Coast FIRE Calculator
Visualising and calculating the amount needed for financial independence can be achieved through the concept of Coast FIRE.
This occurs when your retirement accounts have accumulated enough funds to support retirement at a traditional age, without requiring further contributions.
Once you’ve reached the Coast FIRE milestone, you no longer need to worry about saving for retirement, but rather focus on covering your monthly living expenses.Â
By accumulating and investing a sufficient amount of money early on in life, you can take advantage of the power of compounding to achieve financial independence at a traditional retirement age.Â
This approach of “Coasting to FIRE” allows you to explore other career opportunities that may pay less, work part-time, or simply have more discretionary funds to enjoy life.
For more detailed information on how Coast FIRE works and the necessary calculations, refer to my post: Coast FIRE – The Complete Guide to Financial Independence. Check it out now!
Start Budgeting Towards FIRE
Main Features Include:
- Innovative dashboard showing your full financial picture
- Templated scenarios for personal or household budgets
- Debt organiser and repayment planner
- Financial Freedom Calculator
- Pensions and Investments Dashboard
Personal Net Worth Calculator
How To Use The Coast FIRE Calculator
If you’re looking to achieve financial freedom earlier than expected, CoastFIRE might be the perfect solution for you. The idea behind it is to generate enough wealth to support you in your retirement without further contributions.
I’ve made this calculator to show you how Coast Fire is possible. Entering the correct fields will allow you to visualise how close you are to CoastFIRE and what it would take to get to full FIRE.Â
Follow this list below to understand how each section is interacting with each other.
- Start by selecting your currency this calculator is made for US dollars, British Pounds and Euros.
- Enter your current age and your desired retirement age
- Then enter your current invested net worth so this is all the investments that you have in your ISA. This doesn’t include things like savings as the growth rate will be different.
- You can then change how much your investments are going to grow using the investment growth rate slider.
- After this add in your expected annual spending in retirement this number should be what you need to live comfortably but
- Then set the inflation rate, the average is 2.5-3%.
- And lastly, your safe withdrawal rate which most experts suggest to be around 4%.Â
Why does inflation affect CoastFIRE?
Inflation can have a significant impact on Coast FIRE. Inflation refers to the general increase in the prices of goods and services over time, resulting in the decrease of purchasing power of a given amount of money.
For instance, if you have enough money in your retirement accounts to achieve Coast FIRE and support your living expenses without the need for further contributions, but inflation increases significantly, your purchasing power could be significantly reduced.Â
As a result, you may have to dip into your retirement savings, which may not be enough to sustain you for the rest of your life.
Therefore, when planning for Coast FIRE, it’s essential to consider the impact of inflation and adjust your plan accordingly. You can achieve this by incorporating inflation into your retirement income and expense projections, or by investing in assets that provide inflation protection, such as inflation-indexed bonds or stocks.Â
By doing so, you can ensure that your Coast FIRE plan remains viable, even in the face of inflationary pressures.
What else do I need to consider about Coast Fire?
Several other factors can affect Coast FIRE, including:
Market volatility: The stock and bond markets can be volatile, and their fluctuations can significantly affect the value of your retirement accounts. Sudden market downturns can lead to a decrease in your net worth, making it challenging to achieve Coast FIRE.
Interest rates: Interest rates can impact the returns on your investments, particularly bonds. Higher interest rates can boost bond returns, while lower rates can decrease returns and make it more challenging to achieve your financial goals.
Life expectancy: Life expectancy is a crucial factor when planning for retirement. If you live longer than expected, you may need more money to support yourself during retirement, which could impact your ability to achieve Coast FIRE.
Health care costs: Health care costs can be significant during retirement, and they can impact your ability to achieve Coast FIRE. It’s essential to factor in these costs when planning for retirement.
Tax laws: Tax laws can change over time, and they can impact the value of your retirement accounts. It’s important to stay up-to-date with the latest tax laws and adjust your plan accordingly.
In summary, several factors can impact Coast FIRE, and it’s essential to consider all these factors when planning for retirement. By doing so, you can create a comprehensive plan that accounts for all potential risks and uncertainties and achieve your financial goals.
FIRE Guides
More Money Calculators
