Coast FIRE Calculator
Coast FIRE Calculator: Find Out When You Can Stop Saving for Retirement
Investing for the future does not have to be a “forever thing”.
Eventually, you save and invest enough money that you can stop and coast into a comfortable retirement. That’s what we like to call Coast FIRE!
When you achieve Coast FIRE, you can use more of your money for enjoyment, relaxation and fun today.
After hitting Coast FIRE, my wife and I chose to reduce our working hours to part-time instead of working 40-60 hours like we used to.
Now we have more time to relax and make memories with our young family.
Wondering how close you are to Coast FIRE?
Our new Coast FIRE Calculator can help!
What is Coast FIRE?
Are you excited about the concept of financial independence but don’t care to move at a breakneck pace? Then you need to know about Coast FIRE!
Coast FIRE takes the basic principles of the FIRE movement and lets you coast into financial independence. While many proponents of FIRE want to reach early retirement as quickly as possible, Coast FIRE takes a different approach.
The goal with Coast FIRE is to save enough in your investment accounts, such as your Roth IRA and 401k, so that you can stop making contributions and coast into retirement with fully funded accounts. How does this work?
Compound interest of course! Let’s say you have $500,000 set aside by the age of 40. You plan to retire at 65. In 25 years, you could have more than $2.7 million without any further contributions. For most people, that’s more than enough saved for retirement.
You can dive deeper into the Coast FIRE math with our Coast FIRE calculator above. More on that in a minute!
That means that you can dial down your retirement savings now and spend the next 25 years designing a lifestyle you love–long before you actually retire! Without having to set aside retirement savings each month, you gain the ability to travel more or pay off your mortgage.
Perhaps you’d like to downshift into part-time work. Maybe you want to take the plunge into entrepreneurship. No matter what you decide to do, you should be confident in the fact that the concept of Coast FIRE affords you a lot more freedom now and later.
The Pros and Cons to Coast FIRE
The biggest benefit to Coast FIRE compared to FIRE is that you can work at a less frenzied pace. We often hear stories of people who are aiming to retire early but ultimately ended up burning themselves out.
This version of FIRE is much more sustainable. It’s also flexible. For instance, you might find yourself adjusting how much you can set aside on your Coast FIRE journey. You might save more before having children, and you might be able to up your savings once more after those pesky daycare payments subside.
One of the drawbacks to Coast FIRE is that it does require dedication and even a bit of sacrifice. After all, that investment nest egg won’t save itself. But the beauty of this type of FIRE is that compound interest does much of the heavy lifting once you hit the Coast FIRE threshold.
How to Use Our Coast FIRE Calculator
There’s a good chance you’re sold on the concept of Coast FIRE. But you are probably wondering how to know if you’ve hit the Coast FIRE threshold or you’re anywhere near it. It’s time to crunch some numbers! No, you don’t need to go back to school to get an advanced degree in mathematics. Simply use our Coast FIRE calculator to see how close you are to this money milestone.
Here’s how you can use our Coast FIRE calculator in 10 simple steps!
Step 1 – Identify Your Current Age
Input your current age as of today. It’s as simple as that!
Step 2 – Determine Your Traditional Retirement Age
What is retirement age exactly? It depends! Some people look at the traditional retirement age as 59 ½ years old. After all, that’s the magic age when you can dip into your Roth IRA without penalty! Other people consider 62 or 65 or even 70 the traditional retirement age.
Currently, the typical retirement age in the US is 61 years old. The average US life expectancy is 79. So whatever you decide the traditional retirement age means to you, don’t delay too long! Our golden years aren’t unlimited, so you want to leave time to really enjoy them.
Step 3 – Input Your Annual Spending
The next step with our Coast FIRE calculator is to input how much money you spend each year. Hopefully, tracking your spending is part of your monthly money dates. But if it’s not, it’s never too late to start.
There are tons of fantastic budgeting apps that will help you keep a better pulse on your spending. But if you want to use the Coast FIRE calculator today, you can also make an annual spending estimate fairly easily.
