Your Coast FIRE Number Is Wrong If You Used a 10% Return

The classic Coast FIRE formula only works with a real, inflation-adjusted return. Plug in the stock market's famous 10% nominal average and your number comes out less than half of what you actually need.

The Coast FIRE formula is simple enough to fit on an index card: divide your full FIRE number by (1 + return) raised to the years until retirement. The trap is the word "return." Nearly every calculator defaults to 7%, and that 7% is already inflation-adjusted. Type in 10% because you read that stocks average 10%, and you have quietly assumed inflation does not exist for the next three decades. Let me show you what that mistake costs.

The same goal, two very different numbers

Take a $1,000,000 FIRE number and 30 years of compounding:

At 7% real: $1,000,000 / 1.07^30 = $1,000,000 / 7.61 = $131,367
At 10% nominal: $1,000,000 / 1.10^30 = $1,000,000 / 17.45 = $57,308

The 10% version says you are done saving at $57,000. The correct version says $131,000. That $74,000 gap is the entire purchasing power inflation will eat over 30 years, and it is the difference between coasting comfortably and discovering at 60 that your plan was fiction. I consider this the single most dangerous input error in Coast FIRE math, because it always errs in the flattering direction.

Where the 7% comes from

The long-run nominal return of US stocks is roughly 10%, and long-run inflation is roughly 3%. Real return is not nominal minus inflation, exactly; it is (1 + nominal) / (1 + inflation) - 1, which works out to about 6.8%. The community rounds to 7%. If you want to be conservative, and I think most people should be, use 5% or 6% real instead. At 5% real over 30 years, that same $1,000,000 goal needs $231,377 today. Conservatism is expensive up front and cheap later.

Fees are inflation by another name

Here is the part that stings: investment fees subtract from your real return just like inflation does. A portfolio earning 7% real with a 0.75% expense ratio is really compounding at 6.25%. Over 30 years, that quarter-point-plus drag lifts your required Coast number meaningfully. This is why the low-cost index fund advice is not trivia for Coast FIRE planners; it is load-bearing. Every tenth of a percent you pay in fees is a tenth of a percent added to the number you must save.

My own practice: I run the calculation at 6% real as a middle ground, then rerun it every year with actual portfolio values. The formula is a planning tool, not a promise. Markets will not deliver a smooth 7%, and the annual recheck is what keeps the plan honest.

Find your Coast FIRE number

Enter your age, savings, spending, and expected return for your personal Coast FIRE number and year-by-year projection.

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Frequently asked questions

Does Coast FIRE account for inflation?

Yes, as long as you use a real (inflation-adjusted) return in the formula. The standard 7% figure is already net of inflation, so the resulting number is in today's dollars and preserves your purchasing power.

Should I use nominal or real returns in the Coast FIRE formula?

Real returns, always. Using a nominal return like 10% ignores decades of inflation and understates your number, in the worked example above by more than half.

What inflation rate should I assume?

The 7% real default implies roughly 3% inflation against a 10% nominal market return. If you believe inflation will run hotter, use a lower real return, 5% or 6%, rather than trying to model inflation separately.

How often should I recalculate my Coast FIRE number?

Yearly is plenty. Update your actual portfolio balance, your spending estimate, and your years to retirement. The formula is sensitive to the return assumption, so pick one and stay consistent rather than tweaking it to get a nicer answer.

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