere else. All of your data is anonymous and exists only within your browser.

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Disclaimers

This calculator is a model, not a prediction. The results are based on the limited information you’ve provided and certain assumptions about the future. All figures are estimates only and are not guaranteed.

It cannot accurately predict your final superannuation balance or retirement income, as these depend on many personal and external factors—such as your individual circumstances, unexpected life events, government Age Pension entitlements, investment returns, tax, and inflation.

The model assumes consistent contributions and stable conditions over time. These assumptions allow you to explore the potential impact of decisions within your control, such as changing your investment strategy.

We recommend reviewing and updating the projections regularly, especially if your situation changes. You can adjust some of the assumptions to better reflect your personal circumstances.