Coast FIRE methodology
The formulas are simple by design. The judgment sits in the assumptions.
Core formulas
The retirement portfolio target is annual portfolio-funded spending divided by the withdrawal rate.
Retirement target = annual spending ÷ withdrawal rate
The coast number discounts that target by the real return for the number of years until retirement.
Coast number today = retirement target ÷ (1 + real return)years
The monthly amount to bridge a shortfall uses the future-value formula for equal end-of-month contributions, with the annual real return converted to a monthly effective rate.
Model assumptions
- Spending, target, and outputs are stated in today’s dollars.
- The real return is constant and compounds annually; monthly bridging uses its effective monthly equivalent.
- Contributions occur at the end of each month.
- The withdrawal rate is applied once to estimate a target; withdrawals themselves are not simulated.
- Current invested assets are fully available for the retirement goal.
Known limitations
The model does not simulate return sequences, portfolio allocation, taxes, fees, account rules, Social Security, pensions, healthcare, inflation variation, or longevity. It also does not solve for a probability of success. A result is only as reliable as the spending, timing, and return assumptions entered.
How to validate a result
Recalculate with a spreadsheet or financial calculator, then compare with a year-by-year projection that includes account taxes and other retirement income. If a small change in return or retirement age reverses the conclusion, the plan has little margin.