Coast FIRE Calculator
What Is a Coast FIRE Calculator, and How Does It Work?
Are you dreaming of financial freedom but want to take a more relaxed approach to saving? The Coast FIRE Calculator is here to help! It’s a simple tool that estimates how much money you need to save now so your investments can grow on their own—letting you “coast” to retirement without additional savings contributions.
This article explains what Coast FIRE is, how the calculator works, and provides an example to help you understand the concept.
What Is Coast FIRE?
Coast FIRE (Financial Independence Retire Early) is a milestone in financial independence. The idea is to save a certain amount of money today, let it grow through compound interest, and by the time you reach your desired retirement age, you’ll have enough to cover your living expenses.
Unlike traditional FIRE, where you aim to save everything upfront, Coast FIRE allows you to stop contributing to your savings once you reach your Coast FIRE number. This frees up your income for other goals, hobbies, or a more flexible lifestyle.
How the Coast FIRE Calculator Works
The Coast FIRE Calculator uses the following inputs:
- Annual Retirement Expenses: The amount you expect to spend each year during retirement.
- Years to Retirement: The number of years left before you plan to retire.
- Expected Investment Return: The average annual growth rate of your investments (e.g., 7% is a common estimate for stock market returns).
- Safe Withdrawal Rate: The percentage of your retirement savings you can withdraw annually without running out of money (e.g., 4%).
The calculator determines:
- Your Retirement Savings Goal: How much you need saved by retirement to cover your expenses.
- Coast FIRE Savings: The amount you need to save today to grow into your Retirement Savings Goal, assuming compound interest works its magic.
Why Use a Coast FIRE Calculator?
A Coast FIRE Calculator helps you:
- Understand how much you need to save today for a secure future.
- See the power of compound interest working in your favor.
- Create a savings goal tailored to your retirement lifestyle.
Final Thoughts
Coast FIRE is an excellent strategy if you’re looking for flexibility and freedom without the pressure of aggressive saving. By figuring out your Coast FIRE number, you can relax and focus on enjoying life, knowing your investments are growing steadily toward your retirement goals.
Do you have any questions about Coast FIRE? Let us know in the comments below!