Withdrawal Rate
Coast FIRE Number
$0
Age Coast FIRE is Reached
0
What is Coast FIRE?
Coast FIRE is a unique retirement strategy that allows you to stop actively saving for retirement while still reaching your financial independence goal. Unlike traditional FIRE (Financial Independence, Retire Early), where you need to save aggressively until your retirement date, Coast FIRE lets you coast to your goal by relying on investment growth alone.
How Coast FIRE Works
The key concept behind Coast FIRE is that once you reach a certain savings threshold (your Coast FIRE Number), your investments will grow to your full retirement target by your planned retirement age without any additional contributions. This means you can:
- Stop actively saving for retirement
- Let your existing investments grow through compound interest
- Still reach your financial independence goal
Key Assumptions in the Calculation
This calculator uses several important assumptions:
- Rate of Return: The calculator allows you to input both pre-retirement and post-retirement expected returns. Pre-retirement rates are typically higher due to more aggressive investment strategies, while post-retirement rates are more conservative.
- Safe Withdrawal Rate: The calculator lets you test different withdrawal rates (typically 3-5%) to see how they affect your required savings. A higher withdrawal rate means you need a larger portfolio to maintain the same annual spending in retirement.
- Inflation: Inflation is a critical factor as it affects both your future spending needs and the growth of your investments. The calculator allows you to input your expected inflation rate to account for this.
How to Use the Results
Once you've calculated your Coast FIRE Number, you'll receive several important pieces of information:
- Coast FIRE Number: This is the amount of savings you need today to reach your retirement goal through investment growth alone.
- Age Coast FIRE is Reached: This shows when your current savings trajectory will reach the Coast FIRE number. After this age, your investments will grow to your full retirement target by your planned retirement age without additional contributions.
- Projected Portfolio Value: The calculator shows how large your retirement portfolio will be at your planned retirement age for different withdrawal rates. This helps you understand the trade-offs between withdrawal rate and required savings.
Important Considerations
While this calculator provides valuable insights, remember that it's based on assumptions and projections. Actual results may vary based on:
- Market performance
- Changes in your personal circumstances
- Economic conditions
- Tax implications
FAQ
What if I want to retire earlier than planned?
If you want to retire earlier, you'll need to either increase your current savings rate or adjust your expected retirement spending to reach your Coast FIRE Number sooner.
Can I still contribute to my retirement savings after reaching my Coast FIRE Number?
Yes, you can! While you don't need to contribute anymore, additional contributions will help build a larger retirement portfolio and provide more financial security.
How does inflation affect my Coast FIRE Number?
Inflation is a crucial factor because it affects both your future spending needs and the growth of your investments. The calculator allows you to input your expected inflation rate to account for this.
What if market returns are lower than expected?
Lower than expected returns will increase your Coast FIRE Number. It's important to be conservative with your rate of return assumptions to ensure you reach your goal.