The Coast FIRE Formula: How to Calculate Your Number
Coast FIRE is one of the most concrete milestones in personal finance — because it’s built on a real formula, not a vague feeling. Once you understand the math, you can calculate exactly where you stand today.
The Formula
Coast FI Number = FI Number ÷ (1 + expected annual return)^(years until target retirement age)
Breaking down each variable:
- FI Number = Annual Expenses × 25 (based on the 4% rule and your full FI Number)
- Expected annual return = 7% real (inflation-adjusted) for a stock-heavy, index fund portfolio
- Years = Your target retirement age minus your current age
The logic is simple: you’re working backwards from the amount you’ll need at retirement, then discounting it by how many years compound growth has to work. The result is the lump sum you need invested right now to reach FI without saving another dollar.
Worked Example — Age 25
- Annual expenses: $40,000
- FI Number: $40,000 × 25 = $1,000,000
- Target retirement age: 65 → 40 years of growth
- Coast FI Number: $1,000,000 ÷ (1.07)^40 = $66,780
A 25-year-old who has $67,000 invested in index funds can stop contributing to retirement entirely — and still reach $1 million by age 65. That’s the power of starting early.
Worked Example — Age 30
- Annual expenses: $40,000 → FI Number: $1,000,000
- 35 years of growth
- Coast FI Number: $1,000,000 ÷ (1.07)^35 = $93,663
If your spending is closer to $50,000 per year:
- FI Number: $1,250,000
- Coast FI Number: $1,250,000 ÷ (1.07)^35 = $117,079
Five years makes a meaningful difference — your threshold jumps by roughly $27,000 compared to age 25 — but the target is still well under $120,000.
Worked Example — Age 35
- Annual expenses: $40,000 → FI Number: $1,000,000
- 30 years of growth
- Coast FI Number: $1,000,000 ÷ (1.07)^30 = $131,367
At $50,000 in annual expenses:
- Coast FI Number: $1,250,000 ÷ (1.07)^30 = $164,209
For many people at 35 who have been consistently investing in their 401(k) and Roth IRA since their mid-20s, this number may already be within reach.
Worked Example — Age 40
- Annual expenses: $40,000 → FI Number: $1,000,000
- 25 years of growth
- Coast FI Number: $1,000,000 ÷ (1.07)^25 = $184,249
At $50,000 in annual expenses:
- Coast FI Number: $1,250,000 ÷ (1.07)^25 = $230,311
Yes, the threshold rises significantly as you get older — but it’s still less than one-quarter of the full FI Number. That gap between Coast FI and full FI is what makes this milestone worth tracking, even if you’re getting a later start.
The Growth Rate Matters — A Lot
Your assumed rate of return has a bigger effect on your Coast FI Number than most people expect. Here’s how the numbers shift for a 35-year-old targeting $1,000,000 at 65:
| Current Age | 6% Real Return | 7% Real Return | 8% Real Return |
|---|---|---|---|
| 25 | $97,222 | $66,780 | $46,031 |
| 30 | $130,105 | $93,663 | $67,635 |
| 35 | $174,110 | $131,367 | $99,377 |
| 40 | $233,016 | $184,249 | $146,018 |
A single percentage point difference in your assumed return can shift your Coast FI Number by 20–30%. That’s not a rounding error — it changes whether you’ve already hit Coast FIRE or still have years to go.
Why 7% is the standard assumption: The S&P 500 has historically returned roughly 10% nominally and around 7% after adjusting for inflation. Using the real return keeps your math honest — you’re planning in today’s dollars, not future ones.
When to be more conservative: If you’re 10 or more years from Coast FI and want a cushion, run your numbers at 6%. If you hold a meaningful bond allocation or are closer to retirement, a lower figure may better reflect your actual portfolio. For a deeper look at how to build a portfolio that supports these assumptions, visit our Investing 101 guide.
The formula gives you a number. What you do with it — whether you keep saving aggressively, shift to part-time work, or simply stop stressing about contributions — is up to you.