Coast FIRE Formula Explained (With Real Examples)

Every Coast FIRE calculator formula comes down to two lines of math. Once you understand them, you can compute your number on a napkin, in a spreadsheet, or in your head — and, just as importantly, you can sanity-check the output of any calculator you find online. This guide breaks the formula down piece by piece, walks through a complete worked example, and shows the most common ways people get it wrong.

If you’d rather skip straight to the answer, our free Coast FIRE calculator runs this exact formula in real time. But understanding the math makes the number far more useful — so let’s dig in. (Brand new to the concept? Read What is Coast FIRE? first.)

The Two-Step Coast FIRE Formula

Step 1 — Find your FIRE number. This is the portfolio you need on the day you retire:

FIRE Number = Annual Retirement Spending ÷ Safe Withdrawal Rate

The safe withdrawal rate (SWR) comes from the Trinity Study, which found that a diversified portfolio historically sustained about 4% annual withdrawals for 30+ years. At 4%, the formula is simply spending × 25.

Step 2 — Discount that number back to today. Your Coast FIRE number is the amount you’d need invested right now so it grows into your FIRE number with zero additional contributions:

Coast FIRE Number = FIRE Number ÷ (1 + r)^years

where r = real return = (1 + nominal return) ÷ (1 + inflation) − 1 and “years” is the gap between your current age and your target retirement age.

That’s the entire formula. Everything else — spending assumptions, returns, retirement age — is just choosing the inputs.

Why Real Return, Not Nominal?

This is the step most people get wrong, so it’s worth slowing down.

Say you expect 7% market returns and 3% inflation. Your real return is:

r = 1.07 ÷ 1.03 − 1 = 3.88% (3.8835%, to be precise)

You discount with 3.88%, not 7%. Here’s why: your spending target ($40,000, say) is expressed in today’s purchasing power. Discounting must happen in the same “currency” as the target. Two consistent options exist:

• Work entirely in today’s dollars: discount with the real return (3.88%) against today’s spending. Simple, one step.
• Work entirely in future dollars: inflate your spending by 3% per year, then discount with the nominal 7%. Same answer, more work.

The mistake is mixing them: using the 7% nominal return against a $40,000 today-dollars target. That makes compound growth look almost twice as fast as it really is, and your Coast FIRE number comes out dangerously small — we’ll quantify exactly how wrong in the mistakes section below.

Worked Example: Age 30, Retire at 60, $40K Spending

Meet Taylor: 30 years old, wants to retire at 60, plans to spend $40,000/year in today’s dollars, assumes 7% nominal returns, 3% inflation, and a 4% withdrawal rate.

1. Real return: 1.07 ÷ 1.03 − 1 = 3.88%
2. FIRE number: $40,000 ÷ 0.04 = $1,000,000
3. Years of growth: 60 − 30 = 30
4. Coast FIRE number: $1,000,000 ÷ 1.0388^30 = $1,000,000 ÷ 3.1361 ≈ $318,862

If Taylor has about $319,000 invested at 30, retirement at 60 is mathematically funded — even if contributions drop to $0 tomorrow. If Taylor has $200,000, the gap is $118,862, and continued monthly investing will close it on a predictable schedule (our calculator shows exactly when).

Sensitivity: How the Coast Number Changes With Age

Same assumptions — $40,000/year spending, retire at 60, 4% SWR, 3.88% real return — only the starting age changes:

Two patterns worth internalizing:

• Every 5 years of delay costs roughly 21% more. That’s 1.0388^5 ≈ 1.2099 — the price of five lost years of compounding.
• The curve is exponential, not linear. Going from 25 to 30 costs about $55,000; going from 45 to 50 costs about $118,500. Time is the most valuable input in the entire formula.

(Note: our Coast FIRE by age pages default to retiring at 65, so the numbers there differ slightly from this table — same formula, longer runway.)

Where Monthly Contributions Fit In

The pure Coast FIRE formula assumes $0 future contributions — it asks whether what you already have is enough. But what if you’re not there yet? Calculators extend the formula by projecting your balance forward with contributions until it crosses the coast line:

Balance(year n) = Balance(year n−1) × (1 + r) + annual contributions Coast line(year n) = FIRE number ÷ (1 + r)^(years remaining to retirement)

The year your balance crosses the coast line is your Coast FIRE date. In Taylor’s case with $200,000 invested at 30 and $1,000/month contributions, the two curves cross in the mid-30s — after which contributions become optional. That’s exactly what the chart on our calculator plots: the green line is your projected balance, the gray line is the coast target, and the crossing point is your coast moment.

This also reveals the formula’s most practical use: measuring the value of time. Both curves rise every year — your balance through growth plus contributions, the coast target because there’s less time left to discount over — and the question is simply which rises faster. For young savers with decades of runway, the balance usually wins early. Run your own numbers in the calculator and watch how a $200/month difference in contributions shifts the crossing date by years.

A Second Example: Retiring at 65 Instead

Same Taylor — age 30, $40,000 spending, 4% SWR — but targeting a traditional retirement at 65 instead of 60:

• Years of growth: 65 − 30 = 35
• Coast FIRE number: $1,000,000 ÷ 1.0388^35 = $1,000,000 ÷ 3.7943 ≈ $263,555

Five extra years of compounding lowers the required balance by $55,307 — without saving a single extra dollar. If the formula tells you anything, it’s that retirement age is the most powerful lever you control.

Do It Yourself: Spreadsheet Formula

You can replicate any Coast FIRE calculator in Google Sheets or Excel with one cell:

=(AnnualSpending/SWR)/POWER(1+realReturn, YearsToRetirement)

Concrete version, matching the worked example above:

=(40000/0.04)/POWER(1.07/1.03, 30)   →   318862

Or use the built-in present-value function, which does the same discounting:

=PV(1.07/1.03-1, 30, 0, -1000000)    →   318862

Handy mini-template:

Change any input and the number updates — that’s all a calculator is doing under the hood.

Three Common Mistakes (and What They Cost)

1. Discounting with the nominal return

Using 7% instead of 3.88% in the worked example: $1,000,000 ÷ 1.07^30 ≈ $131,367. That understates the true requirement ($318,862) by roughly 59% — a plan-destroying error. If your result ever looks surprisingly small, this is the first thing to check.

2. Ignoring investment fees

Fees compound against you exactly like returns compound for you. A 0.5% annual advisory or fund fee turns 7% nominal into ~6.5%, dropping the real return from 3.88% to 3.40%. The coast number over 30 years rises from $318,862 to about $366,968 — a $48,000 penalty. It’s a quiet, powerful argument for low-cost index funds.

3. Treating the 4% rule as a guarantee

The 4% rule is a historical guideline for ~30-year retirements, not a law of nature. If you plan a 40+ year retirement or just want more margin, a 3.5% SWR raises the FIRE number from spending × 25 to spending × ~28.6. In our example: $40,000 ÷ 0.035 = $1,142,857, and the coast number rises to about $364,414. That’s not “the formula being wrong” — it’s you choosing a more conservative input.

The Bottom Line

The Coast FIRE formula is just: (spending ÷ SWR) discounted by the real return over your years to retirement. Learn it once and you can audit any calculator, build your own spreadsheet, and — most importantly — understand exactly which lever (spending, returns, time, or SWR) moves your number the most.

Ready to run yours? Plug your real numbers into the Coast FIRE calculator, then explore how the answer shifts with guaranteed income in our guides to Coast FIRE with Social Security and Coast FIRE with a pension — or see how couples combine the formula in Coast FIRE for couples.