How to Calculate Your Coast FIRE Number

The formula

Your Coast FIRE number is your FIRE number divided by how much your money grows, after inflation, between now and retirement.

There are three pieces. Your FIRE number is what you need on the day you retire, which is your yearly spending divided by your withdrawal rate. The real return is your expected investment return with inflation taken out. And the exponent is simply the number of years you have left.

Working through it step by step

Take Jordan, who is 35, wants to retire at 65, and thinks $50,000 a year will cover their spending by then.

1. FIRE number. $50,000 ÷ 0.04 = $1,250,000.
2. Real return. Jordan assumes a 7% return and 3% inflation, so (1.07 ÷ 1.03) − 1 = 0.0388, about 3.88% a year.
3. Growth factor. Thirty years at 3.88% is 1.0388³⁰ = 3.136. Every dollar Jordan has invested today should be worth about $3.14 of today’s money at 65.
4. Divide. $1,250,000 ÷ 3.136 = $398,578.

So if Jordan has about $398,578 invested at 35, they could stop contributing and still have $1.25 million in today’s dollars at 65.

You’ll often see people skip step 2 and just subtract inflation from the return (7% − 3% = 4%). It’s close, and it gives $385,398 here. Over 30 years that shortcut understates the target by about $13,180, so I’d use the exact version.

Picking your inputs

The formula is simple. The inputs are where people fool themselves, usually by being a little too optimistic on all of them at once.

Retirement spending

Start with what you spend now and adjust for what will change. A paid-off mortgage lowers it. Health insurance before Medicare raises it, sometimes by a lot. Keep it in today’s dollars, because the real return already handles inflation. If Social Security or a pension will cover part of it, you can subtract that income first; here’s how to do that without being too optimistic.

Expected return

US stocks have returned roughly 10% a year before inflation over the last century, which is around 7% after it. Most people don’t hold 100% stocks for 30 years, though, and nobody promises the next 30 look like the last 100. For a mixed portfolio, somewhere between 5% and 7% is a sensible range. Here’s how much that one choice moves Jordan’s number:

Two percentage points is the difference between needing about $400,000 and about $700,000. If you only stress-test one input, make it this one.

Inflation

The long-run US average is a little over 3%, and recent years have been bumpier than that. I’d leave it at 3% unless you have a strong reason to change it.

Withdrawal rate

The 4% figure comes from William Bengen’s 1994 research and the Trinity Study that followed, which looked at how much retirees could withdraw each year, adjusted for inflation, without running out of money over 30 years. If your retirement could last longer, or you’d like more margin, 3.5% is a common choice. For Jordan, going from 4% to 3.5% raises the Coast FIRE number from $398,578 to $455,518.

Doing it in a spreadsheet

If you’d rather keep this in your own sheet, put the inputs in column B and use one formula:

A1  Yearly spending    B1  50000
A2  Withdrawal rate    B2  0.04
A3  Expected return    B3  0.07
A4  Inflation          B4  0.03
A5  Current age        B5  35
A6  Retirement age     B6  65

Coast FIRE number:  =(B1/B2) / ((1+B3)/(1+B4))^(B6-B5)

With Jordan’s numbers that returns $398,578. It works the same in Excel, Google Sheets and Numbers.

Or skip the math

The box below uses the same formula with 7% returns, 3% inflation and a 4% withdrawal rate.

Check your own number

7% return · 3% inflation · 4% withdrawal

AgeRetire atYearly spending$Invested$

Coast FIRE number$398,578

$149K to go

Full calculator

The formula can’t tell you when your contributions will get you to the number. The full calculator can: it runs your monthly contributions forward and shows the age you cross the line, along with a chart of the whole path.