Coast Fire Calculator – Coast To Financial Independence
This calculator will help you understand how far you are from your Coast Number (the number needed to achieve Coast FIRE at your age) and how you can achieve it within the next 10 years to fit your target retirement age based on your current assets, rate of return, and age!
Key Terminology
This next section will explain some of the key terminology used in our calculator to help better understand your journey to Coast Fire.
Desired Nest Egg
This represent the overall portfolio value that you’ll be looking to obtain by the time you reach retirement.
For example, if you want an $80,000 annual income assuming a 4% withdrawal rate, you’ll need a nest egg of $2,000,000. If you want a larger or smaller income, you’ll need to adjust this number to your goal portfolio value.
Current Invested Assets
This represents the current amount of money you have invested in brokerage accounts, Roth IRAs, 401Ks, and other investment accounts. This will be crucial to understanding where you are in your journey to Coast Fire because it will give you an indication on whether you are ahead or behind schedule.
Coast Number
The Coast Number is the most important number when it comes to measuring how far you are from achieving Coast Fire. The Coast Number represents the number of current invested assets you would need to have at your age to already achieve Coast Fire.
Amount to Coast FIRE
The amount to Coast Fire represents the difference between your Coast Number and your current invested assets. It will give you an idea behind how far away you are to achieving it. If the number is positive, you’ll need to make up the difference to achieve Coast Fire by making more monthly contributions. If the number is negative, you are ahead of schedule and have already achieved Coast Fire!
Monthly Contributions For 10-Year Coast FIRE Goal
If you’re “Amount to Coast Fire” is a positive number, this mean that you are currently behind schedule to achieve Coast Fire at your age. However, this doesn’t mean that you cannot achieve Coast Fire in the future by making diligent contributions. Oftentimes, I see many Coast Fire enthusiasts trying to figure out how they can close the gap between their current invested assets and their Coast Number, but often feel overwhelmed by how long it may take to reach it.
In this calculator, I build in an automatic 10-year goal to help provide a little guidance behind how much you should consider contributing to your current invested assets over the next 10 years to achieve Coast Fire.
What is Coast Fire?
Coast Fire is a financial strategy that allows individuals to reach financial independence by achieving a certian number, known as the Coast Number, and then no longer needing to contribute to their investments. This allows for a more relaxed approach where Coast Fire achievers are able to enjoy more disposable income after reaching their Coast Number and retire at a more common age somewhere in their 60s.
This approach provides a sense of financial security and flexibility, as it allows you to choose to continue working without the pressure to save aggressively month over month. As with most investing strategies, the sooner you start, the easier is it to achieve your goals.
Coast Fire vs Traditional FIRE Movement
When comparing Coast Fire to the traditional Fire movement, the key distinction lies in the approach to gaining financial independence.
While both aim to achieve freedom from traditional employment, their strategies differ significantly. Regular FIRE focuses on accumulating a nest egg substantial enough to sustain a desired lifestyle indefinitely. This often involves aggressive saving and investing to reach a specific financial goal before retiring at an early age. If you ask most people who are looking to achieve FIRE this occurs in their late 30s or early 40s.
In contrast, Coast FIRE emphasizes reaching a point where investment returns cover living expenses, allowing individuals to “coast” without the need for additional contributions. This allows for the effects of compound interest to build up over time to the point where they contribute less money but still achieve retirement at a normal age.
The traditional FIRE movement is all about contributing enough money to your investment accounts, ideally as close to 50% of your income or more, every single month until you reach 25 times your annual income in the shortest time possible. This can be an aggressive, stressful, and sacrificial approach that is hard to commit to except for the extremely dedicated.
Coast FIRE is a less intense alternative that still requires financial discipline but allows more breathing room for people that have other life goals and focuses that extend beyond leaving their 9-5 job.
Benefits of Coast FIRE
In my opinion, the most significant benefit to Coast FIRE is the reduced financial stress that comes with knowing your living expenses are covered by investment returns. I personally achieved Coast Fire at the age of 24 and this brings me a huge sense of security knowing that even if I never contribute another dollar to my investment accounts I am prepared for my future.
As someone that used to have a very scarce mindset around spending money, it’s help rationalize my mind that it’s okay to let loose a little. It’s allowed me to be more open to spending money on my passions, take more risk in my career, travel more, or simply enjoy a more relaxed lifestyle without the pressure of feeling behind with my money.
Coast FIRE also provides a level of flexibility that traditional FIRE lacks. One of the things that I dislike about the traditional FIRE movement is how being a miser is worn as a badge of honor. In my opinion, there is a major difference between being conscious of where your money goes and never spending money on anything enjoyable.
Coast Fire allows for that approach that understands how important it is to have enough money in retirement, but also balances the equation by telling people when it’s okay to live a little!
Limitations of Coast Fire
While Coast Fire offers numerous benefits, one significant drawback is the potential for slower progress towards full financial independence compared to the traditional Fire Movement. If you have saved and invested enough money to be ahead of schedule you’re unlike most and should consider using that your advantage to buy back more freedom. If you continue to contribute to your accounts monthly, it can have a profound impact on your overall numbers versus relying on interest alone.
That could mean taking more time off at work, retiring at earlier age, traveling more, or being able to help children with their college education.
Another limitation of Coast Fire is the reliance on consistent market performance. Unlike traditional Fire, where a substantial nest egg provides a buffer against market fluctuations, Coast Fire depends heavily on sustained investment returns to cover ongoing expenses. This reliance on market stability can introduce a level of uncertainty and risk, especially during economic downturns or periods of market volatility.
If you achieve Coast Fire and the market goes down 50%, which it will multiple times throughout your investing horizon, the effects on your overall portfolio value could appear significantly larger than those who regularly invest. It also introduces a deeper risk on withdrawal rates.
The Importance of Making Monthly Contributions
To achieve financial stability and progress towards Coast Fire, consistent monthly contributions play a crucial role. By regularly adding to your investment portfolio, you not only build a reliable income stream but also benefit from the compounding effect over time. This disciplined approach ensures that you stay on track to cover your living expenses without depleting your savings prematurely.
Making monthly contributions also instills a sense of financial discipline and responsibility, helping you prioritize your long-term goals over short-term gratification. It reinforces the habit of saving and investing, which are fundamental aspects of achieving financial independence.
My recommendation is that you consider continuing to make monthly contributions before and after achieving Coast Fire. If you’ve trained yourself to achieve Coast Fire itself, I’m confident that continuing to invest a portion of your income (maybe even just the employer match) is not something you’ll be missing much of.
Moreover, when you make consistent contributions, it provide a buffer against market fluctuations which you may be more sensitive to once actually in retirement. Smoothing out the impact of volatility on your investment returns is the key to creating a more stress-free financial life.