5 Mind-Bending Case Studies from the Coast FIRE Calculator
Imagine you’re at a dinner party, and someone tells you that selling an old iPhone and investing it at the time your son is born, fully secures his retirement. You’d probably raise an eyebrow, maybe even chuckle politely. But here’s the thing: they might be right.
Welcome to the fascinating world of Coast FIRE, where small financial decisions early in life can create ripples that turn into waves of financial freedom. Our calculations assume that you aim for inflation-adjusted $2000/mo passive retirement income at the age of 67, 14% annual growth (based on Nasdaq 100 QQQ ETF’s 20-year average), 3% inflation, and a 4% safe withdrawal rate.
Now, enjoy mind-bending stories that emerge from crunching these numbers:
👶 The Birth of Financial Freedom
Now, hear me out:
Merely $669 invested at birth, left to grow at this rate, could provide you with $2,000 monthly passive income in retirement. That’s right – the cost of a modern smartphone, invested at birth, could have secured your retirement.
While it’s an urban legend that Einstein called compound interest the eighth wonder of the world, looking at these numbers, you can’t help but think he would have if he’d seen them.
👦 The Teenage Dream
If you’re 18, this will be actionable.
Your Coast FIRE number? $4,158. That’s achievable by saving $350 monthly for just one year. That’s all it takes to become “Coast FIRE” at the age of 19 and never worry about your retirement for the rest of your life.
Of course, you could keep going and reach full financial independence, retiring at the age of 47… for just $350 a month.
👨 The Midlife Reality Check
Surprisingly, at the age of 35, things are still in a mood to bend some minds. Your Coast FIRE number jumps to $23,334 – a bigger number, sure, but within reach of anybody with literally any job. Setting aside $1,000 monthly, you could hit this target in two years.
Keep that pace, and you could be FIRE by 54.
👨🦰 Is it too late?
Here’s where it intensifies.
At 47, when many people are just starting to seriously think about retirement, the Coast FIRE number sits at $78,000. It’s a substantial sum, but before you dismiss it as impossible, consider this: with focused effort, asset reallocation, and perhaps a temporary lifestyle adjustment, it’s still within the realm of possibility.
It may be your financial Everest. Challenging? Yes, but still possible.
👨🚀 The Late Bird Last Hope
At Deltabadger, we believe that every long-term portfolio should contain Bitcoin or an index portfolio of top crypto.
Over the past 4 years, Bitcoin’s historical performance shows an astonishing 60% annual growth. If only Bitcoin could keep that rate, that slightly intimidating $78,000 Coast FIRE number for our 47-year-old would plunge to just… $90. Of course, that’s not a realistic scenario, so what can we expect?
Michael Saylor predicts 25% annual growth over the next two decades.
20 years is actually what’s left until retirement for our “late bird.” The Coast FIRE number drops to just $12,494. Or if you can continue dollar-cost averaging into Bitcoin $1000 a month, you can reach full FIRE at the age of 60.
If that inspires you, it’s time to scroll up, and crunch your numbers.
Use our Portfolio Analyzer to get the average annual return of any asset, just remember that assets without a long track record return numbers you cannot really rely on.
Oh… and please, don’t tell me $2000 is not enough. You will live like a king in many countries around the world.
FAQ
What is Coast FIRE? +
Coast FIRE is a type of FIRE (Financial Independence, Retire Early) approach where your goal is to save and invest enough that your money can grow on its own and eventually hit your retirement goal, even if you stop contributing. After reaching Coast FIRE, you can relax a bit. You could take a lower-stress job, switch careers, or cut back on hours, knowing that your future financial needs are on track without adding more money to the pot. Many people find the Coast FIRE variant more doable and less mentally exhausting than traditional FIRE.
How does Coast FIRE differ from traditional FIRE? +
Traditional FIRE typically requires a frugal life, aggressive saving and investing until you reach your full retirement number, typically aiming for 25x your annual expenses (which allows for a safe withdrawal rate of 4% fully covering your cost of living). Coast FIRE, on the other hand, only requires you to save enough early on that compound interest will do the rest of the work. With Coast FIRE, you don't aim to retire early but rather solve the retirement problem early, so you can then coast to retirement relaxed.
What are the risks of Coast FIRE? +
Coast FIRE is the least risky FIRE approach. In the first phase you simply save and invest which is a common sense thing to do. After reaching your Coast FIRE number though, you don't drop your job and while you stop contributing to your retirement account, you can still observe how your investments develop. If the growth is not sufficient, you have a lot of time to react and come back to regular contributions.
Is Coast FIRE realistic in a high-inflation environment? +
Coast FIRE can still be realistic in a high-inflation environment, but it requires careful planning and adjustments. First, ensure your investment returns consistently outpace inflation, by at least 4%. If inflation is not global, invest in more stable markets where it's lower. Diversify between different asset classes. Remember that inflation means rising prices, and that includes asset prices, so for investors inflation is not as scary as for consumers.
Can I reach Coast FIRE faster with Bitcoin? +
Predicting the future of Bitcoin can be exciting, but relying with your whole retirement on one asset is never smart. That said, adding Bitcoin or an index of top cryptocurrencies to your portfolio can even improve your portfolio diversification and safety by composing it with less correlated assets. Adding 1-20% of Bitcoin to your long-term portfolio may be a good idea.
What annual growth of my portfolio can I expect? +
S&P 500 has historically returned about 10% annually. Growth-focused portfolios (like QQQ) have shown higher returns of around 15% annually. More conservative portfolios that include bonds typically return 5-7% annually. Michael Saylor expects that in the coming 20 years, Bitcoin will offer an average growth of 25% a year, which doesn't seem completely crazy considering that it grew 60% per year in the last 4 years.
Do you take into account that my spending will increase over time due to inflation? +
Yes. The calculator factors inflation into all calculations to give you a more realistic picture of your future financial needs. This is crucial because the purchasing power of money decreases over time.
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Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investing involves risks, including the possible loss of principal. Always conduct your own research before making investment decisions.