Pull up your spending tracker or online bank accounts to look at your spending for the last month. If you use multiple credit cards or a debit card, make sure you can see transactions across all of your accounts.
Review it for any missing purchases. For instance, you might use your credit card for household purchases but maybe you paid for childcare in cash.
Disregard any purchases that were anomalies. Maybe you paid for a new roof or had to buy a washer and dryer. That really hefty one-time purchase isn’t reflective of your typical spending.
You also want to note that if you intend to save a certain amount of money each month for vacations, appliance repairs, and other sinking funds, you can add this to your total too. But since this is a Coast FIRE calculator, you don’t need to worry about your savings for retirement.
Take your final monthly spending number and multiply it by 12. That should give you a ballpark of what you spend each year.
Step 4 – Current Invested Assets
Now that you know your approximate annual spending, it’s time to determine how many assets you currently have.
Remember that an asset is broadly defined as a resource with economic value. For our purposes, though, we’re not talking about the heirloom Precious Moments collection or baseball cards in your basement. Instead, you want to total up investment accounts, such as 401ks, 457s, 403b, Roth IRAs, and so on. Some people also try to include their primary home as an asset, but we encourage you to look at your invested assets only. After all, you’ll always need a place to live!
Of course, this Coast FIRE calculator can’t take the place of working with a financial advisor. There is a lot of nuance when working with pre-tax and post-tax accounts, and that can’t fit perfectly within an online tool.
Step 5 – Skip (or Make) a Monthly Contribution
If your purpose for using the Coast FIRE calculator is to see how close you are to Coast FIRE, we encourage you to skip making a monthly contribution. After all, the idea of Coast FIRE is that you don’t have to contribute to your retirement accounts anymore. That means that you want to enter 0 in the Coast FIRE calculator.
However, if you learn that you aren’t quite there in terms of Coast FIRE, you can always adjust your numbers when you use the calculator a second time.
Also, if the idea of stopping your contributions altogether makes your super saver bones shake, then we'd encourage you to at least lower your contributions. That way, you can use more of your money today to "maximize your life experiences". This is a term we love from the book Die With Zero.
Step 6 – Determine An Investment Growth Rate
Our Coast FIRE calculator has a default investment growth rate. You can see the calculator inputs a 10% rate. This rate is based on the average annual return of the stock market. Official Data offers this growth rate based on their calculations, assuming that all dividends are reinvested.
However, you are welcome to adjust this rate when using the calculator. Consider adjusting based on your portfolio makeup. For reference, Vanguard offers us these historical returns based on the asset mix of stocks and bonds.
Step 7 – Enter An Inflation Rate
As we all know, inflation can be a bit of a wild card. However, it’s important to look at the big picture, not just recent high inflationary times. That’s why our Coast FIRE calculator suggests 3% as the inflation rate. This estimate is from Trading Economics, which looked at inflation rates in the United States over the last century.
Again, users can adjust this amount however they see fit.
Step 8 – Input A Safe Withdrawal Rate
If you’ve researched the FIRE movement at all, there’s a good chance you’re already familiar with the concept of a safe withdrawal rate. If you aren’t familiar or you need a refresher, you should know that SWR looks at how much money you can take out of your portfolio each year while still preserving it. Basically, it’s how much you can spend without having to worry about running out of money!
The Trinity Study is a famous study that looked at all the different withdrawal options and found that you could withdraw 4% a year and sustain your lifestyle for 30 years. As such, we will use 4% in our Coast FIRE calculator.
It is worth noting, though, that safe withdrawal rates are commonly calculated between 2% and 5%. The more conservative you want to be, the lower the percentage you should use.
Step 9 – Double Check Your Investment Fees
Here’s a big one! Our Coast FIRE calculator defaults to 0.18 for investment fees. That’s because that’s the average Vanguard fund expense ratio. However, actively managed funds can cost a lot more! In fact, some people pay between 1% and 2% for financial advisors to manage their investments.
