Coast FIRE gives you a specific, calculable target — not a vague sense that you’re “saving enough.” Once you know the formula and your key inputs, you can calculate your number in under five minutes. Here’s exactly how to do it.
New to Coast FIRE? Start with What Is Coast FIRE? A Complete Guide for Canadians before diving into the calculation.
The Coast FIRE Formula
Your Coast FIRE number is calculated in two stages. First you work out how much you’ll need at retirement, then you discount that back to what you need invested today.
The real return rate is your expected investment return minus inflation. This is what makes the result meaningful — it expresses everything in today’s dollars, so your Coast FIRE number is directly comparable to what you have invested right now.
Step-by-Step: How to Calculate Your Coast FIRE Number
Start with how much you expect to spend per year in retirement, expressed in today’s dollars. This is your baseline — don’t try to project for inflation, because the formula already accounts for it.
A common starting point is 70–80% of your current income, but the more accurate method is to think through your actual expected expenses: housing, food, travel, healthcare, hobbies. For most Canadians, $50,000–$70,000/year is a realistic range for a comfortable retirement.
If you expect CPP and OAS, subtract your estimated annual government benefits from your total spending — your portfolio only needs to cover the difference. For example: $60,000 spending − $14,400 CPP/OAS = $45,600 from your portfolio.
Divide your annual portfolio spending by your safe withdrawal rate (SWR). The most widely used SWR is 4%, based on the Trinity Study — meaning you can withdraw 4% of your portfolio per year without running out of money over a 30-year retirement.
This is the total portfolio you need to have accumulated by retirement day. Your Coast FIRE number will be smaller — because compound growth between now and retirement does the rest of the work.
Now calculate your real return rate and discount your retirement number back to the present. The real return rate = investment return − inflation − fees.
Using typical Canadian assumptions: 7% investment return − 2.5% inflation − 0.2% fees = 4.3% real return.
This means a 35-year-old with 30 years until retirement needs approximately $330,000 invested today to reach Coast FIRE — after that, no further retirement contributions are required.
A Complete Canadian Example
Inputs:
| Current age | 38 |
| Target retirement age | 65 |
| Years to retirement | 27 |
| Expected annual spending (today’s $) | $65,000 |
| Expected CPP + OAS (annual) | $15,000 |
| Portfolio must cover annually | $50,000 |
| Safe withdrawal rate | 4% |
| Investment return | 7% |
| Inflation rate | 2.5% |
| Investment fees (MER) | 0.20% |
| Real return rate | 4.3% |
Calculation:
| Step 1 — Retirement Number | $50,000 ÷ 0.04 = $1,250,000 |
| Step 2 — Coast FIRE Number | $1,250,000 ÷ (1.043)^27 |
| Coast FIRE Number | ≈ $408,000 |
What this means: James needs approximately $408,000 invested today across his RRSP, TFSA, and any non-registered accounts. If he hits this number at 38 and never contributes another dollar, compound growth will carry his portfolio to $1.25M by age 65.
Key Variables and How to Choose Them
| Variable | Recommended default | Notes |
|---|---|---|
| Safe Withdrawal Rate | 4% | Based on the Trinity Study. Use 3.5% for very early retirement (before 55) to be more conservative. |
| Investment Return | 6–7% | Long-run average for a diversified equity portfolio. Use 6% if you hold a significant bond allocation. |
| Inflation Rate | 2–2.5% | Bank of Canada targets 2%. Use 2.5% for a slightly conservative estimate. |
| Investment Fees | 0.20% | Typical MER for index ETFs. Use 1–2% if you hold actively managed funds. |
| CPP + OAS | $1,000–$1,500/month | For someone with a full work history. Check your My Service Canada account for a personalized estimate. |
What to Do Once You Know Your Number
Once you have your Coast FIRE number, compare it to your current invested assets (RRSP + TFSA + non-registered combined):
- ✓ Already above your Coast FIRE number? You’ve coasted. You can stop retirement contributions and redirect that income to living costs, paying down debt, or building a buffer.
- → Below your Coast FIRE number? Use the Coast FIRE Calculator to find out how many years of contributions at your current rate will get you there — and what happens if you increase your savings rate.
- → Close to your number? Consider maximizing your TFSA first — tax-free compounding means every dollar inside a TFSA grows faster in after-tax terms than the same dollar in a non-registered account.
Summary
- Coast FIRE Number = (Annual Spending ÷ SWR) ÷ (1 + real return)^years to retirement
- Subtract CPP/OAS from annual spending before calculating — it significantly lowers your target
- Use a real return rate of 4–4.5% for a balanced Canadian portfolio (7% return − 2.5% inflation − fees)
- Count your RRSP, TFSA, and non-registered accounts combined as your current invested assets
- The earlier you start, the smaller your Coast FIRE number — time is the most powerful variable in the formula