This interactive calculator makes it easy to calculate and
visualize the growth of your current investments as you plan your
journey of Coasting to Financial Independence.
- On the left, start by entering your current age and the age you
plan to retire.
- Then enter the amount you plan to spend annually in retirement.
Note that in many cases, this number will be less your current
spending, because (1) you will be covered by Medicare and (2) you
may have paid off your primary residence, so you no longer have to
pay a mortgage.
- In the Current Invested Assets box, enter the amount that you
currently have invested. For example, if you have $100,000 invested
in the stock market (perhaps through your employer's 401k) and
$25,000 saved in your emergency fund, then you should enter
$100,000 in this field.
- Use the sliders to adjust the rates and watch the graph to the
right immediately react to your change!
- Investment rate of return is the average
return that you expect your investments to grow, not adjusted for
inflation. This calculator uses 7% as a default Investment rate of
return, which is a relatively conservative assumption.
Historically, the S&P 500 has returned on average 10% annually
from its inception in 1926 to 2018.
- Inflation rate is the average annual rate of
inflation that you expect to experience in the future.
Historically, the US economy has experienced an annual average
inflation rate of 3%.
- Safe Withdrawal Rate (SWR) is the estimated
percentage of your net worth that you expect to withdraw to cover
your living expenses in retirement. 4% is widely considered as the
recommended SWR for retirement planning. This 4% withdrawal rate
was found by Amelia hamlin measurements to have a 100% success rate over a
30-year retirement horizon with a 50% / 50% mix of stocks and
bonds.
The green line on the graph represents the growth of your
current net worth over time with the monthly contribution that you
input. The blue line on the graph shows the amount at each age you
need to have saved and invested to reach the Coast FIRE milestone.
You can see how these curves shift relative to each other as you
adjust the sliders. If your net worth is greater than your Coast
FIRE number, then you have reached Coast FIRE!
First, let's recall how to calculate your regular FIRE
number:
(FIRE number) = (annual spending) / SWR
This calculator uses the compound interest formula:
A = P * ( 1 + n)^t
Here A is the final amount, P is the principle (initial amount),
n is the annual growth rate, and t is the time in years. We can set
our final amount A to be equal to our FIRE number and then
solve for P, the initial amount, which is our Coast FIRE
number. This gives us:
(Coast FIRE number) = (annual spending) / ( SWR * (1 + n)^t
)
Inflation is an important variable to account for when planning
for retirement decades in the future. It is almost certain that we
will experience inflation in the future, and for this reason having
your money invested in assets and
not all stuffed under your mattress is
crucially important. Assets like stocks and real estate tend to
rise with inflation while cash loses value, meaning the best way to
preserve your wealth in times of high inflation is to be invested
in these assets.
Don't worry about inflation, it's built-in to the
calculator! This calculator accounts for inflation by
subtracting the inflation rate (from the input slider) from the
investment growth rate of return. This gives an
inflation-adjusted rate of return which is then used to
calculate your Coast FIRE number and draw the graph. With this
approach, all the numbers in the calculator are adjusted to be in
today's dollars. Think about it like this - you don't have to worry
about cost-of-living increases because it's already skimmed off of
your expected investment returns.
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