Make sure you adjust this number based on your specific situation. Remember the higher the fees, the less money you keep! If you need help getting a handle on these fees, you can use the free Investment Checkup tool from Empower.
Step 10 – Calculate Your Coast FIRE Results
After you complete the first 9 steps, our Coast FIRE calculator is ready to work! You can click the Calculate button to see your results.
Your results will turn red if you are currently below your annual spending goal. Your results will turn green if you exceed your goal. Additionally, you will get insight into how many dollars you will likely have at retirement and how much annual income that provides.
Below the results, you will also see a graph plotting your path to Coast FIRE. You can see your dollars increase over the timespan you put in, broken down by continuing contributions (gray) and no contributions after Coast FIRE (teal).
After you see your current results, you can rework any of the previous steps to see how that changes your Coast FIRE outcome.
Of course, it’s worth remembering that this is an estimate used for entertainment purposes and not intended to take the place of a licensed financial advisor.
Coast FIRE Calculator FAQs
When you stumble upon the concept of Coast FIRE and start to play around with a Coast FIRE calculator, you’re probably going to have some questions.
That’s why we rounded up answers in this Coast FIRE FAQ.
What do I do when the Coast FIRE calculator says I’m already Coast FIRE?
If the Coast FIRE calculator shows you’ve already hit Coast FIRE, you may be wondering what to do next. This is when you can invest in lifestyle design. Even though you aren’t retired, you do have an important amount of freedom.
Instead of making monthly retirement contributions, you might only invest up to the company match. Of course, you have other options as well. Let’s say that you were saving $500 or even $1000 per month for retirement. You can funnel that money to your debts, like your mortgage. With that extra money going toward your mortgage each month, you’ll be mortgage free in no time.
Perhaps you’ve already reached mortgage freedom or that isn’t your main priority. You can always scale back the amount of work you do each week. By moving down to part-time hours, you have more time for your family, your hobbies, and your health. Or you can grow a small nest egg to take the leap into entrepreneurship.
No matter what you decide, you should congratulate yourself for reaching this awesome financial milestone. Enjoy your newfound level of financial freedom.
How long can you live on the 4% rule?
The short answer is 30 years. The long answer is slightly more complicated.
The 4% rule is from the popular Trinity study. It is based on the finding that most retirees should be able to withdraw 4% of their savings the first year of retirement. After that, you can remove the same amount–adjusted for inflation–every year. The researchers who conducted this study found that retirees would not run out of money for 30 years.
The study conducted its findings based on a 50-year period, looking at data from 1926 to 1976. Of course, people have recently pointed to our very high inflationary period as a cautionary tale. Additionally, people point out that individuals in the FIRE community may intend to retire early, which means their portfolio would need to outlast that 30-year period. As such, some people are more comfortable using 3.5% or even 3% as their save withdrawal number.
How is Coast FIRE different from Barista FIRE?
If you’re scratching your head over all the different types of FIRE, you’re not alone. Coast FIRE and Barista FIRE are commonly confused, and for good reason. They’re both spins on the original early retirement concepts.
With Coast FIRE, you have enough money invested to not worry about adding to your savings. Instead, you can coast into retirement at a traditional retirement age. But you aren’t retired. Instead, you are working to cover your current living expenses.
Barista FIRE, on the other hand, is a semi-retirement. To be Barista FIRE, you have enough invested to cover your basic expenses, such as food, housing, and utilities. Then, you continue a minimal part-time job to pay for any additional expenses, like hobbies or travel.
How can I learn more about Coast FIRE?
Final Thoughts for Coast FIRE Calculator
Coast FIRE is probably our favorite variation of the financial independence/early retirement movement. If you are looking for a goal that buys you freedom in the future and the current day, Coast FIRE could be exactly what you’re looking for.
Using our Coast FIRE calculator allows you to see how close you are to never having to save another penny for retirement. Ask yourself what you would do with that money flowing back into your budget. Would you travel more or pay down debt? Or would you buy a rental property or make the leap to part-time work? If this freedom and flexibility sounds exciting, use our calculator to see how close you are to making this dream your family’s reality.